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AI-powered WLAN behind Juniper-Mist acquisition

Juniper plans to acquire WLAN vendor Mist for $405 million. The Juniper-Mist acquisition is an offensive move that fills a hole in the networking vendor's campus portfolio.

Juniper Networks plans to acquire wireless LAN vendor Mist Systems for $405 million and integrate the startup's inventive cloud- and AI-based network management system with Juniper's campus portfolio.

Juniper announced the acquisition on Monday, saying the Juniper-Mist cash deal would close in the second quarter. In a conference call following the announcement, Juniper CEO Rami Rahim said Mist "plugs a hole" in Juniper's campus offering, which depends on partners for WLAN technology.

"We will start to take the AI for IT engine that Mist has developed and make it work across the broad portfolio that Juniper offers," Rahim said. "That includes switching, security and SD-WAN (software-defined WAN)."

As an access layer provider, Mist's "core competency and innovation" is in its ability to deliver its product portfolio as a service from the cloud and to apply AI to simplify network management, Gartner said in a report published last summer.

Mist's WLAN approach

Mist's cloud-based AI and machine learning software analyzes every packet generated by a wireless user and readjusts access points if a problem is detected. The software also provides administrators with root-cause information.

Juniper MistRami Rahim

Along with its AI and machine learning capabilities, Mist's approach to supporting location-based applications has also impressed analysts. The company embeds virtual Bluetooth Low Energy beacons in each Mist access point, which eliminates the need for separate devices to deploy wayfinding or IoT services.

For a small vendor, Mist has attracted an unusually high number of large customers, including seven of the top 40 retailers, one of the three largest airlines and three of the Fortune 10. The company, which is based in Cupertino, Calif., was founded in 2014.

Big wins aside, Mist's cloud-managed WLAN mostly competes in a subset of the total market, said Brandon Butler, an analyst at IDC. "While it's a faster-growing segment of the market, versus traditional wireless LAN management, it is a smaller segment of the market."

Many of Mist's customers are in education, retail and enterprises with lots of small offices, Butler said.

Juniper's challenges

Mist does have an innovative approach to wireless networking, but Juniper needs to keep that momentum going.
Shamus McGillicuddyanalyst, Enterprise Management Associates

Juniper will need to take Mist and make its technology capable of competing with market leaders Cisco and Aruba, which is owned by Hewlett Packard Enterprise. At the end of 2018, Cisco had almost 45% of worldwide enterprise WLAN revenues, while Aruba had 14%, according to IDC. Cisco increased revenue by nearly 10% in 2018, while Aruba's was flat. The total market grew just over 7% to $6.1 billion.

"Mist does have an innovative approach to wireless networking, but Juniper needs to keep that momentum going, which means keeping the engineering in place and giving them the resources to continue driving forward with new innovations," said Shamus McGillicuddy, an analyst at Enterprise Management Associates.

Providing engineering support to Mist will require dedicated resources at a time when Juniper has reported six straight quarters of declining revenue because of weak sales to cloud and communication service providers. For the current quarter, Juniper predicted a seventh quarterly decline from 6% to 12%.

Rahim expects the Juniper-Mist deal, which he called an "offensive move," to contribute revenue to the company's enterprise networking business, which grew 9.5% in 2018. Juniper's enterprise business accounted for 33% of its revenue from verticals. The rest was from service providers.

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