In reaching a deal to acquire networking stalwart Juniper Networks for a proposed $14 billion, HPE has more than grabbed the attention of the entire tech infrastructure market right out of the gate in 2024.
My colleagues Bob Laliberte and John Grady have offered some excellent perspective on HPE's motivations and some of the networking and security-specific ramifications. But what might the deal say about some of the broader trends playing out in the IT infrastructure space?
Here, we look at three big potential infrastructure implications of the proposed deal.
The network is the computer (again)
So went the famous tagline of Sun Microsystems back in the day. And, in the endless whack-a-mole world of digital infrastructure, the pendulum is once again swinging hard to the network.
The proposed HPE-Juniper deal is one great big validation of that. Cloud-native applications are, largely, distributed -- across the core data centers, multiple public clouds and innumerable edge locations -- and keeping them connected in a secure manner, in a way that doesn't kill performance, is hard -- really hard.
Indeed, research from TechTarget's Enterprise Strategy Group (ESG) highlighted "network interconnection" as the most frequently cited challenge when deploying new applications in multi-cloud environments, ahead of other often-cited challenges such as ensuring performance and security. At ESG, we call this the distributed cloud. The distributed cloud needs high performance of course, but it also needs massive doses of automation, baked-in security and, ideally, end-to-end visibility.
Add in the massive performance requirements of running distributed AI applications, and that quickly becomes a huge network scale problem. These factors are already pushing networking front-and-center, and are likely to encourage customers to consider providers that can deliver intelligence (using AI) and, increasingly, a full portfolio of core-edge-cloud capabilities. It also means that networking professionals will be in high demand as the distributed cloud evolves over the coming years.
A shot in the arm for the 'everything as a service' model
IT infrastructure providers have something of a checkered history when it comes to delivering "end-to-end" infrastructure (remember vBlocks?). But the public cloud model made it clear that enterprise customers do want to consume infrastructure as a service when it's packaged in the right way, and technology providers across the board are responding.
The emergence of as-a-service models for on-premises infrastructure that can be consumed on an OpEx basis -- promising to bring many of the benefits of public cloud inside an organization's four walls -- initially focused on compute- and storage-related services. We should expect to see these more aggressively expand to include networking-related services, providing IT decision-makers with a greater raft of options for consideration.
For HPE specifically, the prospect of combining networking with other as-a-service offerings under its GreenLake umbrella to create a much broader range of integrated, outcome-oriented solutions, is intriguing.
A shake-up of the competitive landscape
Which brings us nicely to the final point: What might this deal do for HPE, and how might that prospect ripple across the competitive landscape in the infrastructure market?
Make no mistake, this is a big, bold acquisition -- and one that HPE CEO Antonio Neri believes will redefine HPE, with networking moving front and center. "The core business inside GreenLake… is networking," Neri said. Obviously HPE gets major market expansion in networking -- along with increased margins -- adding to its already considerable assets in the space, just as networking is emerging as the major bottleneck in delivering the distributed cloud.
But not to be overlooked is the potential power of its technology portfolio: From application-specific integrated circuits and supercomputing with Cray to servers, storage, security, software and, with Juniper, a substantial addition to its networking assets -- all sprinkled with AI and delivered under the GreenLake as a service wrapper.
The potential to combine these into a range of new distributed cloud offerings for a variety of enterprise, cloud service provider and telecom service provider clients is powerful. Of course, the risk of getting bogged down in a mire of complexity, confusion and internal/partner politics is also substantial. But, with its Juniper play, HPE's Neri is also throwing down the competitive gauntlet to the entire industry, giving Dell, Cisco and other vendors plenty to think about and respond to.
HPE is already a substantially different company from the one Neri took over as CEO of in 2018. With this latest proposed move, he's aiming to reshape the entire industry over the next decade. It's going to be a fun ride.
Simon Robinson is a principal analyst at TechTarget's Enterprise Strategy Group who focuses on existing and emerging storage and hyperconverged infrastructure technologies as well as related data- and storage-management products and services used by enterprises and service providers.
Enterprise Strategy Group is a division of TechTarget. Its analysts have business relationships with technology vendors.