It didn't take long to have the first blockbuster acquisition in 2024, with Hewlett Packard Enterprise's plans to acquire Juniper Networks announced just nine days into the new year. This is a big deal, valued at $14 billion and representing a $40/share price.
Right now, there is a lot of buzz online about what this acquisition means to Juniper, HPE and HPE Aruba -- as well as their loyal customers. Many might wonder why HPE would want to acquire Juniper when it already owns Aruba.
There are several benefits to both companies. The following is a breakdown.
Juniper's extensible AI Platform, Marvis
Juniper acquired Mist in 2019 for $405 million, and while some questioned the price, Juniper always viewed it as a strategic acquisition for its AI technology and talent. Of course, adding Wi-Fi to the portfolio was also helpful. Over the last few years, Juniper has proven the platform's extensibility by adding its firewalls, wired switches and SD-WAN -- 128 Technologies -- along with Wi-Fi.
Why does this matter? AIOps technology is really hot right now. As network environments become more complex and distributed, organizations need AI technology to help drive operational efficiencies and better experiences. In addition to extending the Marvis Platform to HPE's networking products -- private 5G Athonet technology, Aruba technology, etc. -- this platform can be extended across the full-stack of HPE products, giving HPE a conversational AI platform for all components. And as Juniper CEO Rami Rahim points out, there is a compounding effect for each technology or domain added that can provide additional insight and context.
Enterprise data center networking
HPE has limited offerings for enterprise data center networking, mostly the CX10K with distributed services from Pensando, while Juniper has a significant portfolio of hardware and software offerings, including Apstra Intent-based Networking.
Why does this matter? While many are shifting applications to the public cloud, there are certain applications and industries where it makes sense to keep them in an on-premises data center. HPE will be able to offer modern, full-stack systems for enterprise data centers. More importantly, leveraging Apstra, which manages heterogeneous environments, allows HPE to get a foothold in competitive environments and provides the opportunity to sell Juniper data center networking.
Telecom operator and service provider synergies
Prior to its focus on enterprise business, Juniper focused its efforts on enabling telecom operator environments and cloud service providers. It still does a healthy amount of business in both. This includes WAN routers and Open Radio Access Network technology, plus 400 and 800 GB networking for cloud data centers. The companies already have joint telecom operator customers.
Why does this matter? The public cloud market continues to grow and the transition to 5G has created a lot of opportunities for telecom operators. HPE has a good cloud business; it can leverage Juniper to sell full-stack offerings and the same can be said for its telecom operator business.
While not specifically referenced in press releases other than to mention secure connectivity, my esteemed colleague John Grady has highlighted that Juniper's security business is more focused on data center and branch attached to Juniper networking and might be able to provide value to HPE and its acquisition of Axis security group last year.
Also, often overlooked is Juniper's acquisition of WiteSand in 2022, which might be an easier integration to the cloud-native Axis. At the very least there is some strong security talent to incorporate.
Why does this matter? Security is virtually every enterprise's top challenge, especially with the lack of available security talent. TechTarget's Enterprise Strategy Group research highlights that a problematic shortage of cybersecurity skills has been on the top of the list for six years. Converging these teams and potentially incorporating Axis to Marvis could prove to be extremely beneficial.
Generative AI infrastructure opportunities
Both companies recognize the opportunity that new GenAI environments will present for both the compute side as well as the back-end networks that support them. Both organizations are members of the Ultra Ethernet Consortium and see an opportunity to provide Ethernet-based technologies.
Why does this matter? This could be a significant area of growth for both companies, and the ability to provide comprehensive offerings could be a differentiator, especially when competing against InfiniBand. One of the keys to this is knowing these environments and having validated designs to expedite deployments and ensure optimized performance.
GreenLake and global channel partners
HPE's CEO Antonio Neri and Juniper's Rahim discussed the ability for Juniper to scale on day one to deliver internationally via the HPE channel. In addition, Juniper will be able to take advantage of HPE's GreenLake as a service offering.
Why does this matter? With more organizations looking to consume on-premises equipment as a service, HPE's GreenLake has a strong market presence, with the channel favoring this model as well.
So, there are a lot of potential synergies, but also many overlaps between the two companies. There is no magic button to push to have all of the above integrations and rationalizations completed on day one, nor can each company really do much planning prior to the close.
It will take 10 to 12 months to close the deal, a time frame during which many customers will be asking questions. Competitors will use this time to inject fear, uncertainty and doubt (FUD) into any active sales opportunities.
While both Neri and Rahim stated that Aruba and Juniper will be kept whole after the close -- there are no plans to sell off Aruba -- there will be a rationalization of product lines. Rahim, who will run the new HPE Networking entity, stated that the process will be thoughtful. Once the deal closes, significant time should be dedicated to meeting with customers personally to inform them of the plan. Until that time, let the FUD begin.
Bob Laliberte is a principal analyst at TechTarget's Enterprise Strategy Group who focuses on existing and emerging network technologies, and on application and network performance 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.