HPE confirmed on Wednesday that it is acquiring router and security giant Juniper, deepening its foothold in the service provider, security and SASE/SD-WAN segments.
The acquisition has benefits for both HPE and Juniper. HPE enhances its networking business while growing Juniper’s footprint in data centers and cloud providers.
Further, HPE said the acquisition increases the scope of its networking business and will create opportunities to provide even more comprehensive solutions to Juniper’s installed base of enterprise customers, communication service providers and tier-one cloud customers, as well as launches HPE into adjacent large segments, including data center networking, firewalls, and routers. It also grows Juniper’s footprint in data centers and cloud providers.
Antonio Neri, President and CEO of HPE, said he sees a lot of upsides in the telco and service provider market segment by acquiring Juniper. The routing vendor has strong customer ties to large Tier 1 telcos and providers like AT&T, Crown Castle, Deutsche Telekom and Equinix, so this deal could further bolster the company’s position in this market.
“When you look at the CM&E (Communications Media and Entertainment) segment, which includes telcos, it is one of the top two segments HPE participates in today,” he said. “The two largest segments where HPE generates a lot of revenue are telco and financial services.”
He added the two companies bring complementary solutions to the service provider and telco markets. "Juniper has a long history in the service provider and the telco segment,” Neri said. “HPE has been working on disruptive technologies in terms of the virtualization of the network, so I am excited to see what we can do with Juniper because HPE brings additional software into that market.”
Rami Rahim, CEO of Juniper Networks, agreed. “A lot of people will this deal bet on the enterprise side, but it’s not just enterprise,” he said. “It will drive greater relevance and more portfolio pieces for service providers and cloud providers.”
Rahim said Juniper’s marriage with HPE will further bolster the capabilities of the data center market segment. “Everyone is building data centers,” he said. “Cloud providers are building data centers, and service providers are building data, so if we have more capabilities to enable these modern data centers with every component, it’s great for everyone.”
Security service synergies
Acquiring Juniper networks will enable HPE to address the need for more security platforms.
Service providers and enterprises seek platforms to secure their networks or provide managed security services to their business customers.
Managed security is set for growth. According to Mordoor Intelligence, the managed security market is forecast to grow to $36.1 billion in 2024. It is expected to reach $76.1 billion by 2029, growing at a CAGR of 16.11% during the forecast period (2024-2029).
“In security, the combination of the two companies addresses that gap overnight,” Rahim said. “It will also address go-to-market scale and brand awareness.”
In a blog post, Mauricio Sanchez, senior director of enterprise Security and Networking Research for Dell’Oro, said that the combined company will have a deeper set of security and SD-WAN offers.
“HPE has been in the networking industry even longer, going back to the 1980s, and most recently, a well-regarded enterprise networking player with Aruba campus solutions,” he said. “However, both firms have a wider portfolio that spans the network security and SASE/SD-WAN technology landscape.”
While Juniper’s network security market share is small compared to the big 3 of Cisco, Fortinet, and Palo Alto Networks, Dell’Oro’s Sanchez said that “Juniper brings several network security technology capabilities that HPE lacks, adding that the company’s reputation in the cloud and comms service provider space will help HPE’s overall credibility.”
Regardless of Juniper's challenges, he sees that the combined company can enhance its stance in the security segment.
Sanchez said that HPE can align with “Axis Security for SSE for both HPE and Juniper customers to accelerate uptake and “enable the total HPE salesforce to sell all Juniper products.”
Ramping SASE/SD-WAN
The acquisition also enables the combined company to further its SASE/SD-WAN business.
Consisting of SD-WAN and SSE (security service edge) solutions, the SASE market grew 33 percent to $2.2 billion.
Dell’Oro Group said in its recent third-quarter roundup that the SSE and SD-WAN portions of the SASE market have nearly doubled in the last ten quarters, indicating that enterprises are thinking about both sides (networking and security) of the SASE coin.
According to the research firm, HPE was the tenth largest SASE vendor in terms of revenue, and its business was four times larger than Juniper’s SASE business. The research firm said that Juniper’s SASE business had been taking the 18th revenue position in the segment.
Sanchez said due to HPE’s larger position in the SASE market, the overlap between both is limited to SASE. Outside of SASE, Juniper extends HPE’s reach into the DDoS, Firewall, Cloud Workload Security, and Distributed Cloud Networking markets.
“Both have SD-WAN and SSE offerings to provide a single-vendor SASE solution,” he said. “The overlap in SASE should be straightforward to reconcile since HPE has a much larger business than Juniper.”
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