Juniper turned in a nice quarter, a quarter whose success was largely due to the cloud and its impact on switching and the data center. Since Juniper is a small-ish player in the networking space, a successful focus on something emerging like the cloud could have a disproportionate impact on its numbers. That could mean, of course, that there is an emerging cloud space, and that’s a worth focus for a discussion.
In order to do cloud computing you need a cloud (obviously), and that starts with one or more data centers. In fact, as cloud computing advances toward broad success (if it does), we could expect its greatest impact to be the building of cloud data centers or the transformation of “ordinary” data centers to cloud-ready form.
A cloud data center is characterized by a dense server population (I hate to use the word “hyperconverged” but it’s out there) that’s connected by a high-capacity switching system. The mandate for the switching is to create a “flat” architecture in a delay and packet loss sense, meaning that any server-to-server path has much the same characteristics. The reason to demand this is that component connection in the cloud could impact performance of applications disproportionately because of the increase in inter-component traffic. If you don’t have a flat connection architecture you’d have to limit your hosting assignment to systems that had a suitable connection, which makes the resource pool smaller and less efficient.
Juniper was, back in the old days, reluctant to even get into switching. I can remember discussions I had with Juniper management pushing the notion (I had similar discussions on getting into optics) and there was little interest until about a decade ago. Since then, though, Juniper has been pretty aggressive in framing a high-performance switching product set, including a really interesting fabric architecture called QFabric whose QFX products are among Juniper’s successes this quarter.
If QFabric was a technical success (and it was) it was a bit of a marketing whiff. The cloud came along and provided the context for deployment, though, and there’s no question in my mind that Juniper’s switching for the cloud is among the strongest offerings available. The question is how much of it will happen, and how Juniper would perhaps advance its own cause by leveraging it.
You can’t have cloud data centers or data center switching without the data centers. The largest single opportunity for creating new data centers would be the telco cloud, which means NFV. My model has shown that a global, optimum, deployment of the carrier cloud and NFV would add about a hundred thousand new data centers. That would mean a huge jump in the total addressable market for QFX, of course, and something Juniper should have been all over from the first.
They got a bad start with NFV, though. The “Microsoft crowd”, led by CEO Kevin Johnson, didn’t even understand the difference between SDN and NFV and created no useful NFV position during the early critical time of the ETSI NFV ISG’s work. Their current position on NFV is muddy; they seem to have a higher regard for the “virtual CPE edge-hosting” model than for the cloud-hosted model even though it’s the latter that would promote the carrier cloud and Juniper’s switching portfolio.
No aspiring switching kingpin should ever dream of compromising the carrier cloud value proposition to sell a few edge appliances or router boards. In fact, what they should be doing is talking about ways to promote the expansion of the cloud data center paradigm and technology outward from the data center to create broader success.
Edge NFV is a competitive throw-away. If you’re hosting functions in CPE or router boards, it’s difficult for the architecture to create any competitive advantage for you because operators would demand multiple sources and the sales are onesy-twosy in nature. If you’re building a cloud data center, once you get a win there it’s hard for you not to get the follow-on sales. It might also be easy for you to then attack things like data center interconnect (DCI) and even extend your story out to the network edge.
Juniper’s notion of the “Cloud-Enabled Branch” could be a good one, but the collateral for the concept is weak and it’s not directed at the logical evolution of the model’s consumer. You can’t cloud-enable a branch without a cloud, and without cloud services and applications. You have to make a very strong place for yourself as the foundation of a cloud network, and the collateral doesn’t do that. They do have a nice white paper on the topic of network automation that is better at promoting the Cloud-Enabled Branch than the specific collateral is, but when I asked for the Cloud-Enabled Branch material, they didn’t provide it. The material they did provide talks about a lot of Juniper products, but not QFX.
There’s still time to get this right, though. Juniper’s competitors don’t do much better in positioning their products. Probably the issue for both Juniper and the competition is the desire to buff up the current quarter rather than try to promote a long-term evolution. That’s kind of like treating the symptoms and not the disease; your sales world is an endless cycle of tactical engagements. However, it can still work if nobody gets it right, at least for the enterprise.
I think that for every vendor in the cloud space, including and maybe especially Juniper, the carrier cloud is really the issue. The data center has, for over a decade, been the focus of setting networking policy. Vendors who won minds and hearts there won overall. If you want to target the data center, do you target the 14,000 enterprises who have cloud-scale opportunity, or a dozen operators whose collective data center opportunity could be ten times what the combined enterprise total would be?
So that’s what Juniper’s quarter says Juniper should be doing. Also, of course, what Juniper competitors should be doing, including Arista, who analysts on the Juniper earnings call felt was Juniper’s big competitor. Here again, Juniper may have an edge because Arista is a bit more partner-focused, which makes it harder for them to target the telco space, and other competitors (notably Cisco) are busy defending against NFV rather than supporting it.
Of course, Juniper has had opportunities before and muffed them, and so have their competitors. A lot of this is a matter of revenue prioritizing in age when only the current quarter counts to the Street, and a lot to a technical culture that all tech companies have. It’s going to be a matter of who overcomes obstacles first, and whether the opportunity will wait for anyone.
