The HPE/Juniper deal had a lot of promise from the first, and also a lot of risk. M&A in the tech space these days isn’t exactly a cakewalk, after all. But from the most recent earnings reports, it looks like the deal is navigating the reward/risk space reasonably well. There’s no reason to doubt the views of HPE’s CEO (Antonio Neri), stated on their earnings call: “Phase 1 of our Juniper integration is complete. We remain on track to achieve our fiscal ’26 synergy targets.” The big question is the next statement: “As we move to our second phase, we are focused on building a new networking market leader by aggressively executing our strategic product and software roadmap while driving revenue synergies through our go-to-market scale.” The key word is “strategic”, and I want to refer to a blog I did last fall to address it.
There are two ways that HPE could build a new networking market leader. One is to leverage the sales force and account relationships of HPE and Juniper to cross-sell. Sales of networking and server technology today, according to enterprise buyers, is largely leveraging enterprise plans to expand the data center. The other is driving new missions that create those plans. Tactical, then strategic.
What enterprises tell me is that HPE/Juniper is doing very well in the first of these areas. If you reference my blog, which talks about a Street presentation made last fall, the “Creating a new networking industry leader” step is succeeding for HPE/Juniper, without question, and this provides two key and almost immediate benefits relative to rival Cisco.
The first benefit is in networking. The cross-selling of Juniper gear gives HPE a way to leverage Juniper in its own server accounts. Where projects that involve network upgrades are in play, HPE/Juniper is more likely to see them and more capable of responding quickly at the sales engagement level, which is a good thing. Enterprises tell me that this is working for HPE.
The second benefit is in the server sales. Cisco has no significant server position with enterprises, no significant influence in that area. Since many of the data center network upgrades also involve server purchases, HPE is now able to use Juniper’s sales force to pull their servers into projects they would have missed otherwise. That, according to enterprises, is also working.
OK, that’s tactical success, then. This is the level of engagement that’s driving the current results HPE is reporting, and I think that’s consistent with what Neri says in his comments on the earnings call. What about strategy?
The only enterprises who offered any negative comments on HPE/Juniper focused on this area. Almost all enterprises are a bit frustrated by the AI hype because it’s making any attempt at AI planning difficult. They’d love to see someone straighten out the mess, and a big part of that is unraveling the relationship between AI overall, self-hosted AI, and networking. All vendors seem to say that you need to prepare for AI, prepare everything, but enterprises know that to make a business case, they need to prepare for applications, for missions. So they look to a vendor like HPE, who now has a unique mix of IT and networking, to help them strategize.
Strategic influence is something I’ve measured for decades, in some way or another. Through the entire period, two truths have emerged. First, data center technology is actually the biggest driver of network technology. If you talk to enterprises about why they might change how they do networking, the biggest reason by far is that they’re changing the applications and hosting technologies they use in some way. Second, IBM has consistently had the highest level of strategic influence of all data center vendors. In the last year, they scored roughly a third higher than any of the others (HPE, Dell, SMC).
Strategic influence is what lets a vendor get involved in a problem, a need, before it becomes a project. Their influence usually makes a major difference in how quickly a problem or opportunity can be translated into a business plan that then drives IT procurement. So, if HPE’s next phase is to influence strategy, it’s important to see whether their strategic influence is improving.
If you’re tired of a two-options approach, I’m going to disappoint you by introducing another. One compares their influence to Cisco, and the other against the broad metric of the ability to drive project evolution. Against Cisco, HPE is clearly superior in potential now, because Cisco rival Juniper has no significant enterprise server influence today, and HPE/Juniper has. However, whether that difference is important depends on whether the influence is actually bearing fruit in terms of new projects for which HPE/Juniper has a leg up. It’s less a matter of whether then can compete better on an RFP than whether they can induce one to be launched and wire it to maximize their own chance of winning.
In this regard, enterprises say that HPE/Juniper isn’t there yet, to the point where some are actively upset at what they’re hearing. Overall, I don’t see any statistical difference in HPE/Juniper’s strategic influence with enterprises, versus the two separately, and the “why” largely comes down to AI.
AI is the primary strategic driver of data center change, and so if network change. It’s not that AI necessarily creates things like traffic, but that it creates potential new business cases. As they used to say in the space program, no bucks, no Buck Rodgers. Enterprises are struggling with AI because their own project knowledge collides with the popular comments on AI usage. Enterprises don’t see much of a business case from cloud-hosted AI, nor do they see much of a traffic change or network change created by connecting AI users to self-hosted AI. They do see new AI agent missions that use AI to augment current applications and workflows, and these agent missions drive real data-center-network needs and potential increases in the number of users who might employ some applications, thus impacting the traffic levels and potentially the QoS even in the WAN.
For over a year, enterprises have told me that IBM is unique in understanding how they would see and adopt “AI agents”. They still say that about IBM, but they don’t yet say it about HPE. That makes what I think is the most critical point about future networking benefits of HPE/Juniper; you cannot drive new projects in AI without being able to drive AI agents as applications; networking AI is meaningful to enterprises only if they have AI to network.
I think HPE is trying to address this, but not in a systematic way, and more aimed (it seems) at large-scale AI providers like sovereign AI than at enterprises. I interpret the specific unhappy views of some enterprises to their disappointment with sales comments on the strategic points, which says that at least some salespeople are getting asked to provide insight and aren’t able to do that yet. This frames a risk; it’s one thing to fail to exploit an opportunity to realize strategic influence on an account, and another to fail to look strategically credible. HPE may have to work on that.
