HPE-Juniper merger faces antitrust inquiry in UK

An inquiry into HPE’s $14 billion takeover of Juniper Networks by the UK’s Competition and Markets Authority (CMA), a move that potentially could delay approval of the deal, will have little impact on data center managers, an analyst with Info-Tech Research Group said.

“HPE and Juniper have different but complementary product lines in the data center,” said John Annand, Info-Tech’s research director for infrastructure and operations. “Would it be nice for a DC manager to only have to deal with a single vendor for their servers, storage, and DC networking for the planned refresh in Q1 of 2025? Of course it would. If they have to buy from two vendors (or from HPE Greenlake but with an incumbent partner like Cisco for DC networking), will that delay or materially disrupt the refresh? Not at all.”

Both companies were informed of the inquiry by the CMA, the UK’s principal antitrust regulator, on Wednesday.

As for data center managers having to wait for new offerings from the two, Annand said that new products from the combined HPE-Juniper “chimera have always been speculative at best. Juniper will likely behave much like Aruba when HPE first bought them to supplement the homegrown Procurve/3Com line. The only product family in which I expect significant and immediate advancement would be their AIOps. Much like when HPE bought Nimble and then quickly dispersed the talent into 3Par and their other storage product teams, Juniper has a compelling artificial intelligence enhanced operations strategy.”

HPE customers who were hoping for an Ops platform that would control server, storage, and networking using fully natural language commands are going to have to stick with GreenLake for now or wait until probably 2026 at the earliest, he said.

Little roadmap overlap

When HPE announced its intention to acquire Juniper, Annand said, it “strongly hinted that the roadmaps for both companies’ products would remain materially unchanged post-acquisition. There is very little overlap between what HPE and Juniper sell anyway unless you are a telco provider. Despite investing heavily in 5G technologies, HPE was not historically getting a lot of love from the telcos, except for one deal with Comcast. And even then, that was mostly for their HCI server platform.”

Annand said he’s no competition law expert, but noted that the CMA had only announced a so-called “Phase One” inquiry, to see if a more thorough Phase Two investigation is warranted.

“The CMA has not released a hypothesis as to why this merger might interfere with fair trading, nor, as I understand it, are they required to. We will not know the likelihood of a delay or scuttling of the merger until we see the submissions from interested parties,” he said. Considering the likely effect on the market, he added, “Juniper is 10% the size of Cisco and one-quarter the size of HPE. They have complementary and not competing products, and the size of the newly combined company is not out of step with other Tier One IT Infrastructure companies.”

When the deal was announced in January, HPE, which has a market cap of about $21 billion, said the acquisition is expected to double its networking business by adding a significant, though somewhat overlapping, campus and data-center product lineup. Juniper’s enterprise networking business was the largest of its three core divisions — cloud, service provider and enterprise — in the first quarter of 2022 for the first time in Juniper’s history, and it has continued to grow since then. Juniper’s market cap is about $12 billion.

Mauricio Sanchez, senior director of enterprise security and networking research at Dell’Oro Group, had prevously described the acquisition as a “tectonic shift” for the networking industry and extends HPE’s reach into distributed denial of service (DDoS) attack protection offerings, firewalls, cloud workload security, and distributed cloud networking markets: “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. However, both firms have a wider portfolio that spans the network security and SASE/SD-WAN technology landscape.”

He said key strengths of the deal are the fact that Juniper brings a number of network security technologies that HPE lacks, and that its reputation in the cloud and comms service provider space will help HPE’s overall credibility.