HPE writes $14B check for Juniper Networks to boost AI networking

After days of speculation, Hewlett Packard Enterprise has officially entered an agreement to buy Juniper Networks for $14 billion.

HPE, which has a market cap of about $21 billion, says 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.

The buy is primarily about AI technology for HPE. It gains Juniper’s cloud-based MIST AI family, which proactively manages wired and wireless networks. Most recently, Juniper integrated the ChatGPT AI-based large language model (LLM) with Mist’s virtual network assistant, Marvis. Marvis can detect, describe and help fix myriad network problems, including persistently failing wired or wireless clients, bad cables, access-point coverage holes, problematic WAN links, and insufficient radio-frequency capacity. 

Networking will become the new core business and architecture foundation for HPE’s hybrid cloud and AI solutions delivered through the company’s overarching HPE GreenLake hybrid cloud platform, the companies said in a release. The combined company will offer secure, end-to-end AI-native solutions that are built on the foundation of cloud, high performance, and experience-first, and will also have the ability to collect, analyze, and act on aggregated telemetry across a broader installed base, according to the companies. 

“Through its suite of cloud-delivered networking solutions, software, and services including the Mist AI and Cloud platform, Juniper helps organizations securely and efficiently access the mission-critical cloud infrastructure that serves as the foundation of digital and AI strategies,” the companies stated. “The combination with HPE Aruba Networking and purposely designed HPE AI interconnect fabric will bring together enterprise reach, and cloud-native and AI-native management and control, to create a premier industry player that will accelerate innovation to deliver further modernized networking optimized for hybrid cloud and AI.”

Putting further emphasis on the importance of AI in the deal, the company combination will let HPE focus on building the AI data center, wrote Juniper CEO Rami Rahim in a blog about the deal. 

“With comprehensive and data center solutions including compute, storage, and networking. HPE brings years of experience in high-performance computing, including interconnect technologies like Slingshot, liquid cooling solutions and GPU servers that all apply to the current AI data center revolution,” Rahim wrote. “By combining with our intent-based automation solution Apstra that has already been simplifying customers’ DC operations around the world, and our QFX switches and PTX series routers, we will be positioned to be a pioneer in the development of a comprehensive solution for customers building AI data centers.”

“The combination of HPE and Juniper will create a strong networking company that is well-positioned to compete in the expanding era of AI everywhere,” said Brandon Butler, research manager with IDC’s Network Infrastructure group. “There are two main aspects of the AI opportunity in networking this acquisition supports. The first is around building datacenter network infrastructure to support data intensive AI workloads. Juniper’s strength in datacenter and cloud networking will build on HPE’s broader edge-to-cloud portfolio. The second aspect of AI in networking is around AI Operations being used to enhance the management of the network. Here, Juniper’s Mist portfolio will complement the HPE Aruba networking division for AI-driven network management efficiencies across the campus, branch, datacenter, edge and cloud.”

The deal will also impact larger competitor Cisco and others such as Extreme, Arista, Fortinet and others.

In switching, Cisco has consistently dominated as the major incumbent vendor, with a 45% revenue share in 2022. HPE held the fourth position with approximately 5%, and Juniper secured the fifth spot with around 4%. A consolidated HPE/Juniper entity would climb to the fourth position, capturing a 7% market share, trailing closely behind Huawei and Arista, according to Dell’Oro’s vice president, Sameh Boujelbene.

“Juniper’s standout performer is undeniably their MIST portfolio, recognized as the most cutting-edge AI-driven platform in the industry,” Boujelbene said. “As AI capabilities increasingly define the competitive landscape for networking vendors, HPE stands to gain significantly from its access to the MIST platform. We believe that MIST played a pivotal role in motivating HPE to offer a premium of about 30% for the acquisition of Juniper.”

“Beyond giving HPE more depth in AI, Juniper also brings strengths in communication service provider infrastructure. Juniper’s RAN Intelligent Controller (RIC) platform and mobile network operator install base could be a boon to HPE’s telecommunications business unit, complementing HPE’s recent acquisition of Athonet to also provide private cellular networking services for enterprises,” wrote Will Townsend, vice president and principal analyst, and Patrick Moorhead, founder, CEO and chief analyst of Moor Insights and Technology, in a blog about the potential for a HPE/Juniper buy. “It’s also worth noting that one of HPE’s competitors, Dell Technologies, has matured its telecom offerings. Acquiring Juniper could serve as a defensive strategy to allow HPE to take more telecom share and thwart Dell’s efforts—which, until recently, was only selling common off the shelf (COTS) servers to mobile network operators. Dell’s offering has matured,” Townsend and Moor stated.

The deal isn’t all about AI however, as Juniper has other interesting technology HPE doesn’t have, such as its Apstra data center automation software. Apstra works by keeping a real-time repository of configuration, telemetry and validation information to ensure a network is doing what the organization wants it to do. Companies can use Apstra’s automation capabilities to deliver consistent network and security policies for workloads across physical and virtual infrastructures.

Since it bought Apstra in 2021, Juniper has been bolstering the platform with features such as automation, intelligent configuration capabilities, multivendor hardware and software support, and improved environmental analytics, with the goal of making the system more attractive to a wider range of enterprise data-center organizations. Bringing HPE into that mix could make the technology even more attractive.

With all that said, there is a significant overlap between the HPE Aruba networking and Juniper networking portfolios, Townsend and Moor stated. “Serious roadmap rationalization will need to occur, and without a doubt, some solutions will be sunsetted. There will also likely be a reduction in force as enterprise and service provider networking product teams and internal channel sales and marketing personnel are blended,” Townsend and Moor stated.

Juniper has long been known as a premier service provider router company, and, more recently, as darling in the enterprise networking space with the AI-powered MIST WLAN solutions, said Mauricio Sanchez, senior director, enterprise security & networking research, for the Dell’Oro Group. 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, Sanchez said.

The overlap between both is limited to SASE offerings as both have SD-WAN and SSE offerings, but the overlap in SASE should be straightforward to reconcile since HPE has a much larger business than Juniper, Sanchez said. In 3Q23, HPE was the tenth largest SASE vendor by revenue, and its business was nearly four times larger than Juniper’s SASE business (which occupied the 18th revenue position), Sanchez said.

Outside of SASE, Juniper extends HPE’s reach into the DDoS, firewall, cloud workload security, and distributed cloud networking markets, Sanchez said.

Juniper brings a number of network security technology capabilities that HPE lacks. Juniper’s reputation in the cloud and comms service provider space will help HPE’s overall credibility. However, Juniper’s network security market share is small compared to the big 3 of Cisco, Fortinet, and Palo Alto Networks, Sanchez said.

“In addition HP/HPE has had a troubled past trying to sell network security. Juniper’s security business may further be marginalized,” Sanchez said. 

“HPE has had a checkered past with company acquisitions – Colubris wireless, 3Com/H3C networking, TippingPoint security– Aruba has been a bright star,” Sanchez said. 

Upon completion of the transaction, expected in 2024 or early 2025, Juniper CEO Rami Rahim will lead the combined HPE networking business, reporting to HPE President and CEO Antonio Neri.