Juniper targets cloud, mobile Internet in 2011

Juniper‘s (NYSE: JNPR) strategic initiatives in 2011 and beyond are cloud computing and the mobile Internet.

In cloud computing, Juniper next year will unleash products to support its Project Stratus plan to deliver a flat, unified fabric for data centres and cloud computing environments. The products will include switches and routers designed to be able to be linked together into a virtual chassis.

Juniper has also lined up IBM (NYSE: IBM) to help it develop the Stratus fabric. Stratus is designed to flatten and scale data centre and cloud switching fabrics for high-performance, low latency, resiliency and support for LAN and storage convergence.

In the mobile Internet, Juniper is acquiring companies to fill out its portfolio in several areas of this market. Most recently, it acquired WLAN pioneer Trapeze Networks from Trapeze parent Belden to fill a yawning gap in its mobile enterprise offerings. And earlier this year, Juniper acquired SMobile, a maker of security software for mobile handsets supporting an array of operating systems.

Juniper CEO Kevin Johnson recently prepared analysts for major thrusts in cloud computing and mobile Internet in 2011:

“We are beginning to add key sales and marketing resources ahead of several planned launches in 2011,” Johnson said during Juniper’s third quarter conference call in mid-October. “We are positioning for the opportunities we see in 2011.”

Overarching the cloud computing and mobile Internet initiatives is Juniper’s software strategy. Juniper is also bolstering its software prowess by lining up third-party development partners for its three platforms: JUNOS, JUNOS Space and JUNOS Pulse. In this effort, Juniper is looking to emulate the success Microsoft ‘s (NASDAQ: MSFT)and Apple have had in recruiting hundreds of software partners to their products and platforms.

And the foundation of them is Juniper’s 30 per cent share of the service provider router market and burgeoning enterprise business. After shipping its first product in 1997, Juniper is now a $4 billion company with a 65 per cent-to-35 per cent split between service provider and enterprise, respectively. The company is targeting annual growth of 20 per cent.

Juniper is second to Cisco (NASDAQ: CSCO) in router market share. The company just unveiled its newest Internet core router, the T4000, which aims to double the performance and capacity of Cisco’s largest machine, the CRS-3. In addition to technical agility, Juniper, Cisco and everyone will be challenged by regulations and recent regulatory ambiguity.

“Content monetization is hostage to net neutrality issues,” says Tom Nolle, president of consultancy CIMI Corp. “They, like everybody else, have got to try and navigate their messages through an uncertain regulatory and business framework. We don’t really know how all of that is going to shake out.”

In the enterprise, the road is a bit tougher. Cisco virtually owns the Ethernet switching market with a 72 per cent share of the $19.4 billion in worldwide revenue for 2010. Juniper owns less than two per cent but that’s from zero per cent 30 months ago.

The challenge is growing that business beyond a half billion dollars, which many over the years have found hard to do against Cisco and HP. It will require a receptive channel, analysts say.

“Almost all (switching companies) have a difficult time breaking over the $100 million/quarter wall,” says Zeus Kerrvala of The Yankee Group. “A lot of the channel is saturated by Cisco and HP. How does Juniper manage to capture some of the channel from the two big heavyweights in that space?”

Another is being too reliant on partners for lucrative new opportunities, like virtual data centres and cloud computing. Messages can get mixed if there are too many messengers.

“Juniper relies very heavily on its relationships with IBM and Dell,” Nolle says. “It’s always hard to sing a song through a third party.”

Nolle also notes the possibility that IBM may have to get into the networking business. IBM did recently buy BLADE Network Technologies, a company that makes blade switches for data centre racks. BLADE is also a technology partner of Juniper’s and has some products that overlap a bit in top-of-rack applications.

In enterprise routers, Juniper is second to Cisco in high-end router market share, according to Dell’Oro Group. In the third quarter of 2010, Juniper had a 19 per cent share of the $139 million in revenue generated for the quarter. But this is down from a 26% share a year ago.

In access routers, Juniper has a two per cent share of the $705 million market in the third quarter. Cisco had an 87 per cent share of that market. HP was No. 2 with three per cent, according to Dell’Oro.

“In many ways, they’re viewed by the enterprise as that cool alternative vendor to Cisco,” Kerravala says. “Cisco is the pervasive, de facto standard; Juniper tends to be the Mac, the cool, viable, technically superior alternative to Cisco.”

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