HPE Acquires Juniper: HPE Strengthens Hybrid Cloud Proposition and Juniper Doubles Down on Enterprise Focus

Hewlett Packard Enterprise (HPE) will be acquiring Juniper Networks in an all-cash transaction worth around US$14 billion. This acquisition is set to double HPE’s networking business and current Juniper Chief Executive Officer (CEO) Rami Rahim will lead the combined HPE networking business, reporting to HPE President and CEO Antonio Neri.

This acquisition is part of HPE’s shift toward higher-growth solutions, with the explosion of Artificial Intelligence (AI) and hybrid cloud driving the demand for a secure and unified technology platform that connects and protects an organization’s data from edge-to-cloud. Juniper’s Mist AI and Cloud platform is poised to play a central role in HPE’s push in edge-to-cloud orchestration, bringing AI-native solutions to modernize networking for hybrid clouds further.

The acquisition widens the scope and capability of HPE’s networking business, while at the same time allowing Juniper to double down on its focus on the enterprise business. Juniper will be able to leverage HPE’s well-established channel ecosystem to grow its footprints in enterprise further and make inroads into the data center and cloud hyperscaler space.

While this acquisition is set to strengthen HPE’s networking capabilities and increase market share, the acquisition of Juniper will significantly fortify HPE’s GreenLake platform, the crown jewel in HPE’s portfolio of offerings. HPE will undoubtedly try to integrate solutions such as Juniper’s AIOps and Mist AI into GreenLake, presenting a compelling edge-to-cloud orchestration platform on a pay-as-you-go consumption model.

Juniper’s enterprise business has been growing rapidly, especially after the acquisition of Mist Systems in 2019. HPE’s strong positioning in the enterprise market, particularly in the data center space, will help Juniper make further inroads, in line with Juniper’s push to grow the enterprise market. Juniper can also tap into HPE’s global channel partner ecosystem, which plays a very important role in selling to enterprise customers.

This acquisition will trigger some concerns from Cisco, the incumbent leader in enterprise networking as HPE strengthens its data center offerings. Meanwhile, Dell Technologies will look at HPE’s acquisition as an addition of an industry-leading, AI-led networking solution that can prove to be a differentiator when compared to Dell’s overall infrastructure offering.

However, if there are any potential losers in this acquisition, it will most likely be the telecommunication service providers. Juniper is a well-established telecommunications networking solutions provider, with operators such as AT&T and AIS among its customers. Given the increase in enterprise focus and HPE’s limited portfolio of telecommunication solutions, telecommunication operators might be worried that this acquisition will mean less focus and innovation from Juniper, resulting in less product and solution support, resulting in a deteriorating relationship.

HPE’s acquisition of Juniper further underscores the growth and demand for the hybrid cloud. HPE is moving steadfastly in its strategic push for GreenLake as a leading hybrid cloud management platform, and the addition of Juniper’s AI-led networking solution will be an important component of this hybrid cloud strategy. This comes as Broadcom recently completed its acquisition of VMware, another important player in the hybrid cloud orchestration space. One common theme that cuts across these two acquisitions is transitioning to an as-a-Service consumption model. Both HPE and Broadcom have stated the importance of moving toward a high-margin and stable revenue stream, aligning with the broader technology industry trend of moving toward a subscription business.

Another point that needs to be addressed by HPE is the fate of the service provider business from Juniper. Based on the latest 3Q 2023 financial statement, service provider revenue accounts for almost US$420 million, representing 30% of Juniper’s overall revenue, the second largest behind enterprise. Service provider solutions have traditionally been Juniper’s strongest offerings and still command a large customer base. The question is will HPE invest and integrate its telecommunications solutions from Athonet with Juniper’s service provider portfolio, or will Juniper be asked to continue running the service provider business separately given Juniper's years of expertise in this industry. With the Juniper acquisition, HPE now has a diverse product offering for telco networks, including Operations Support System (OSS) and Information Technology (IT) infrastructure (HPE legacy) and transport networks, as well as RAN Intelligent Controller (RIC)/Service Management and Orchestration (SMO) (from Juniper).

It is still early days yet, and while on paper the acquisition seems like a complementary fit for both HPE and Juniper, it remains to be seen if this transaction will prove to be a catalyst for growth in an increasingly challenging economic environment. From a customer’s perspective, ABI Research expects Juniper’s customers to be the most anxious, especially the telecommunication operators. With significant investment and existing legacy infrastructure well entrenched in the core network, it will be crucial for both HPE and Juniper to convey their plans to their telecommunication customers or risk losing a significant chunk of revenue.

In the meantime, ABI Research expects both HPE and Juniper to continue operating as separate entities, giving competitors time to formulate and implement strategic plans in response to the expected completion of the acquisition. The messaging from competitors should focus on solution simplicity, a clear product roadmap, seamless integration, and one single vendor for all customer needs.