The Six Five team discusses HPE Buying Juniper.
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Transcript:
Daniel Newman: Let’s talk about HPE and HPE buying Juniper. So this one’s with me. But Pat, look, it happened really quickly. It happened really quickly. Now, where it started for me was I got some rumblings from some journalists. I heard a few journalists starting to track the story. I think it broke on the Wall Street Journal or Bloomberg. I heard from one of the Wall Street Journal. By the time I had a chance to call back, the deal had been announced. So you and I were lucky enough to share some time with both CEOs and have the opportunity to ask some questions. So we talked to Antonio Neri and Rami Rahim, the CEOs of both companies. And look, there is a unified belief between these two CEOs that together, from branch to edge, to cloud, they’re going to be able to come up with a comprehensive networking portfolio to support the massive growth of AI. When I say AI on-prem, I’m basically talking about private cloud and AI.
And I believe it has a lot to do too with being able to deliver consumption based compute networking offers for customers in the GreenLake platform. And that’s been the focus of Antonio Neri now for multiple years. This gives excess portfolio competency capabilities, capacity and customers. It definitely adds meaningfully to HPE’s telco portfolio. Juniper has incredibly deep roots in that area, very successful long time. Provides equipment to many of the world’s largest telcos. And of course, there’s a component of what they’re going to be able to provide to cloud providers. And so that is another opportunity for HPE.
Am I immediately confident that this is going to be a creative to growth at the same rate as Antonio Neri and Rami Rahim? My gut tells me that together they can eliminate one source of meaningful competition. And then instead of focusing on having HPE, Juniper and Cisco, now HPE and Juniper can just focus on Cisco. Now, I mean you have Arista, you have others that are out there. But I do think that that’s a big part of the story of what HPE and Juniper is focused on. I think that the synergies, they’re talking about nearly half a billion in three years. I think that will be achievable. I tend to believe that most companies are over their skis on what they’re spending, and you can definitely get synergies. Nobody has proven that more than the CEO of Broadcom, Hock Tan, of what’s achievable.
And I don’t want to make this just about personnel, but just about everything from go-to-market strategies. I mean, look, Pat, you can take one of the logos off one of the cars. I’m pretty sure Juniper and HPE both sponsor F1. They might even be on the same car. Well, there’s a hundred million in savings. But look, I think the engineering capacity and capabilities, I think the opportunity to package it, GreenLake it, make it consumption based. And the opportunity right now to build data centers for AI, especially for enterprises that have substantial AI workloads on-prem, is palpable. It’s a coming together that has all the markings and makings of success if it can be done correctly. But Pat, as someone who’s done a few acquisitions, not nearly at this magnitude, I can tell you the execution oftentimes far outstrips the strategic opportunity.
Patrick Moorhead: So this one’s an interesting one in that it’s hard to have a definitive hot take. There’s a lot of caveats here. I mean, financially, it makes sense for both companies. It’s a creative immediately and Juniper stockholders get something. But that’s not how we look at things as industry analysts. We look at them more strategically. What I’m trying to get through is the, oh, we’re bringing different things, but we have all this overlap.
And I got to tell you, it’s been hard to muscle through because when I look at the AI capabilities with Mist, which by the way, that is a definitive winner here, and then I look at things like Aruba Central that pull things together. How, if there’s duplication, are the regulators going to look at that? Is it that they have such small market share compared to Cisco and it doesn’t matter? Or are there different things to be put together? I mean, Juniper was a telco play without Mist. Mist made it a data center play. But that doesn’t mean that they’re going to go in there and steal the core switch leaf and spine and everything from Cisco. It’s very difficult, unless you’re Cisco, to get anything in there but the edge. And this is exactly where HPE has been so strong with Aruba. Not that HPE does do some data center networking, but it’s not, market share wise, a big player.
So I need to do a lot more work on this. Will, my VP and principal analyst of networking, cranked out a piece on the website. You could find it in the show notes. But this I think is going to take a little bit more research on my side to get it. There are puts and takes. In the end, Daniel, like you said, it’s going to come down to execution and integration to make this work.
Author Information
Daniel is the CEO of The Futurum Group. Living his life at the intersection of people and technology, Daniel works with the world’s largest technology brands exploring Digital Transformation and how it is influencing the enterprise.
From the leading edge of AI to global technology policy, Daniel makes the connections between business, people and tech that are required for companies to benefit most from their technology investments. Daniel is a top 5 globally ranked industry analyst and his ideas are regularly cited or shared in television appearances by CNBC, Bloomberg, Wall Street Journal and hundreds of other sites around the world.
A 7x Best-Selling Author including his most recent book “Human/Machine.” Daniel is also a Forbes and MarketWatch (Dow Jones) contributor.
An MBA and Former Graduate Adjunct Faculty, Daniel is an Austin Texas transplant after 40 years in Chicago. His speaking takes him around the world each year as he shares his vision of the role technology will play in our future.
