HPE to acquire Juniper Neworks for $14b

HPE announced last week that it is acquiring Juniper Networks for $14 billion. The deal will double HPE’s market share in the overall network market, but will do little to dent those of either Huawei or Cisco – the stand-out leaders of the ‘Service Provide’ and ‘Enterprise’ sub-divisions of the network market.
Juniper’s performance over the last 10 years has been steady; its total quarterly revenues have consistently been between $1 and $1.5 billion and it has posted quarterly losses only three times. The ratio of its hardware sales have been split between routers, switches and SLT products in an order of around 60:30:10. The proportion of its sales to Service Providers has declined from around 67% in 2013 to around 33% in 2023.
HPE’s network business has shown stronger growth in recent quarters, with a quarterly revenue now almost twice the level ten years ago. It will add Juniper to the 4 companies (OpsRamp, Axis, Athonet and Pachyderm) it acquired in 2023. Looking further back, HPE has picked up a number of other US-based hardware companies – most notably SGI, Polycom, Cray, Nimble, Simplivity and Aruba. In fact the addition of Aruba in 2015 – during the period HP split into HPE and Hp Inc. – allowed it to modernize its overall approach to the network business.

However neither Juniper nor HPE have been market leaders in the worldwide network market (I show their market share development in my Figure above). Unlike Juniper, HPE has been growing quickly since the end of the pandemic.

Looking at the total network market in the year to the end of Septembe4 2023, the 2 companies held a market share of 4.2% – enough to overhaul NEC and challenge Chinese suppler ZTE; but nowhere near getting to the top positions in this $209 billion market. At announcement HPE indicated that the addition of Juniper will help it in supplying networks to the rapidly growing AI market. The new combination will provide stronger competition (with products such as Juniper’s QFX10000 100-Gigabit Ethernet switches) for Nvidia Mellanox Infiniband networking in HPC datacenters for ML and AI applications; however I’d be surprised to see this move challenge Nvidia’s incredible AI success seriously in 2024. We will have to wait until the end of 2024 or early in 2025 before the acquisition is complete.