The paperwork isn’t complete yet, but that won’t stop HPE from openly showing off Juniper Networks at Discover in Barcelona. A networking giant is about to be born.
HPE is descending on Barcelona again this year for the European edition of its annual Discover trade show. Of a Spanish siesta there is no question when CEO Antonio Neri takes the stage shortly after the lunch break. The room is startled by noisy fans of the local soccer club who storm in adorned in shirts and scarves. A scarf is laid out on every seat and soon the audience is enticed to wave rhythmically along. For a moment we imagine ourselves at Camp Noú for El Clásico, but we are indeed at an HPE event. Neri also demonstrates himself at 57 to still have a refined kicking technique.
The biggest surprise of the keynote, however, is at the end. Rami Rahim, top executive of Juniper Networks, comes strolling onto the stage. The CEOs sprinkle compliments at each other. That should come as no surprise, since HPE has been working for nearly a year to complete its acquisition of Juniper. At Discover in Barcelona, Juniper will have its first physical presence at an HPE event.
If the deal goes through, it will rock the networking industry. Why is HPE out on Juniper? HPE isn’t revealing its trump card yet, but on Discover, it’s showing a little bit in its cards.
The final hurdle
The ball got rolling in January. HPE announced its intention to acquire U.S. networking specialist Juniper Networks for a hefty $14 billion. Meanwhile, the EU and the United Kingdom gave their blessing for the impending marriage. With that, the red carpet seems to have been rolled out.
Neri should be careful not to speak out of turn. The takeover may be in its final stages, but in principle the U.S. government can still put a stop to it. During a chat with the press, there is not a shred of doubt from Neri that it will be OK.
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“We have always said we want to get the deal done by early 2025 at the latest. I see no reason for concern that that won’t happen. We are on track even if it would take a few more weeks,” said the confident CEO.
Network as a binder
You don’t just put down fourteen billion dollars for a company. HPE has been buying heavily in recent years. Neri proudly tells us that HPE has completed 35 acquisitions since he took over as CEO in 2018. Not because Neri suffers from uncontrollable buying frenzy: behind every acquisition is an idea. “You can buy something, but if you don’t integrate it, you don’t create value with it,” says Fidelma Russo, CTO at HPE.
With Juniper Networks, HPE is not entering unfamiliar territory. Through subsidiary Aruba, part of HPE since 2015, it has a fat foot inside the networking industry. The network plays an invisible but important role in HPE’s hybrid cloud strategy.
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“Companies today don’t want to keep all their data in the same place, they want to keep data local where it adds value. The patterns of data are changing in hybrid IT environments. The network is then the fabric that connects everything,” says David Hughes, Chief Product Officer at Aruba.
Hughes does not fear that Juniper will become HPE’s preferred subsidiary. “At the highest level, HPE’s networking business will potentially double. There is overlap, but Juniper also operates in other areas than Aruba. If we come together, we will evolve faster to offer a broader portfolio.”
AI for network, network for AI
Neri sees Juniper Networks as the next piece of the puzzle in his strategy. “Our portfolio consists of three layers: network, hybrid cloud and AI. Computing is transforming faster than ever driven by AI. The network must evolve with it to connect all your data from the edge to the cloud. AI can only work with a network that is ready for that task, but traditional management methods can no longer keep up,” said the CEO.
Juniper, thanks to its focus on AI-native networks, fits squarely into that philosophy, HPE is firmly convinced. “AI and the network influence each other in two directions,” Hughes explains. “The network is traditionally the backbone of the data center. But AI also increases the value of data outside the data center. This changes the way a network is deployed.”
“As a network manufacturer, of course we want to make good network equipment. But to really differentiate yourself in the market, you have to go beyond the individual devices and look at the entire network management. That’s where you can make a big difference with automation and AI,” Hughes continued.
AI can only work if the network is ready for the task.
Antonio Neri, CEO HPE
Network giant
No acquisition is a guarantee of success. As confident as HPE sounds about its chances of success, its acquisition of Juniper Networks is a billion-dollar gamble. HPE wants to raise its profile more explicitly in the AI race with Juniper. There, HPE does not want to be seen as a follower. The company is convinced it can take a leading role with its hybrid strategy. Neri agrees, “AI is pre-eminently hybrid, network is the foundation. We get to own the full stack.”
Still, it will be mostly the networking industry that will rock its foundations. Add HPE and Juniper together and you get a networking giant. The networking division will then represent a third of HPE’s total revenue. Then it is no exaggeration to say that HPE is retraining itself as a networking company. Surely the industry incumbents, Cisco foremost, will be watching developments with some trepidation.
HPE and Juniper are in the final straight, but there is still a hurdle ahead. Will a networking giant be born? In any scenario, HPE intends to ride a shock wave through the networking industry.