Hi Mario, as I poked around the JNPR website and read information there and in previous PR, JNPR is quoted as saying they don't want to compete with their customers. Maybe true, maybe not. Maybe they just saw fatter revenues serving the SPs, and wanted to not get distracted with trying to make too many kinds of equipment initially, especially since JNPR's forte was/is 'special purpose-built core IP routers.' Consider, too, the time during which JNPR was launched as a company, and the unforeseen slowdown in the sector. That was the segment where they felt they had the greatest product differentiation from others, esp CSCO. Such differentiation may not exist to the same degree for enterprise-level devices.
But with the slowdown in capex from SPs for IP-based networks, the potential pool of customers that JNPR had initially targeted has suddenly shrunk. So what was an initially successful 'focused' approach for a new company has come back to bite them a bit. I think JNPR probably has a wide range of ideas of how to serve other market segments, and the edge market is a clear example. JNPR may also get more growth outside of the US where the backbone IP networks may not have caught up with the build we saw here. Eventually even the ILECs in the US will 'get the IP religion,' as the JNPR exec noted recently. But in the meantime, I have a strong suspicion based on past and current behavior that the ILECs will be slow to change. Also, the ILECs are concerned about making all their systems work interchangeably insofar as routing signals. Since much of the legacy traffic the ILECs handled was purely voice, with little tolerance for poor QoS, they are sensitized to this aspect of their business. Thus, if JNPR must rely on the ILECs for core router spending in the future, this presents some hurdles. OTOH, I do think the long-haul data traffic SPs will coalesce into a few players within the US (after undertaking some reorganization of debt and equity), and those customers have a history of using JNPR products already (look at JNPR's prior customer list).
I think the edge products will provide a new growth area for JNPR, but there are many more players in that space.
As an aside, I think Riverstone Networks RSTN looks attractive in the metro network router arena, both insofar as variety of customers, not being overextended, and being in a market that will see more growth than the core/backbone market. Still doing my initial DD, wish I'd done it before their haircut to $4 recently, and like others will be looking to buy on pullbacks (esp if NT warns and the telecom stocks all get whacked).
Hope you get more than a pat response from JNPR.
Regards, Rich |
