HPE closes deal with Juniper Networks and what it means for CIOs

Yesterday, HPE announced that after 18 months in the making and with a lot of legal negotiations, they finally received DOJ approval to close the acquisition of Juniper Networks. I jumped on a briefing with the CEO’s of both HPE and Juniper Networks to talk about the acquisition and next steps.

There are some ins and outs of this deal that warrant a bit of awareness among enterprise customers.

First, the deal was announced in January 2024 and closed yesterday morning after receiving DOJ approval on a few sticking points. We will get to those in a minute and what they mean moving forward.

The new HPE Networking division of HPE

As part of the acquisition, HPE CEO Antonio Neri announced that HPE Networking will be led by former Juniper Networks CEO Rami Rahim and encompass both Aruba and Juniper brands.

HPE is keeping both brands alive today and still looking at how best to integrate the portfolios. It is apparent they still have work to do on how best to integrate the portfolios. For existing customers of either Aruba or Juniper, little should change in the short term. Longer term, there is work to be done.

A challenge for HPE is that Aruba has been kept somewhat separate from the rest of the HPE portfolio for some time. The addition of Juniper will push HPE to fully integrate both Aruba and Juniper into the broader HPE GreenLake fold. In addition to the technical challenges, there are a few cultural hurdles HPE will need to address too. The integration will be one to watch as one of the key value propositions of the merger, and for customers, is the integration into the broader HPE portfolio.

New President and General Manager of HPE Networking, Rami Rahim stated that their “True North is a secure, AI-native, cloud-native portfolio.” It’s clear they plan to leverage the strong expertise that Juniper has built around these three areas. That’s a good move and largely expected as part of the acquisition as Juniper’s AI prowess was seen across the market as more innovate and mature.

AI: Networks for AI and AI for networks

One key selling point for Juniper was their Mist AI technology. It has long been recognized as strong value proposition for customers looking to improve the operations of their networks.

HPE’s Rahim noted that they are looking at ‘networks for AI’ and ‘AI for networks.’ Mist is the engine for AI for networks. Rahim noted that they are looking at HPE’s scale with Juniper’s network technology to build large-scale data centers for AI. HPE’s innovation from silicon to systems to software was also noted.

DOJ requirements

As part of the deal, the DOJ is requiring HPE to take a couple of steps.

First, within 180 days, HPE needs to fully divest its Instant On business including assets and intellectual property. Instant On products target the small-medium business market and largely outside of HPE’s core market. So, this should not be a big deal for HPE.

Second, and the most interesting, is the DOJ’s requirement that HPE license Juniper’s AI Ops for Mist source code. The auction will offer a perpetual, non-exclusive license with support. While this opens the door to competitors who vie to get their hands on the technology, HPE is looking beyond at the overall value proposition they bring to customers. Still, it’s a huge hit in the value proposition and competitive leverage that HPE could have had without the need to auction the source code.

Competitive landscape

That brings us to how this impacts the competitive landscape. The Juniper acquisition essentially double’s HPE’s networking business and will provide >50% of the total company operating revenue. I’m sure there are significant objectives setup for the HPE and Juniper teams to ensure they continue to meet those targets which could play out in some interesting ways.

HPE plus Juniper brings two of the top three networking competitors together. The third is Cisco. While the HPE + Juniper powerhouse has the potential to provide significant value to customers, the details are still being worked out on how exactly this happens. The real questions will be a) how Mist gets integrated into HPE Networking, b) how the Aruba and Juniper portfolios get integrated, c) how HPE Networking plays a more integrated role with the rest of the HPE portfolio and d) what the roadmap looks like moving forward…namely how AI will play a role. During the briefing, the leaders were light on details.

Notably, at both RSAC and CiscoLive, Cisco took significant steps forward in terms of how they are leveraging AI into their portfolio. In many ways, the Cisco roadmap looks impressive and a formidable competitor for HPE plus Juniper.

The potential of HPE Networking plus the rest of the HPE GreenLake portfolio has the potential provide a strong server, storage, network, software story. I wrote about HPE’s move across the portfolio to engage AI.

Cisco already has strength in networking, security, hyperconverged infrastructure and observability. In addition, their announcements around AI at RSAC and CiscoLive in the past couple of months were impressive.

Other competitors such as Fortinet, Extreme Networks and Arista are still viable solutions, but I expect to see consolidation among smaller players to maintain scale and innovation.

CIO Perspective

What does this mean for CIOs? In the short term, not a whole lot. There is still a lot to figure out in terms of integrating the portfolios. Outside of HPE Networking, how will the networking products further integrate into HPE GreenLake and their software stack? In addition, what happens with Juniper’s Mist technology? Where does HPE integrate and leverage it into the stack?

The power play here is less about the hardware and more about how software is used to capitalize on the hardware. Hardware is largely getting commoditized, but when you have the power to leverage silicon to software, edge to cloud, you can optimize in ways that differentiates from others.

So, today’s message is: stay the course. Watch for the software plays in the infrastructure space as those will ultimately provide the strongest value for enterprises.