Juniper Networks saw its share of ups and downs in 2013.
The company last week, however, ended the year on a high note, reporting fourth-quarter earnings that exceeded analysts' expectations and showed signs of growth in both its enterprise and service provider business. Specifically, Americas service provider revenue was up 6 percent year over year, and Americas enterprise revenue was up 29 percent year over year.
The 12 months prior to last week's financial report weren't smooth sailing, though. Juniper's channel team, for instance, was shaken by a number of high-level executive departures that left more than a few partners worried. Meanwhile, reports of Juniper pursuing a sale of its enterprise business continued to swirl.
But newly appointed CEO Shaygan Kheradpir said Juniper -- thanks to its service provider roots -- is better positioned than ever for growth.
"Our history and DNA is well-suited toward where the world is going," Kheradpir told CRN in an interview at this month's Juniper's Global Partner Conference (GPC).
Kheradpir replaced five-year Juniper CEO Kevin Johnson and officially took the helm of the Sunnyvale, Calif., company Jan. 1. He joined Juniper from Barclays, where he was COO, but also spent 10 years at Verizon, where he was an original member of the management team and ultimately CIO and CTO of telecommunications giant.
Upon Kherdapir's appointment, some Juniper partners questioned whether the company would be placing a bigger bet on its service provider business and potentially shift its focus away from its commercial or enterprise segment.
But, as Kherdapir sees it, those two customer segments are actually much more similar than some partners think. His theory, according to his message at GPC, is that the rise of advanced, hybrid cloud ecosystems and the enterprise's recent push toward services-based IT are blurring the lines between the demands of Juniper's service provider and enterprise customers. In other words, Juniper's two marquee markets are starting to converge.
"The future of every segment of our customers -- enterprises, service providers, cable companies, Web 2.0 companies [that are] small, medium and large -- they all are converging onto the same place," Kheradpir said at GPC.
Kheradpir called this convergence a "grand opportunity for Juniper and its partners," given the company's DNA in the service provider segment and its history of providing carrier-grade networking equipment.
In his interview with CRN, Kheradpir said that this convergence between Juniper's service provider and enterprise customer segments already is starting to show in Juniper sales.
"When I look at [Juniper customers'] buying behaviors from last year, you see carrier equipment that I would have never thought being purchased by enterprises. You had things that we typically think of as being 'enterprise' being bought by carriers," Kheradpir said. "Everybody wants big, tall firewalls that can't go down, and everybody wants a controller and everybody wants automation."
David Helfer, vice president of worldwide channels and commercial at Juniper, said he sees a higher percentage of Juniper's U.S. service provider business being sold through the channel than ever before. Juniper later declined to give a specific percentage of those sales.
Helfer also said that Juniper recently moved John McEntee, senior director of service provider field operations, into the U.S. channel organization to infuse his service provider roots into the team.
"[McEntee's] role is working for [U.S. channel chief] Jon Belcher and to wake up every single day and look after, care for and make sure that all the programs we are coming out with will support those partners," Helfer said. "That partner base is growing and the lines are getting a little bit blurred."
THE 'CONVERGENCE' EFFECT ON PARTNERS' BUSINESS
Some Juniper partners say they starting to see a similar convergence between their own service provider and enterprise customers.
"The lines are getting more and more blurred. Large enterprises tend to become service providers in themselves in the sense that they are providing services from a structural perspective," said Alexander Spoov, executive director of technical services at Sanforce, a Doral, Fla.-based Juniper partner. "There are so many different services running over the network that IT is basically providing carrier-like network infrastructure to the various departments inside their organization."
Spoov, who said the bulk of Sanforce's Juniper business already is within the service provider segment, said this convergence is only really happening at the large enterprise level, rather than with smaller and midsize businesses.
"A corporation has to be big enough for that to happen," Spoov said. "You won't see that in your corner store."
Chris Becerra, vice president of sales at Terrapin Systems, a San Jose, Calif.-based solution provider and Juniper partner, said Terrapin Systems still sells Juniper equipment primarily to enterprise accounts. But Becerra also said the company is starting to see some overlap between the Juniper products it sells into service providers and those it sells into the enterprise.
"A lot of companies are building out private clouds to support their different applications and services because employees nowadays work from home or wherever, and all they want is access to their applications every day, all the time," Becerra told CRN. "That's more of a service provider model that these IT departments are putting together within their infrastructures."
Becerra said he specifically sees Juniper's EX series switches and MX series routers selling into both service provider and enterprise accounts.
Meanwhile, some Juniper partners -- and especially those selling exclusively into the enterprise -- are concerned that Kheradpir's vision of a one-size-fits-all, carrier-grade solution could hurt their legacy Juniper businesses.
"Service providers are really a protected and named account group of folks for Juniper," said Frank Kobuszewski, vice president, Technology Solutions Group, at CXtec, a Syracuse-N.Y.-based solution provider and Juniper partner. "We have had very, very little service provider business."
What's more, Kobuszewski said CXtec likely would have to rework its sales model to seriously break into the service provider space. He said he expects CXtec would have to retrain its engineers and tweak the way in which its sales team communicates and contacts end customers.
"From a pre- and post-sales engineering standpoint, it would be a whole new set of requirements," Kobuszewski said.
GLOBAL PARTNER CONFERENCE: SOLUTION PROVIDER FEEDBACK
Partners' take on GPC, and ON Kheradpir's first formal address to Juniper's partner base, is mixed. For some partners, Kheradpir's 15-minute keynote and the event, in general, lacked some of the details they were craving, particularly around Juniper's security business and its response to a Jan. 13 filing from hedge fund and Juniper investor Elliott Management, which urged the company to cut costs and make other strategic changes.
When CRN asked Kheradpir to comment on the filing during an interview at GPC, he said Juniper was still in the process of reviewing the report.
On a call with analysts Jan. 23 discussing Juniper's fourth-quarter earnings, Kheradpir did say that Juniper is compiling an "Integrated Operating Plan" to drive profitable growth and shareholder value. He said part of the plan is to rebuild Juniper's "get-it-done culture" and to scale back on R&D costs.
"I will present the details of this plan to you more fully in a few weeks," he said on the call.
Partners, however, told CRN they wished the filing had been addressed at GPC head-on.
"That's something that you address a little bit. Say that you saw it in the paper yesterday, and not to worry about it, and here's why," said the CEO of one Elite-level Juniper partner, who asked not to be named. "But at least address it. It was on the front page of The Wall Street Journal. You don't just avoid it."
Another Juniper partner, who also requested anonymity, said he felt like the overall message presented by Juniper executives, especially during the opening session at GPC, was vague and unclear.
"I wrote every executive's name down, and not a single note under them," the partner said.
PAINTING JUNIPER'S SECURITY PICTURE
Some partners told CRN they had hoped to get more details around the direction of Juniper's security business at GPC.
Juniper's security reputation took a hit in 2010 and 2011, as customers and partners felt Juniper responded too slowly to customer complaints about technical shortcomings within its SRX line of services gateways.
In the fourth quarter, Juniper's security business -- which was one the product segments Elloitt Management specifically urged Juniper to review -- saw revenue decline 7 percent year over year to $157 million, according to last week's financials.
Becerra, who said about 20 percent of Terrapin Systems' Juniper business is security, said Elliott Management specifically pinpointing Juniper's security business could make it harder to on-board new customers.
"I don't think it will be a big problem with current security customers, but I could see it being a potential problem with net new opportunities, where I'm sure the competition is going to throw FUD at the customers pretty hard, saying, 'Hey, is Juniper even going to be in the security business in six months or a year?' " Becerra said. "I mean, that's a realistic concern."
Juniper at GPC did debut its Firefly suite of virtualized security products, including a new virtual version of SRX. The company also teased upcoming security announcements, related to mobility, that it said will come to light at the RSA conference next month.
Still, partners such as Sanforce's Spoov wanted more.
"There wasn't a lot of earth-shattering substance," Spoov said of GPC. "I was hoping for something a little bit more on the security side. I think they are going in the right direction, but I think that Juniper still has a long way to go on the security side in order to move a little bit further."
Clouding Juniper's security issues even further was a recent report from NSS Labs, an Austin, Texas, information security research and testing company, that gave Juniper's SRX intrusion prevention system appliance a "caution" rating among a field of nine other competitors (see sidebar).
A Juniper spokesperson did not return a request for comment to CRN on the NSS Labs report.
Joe Miller, vice president and owner of Wilder, Ky.-based Key Solutions, a Juniper partner, said Juniper has had a long presence in enterprise data centers with many firms standardizing on Juniper equipment. Independent test results, however, are one of many different factors for businesses to evaluate products, Miller said, adding that his firm advises clients on networking products from a variety of firms.
PARTNERS INVESTED, BUT STILL BRACING FOR CHANGE
Despite investors' call for action -- and even in light of the massive turnover Juniper saw within its channel executive team in 2013 -- partners tell CRN they still plan to invest and stay committed to their partnerships with Juniper. The solid fourth-quarter financial report certainly gives Juniper momentum. But partners are still bracing themselves for some change, perhaps even in the channel ranks -- again.
"One of the key things we wanted [out of GPC] was to get some continuity around who we are engaging with from a Juniper perspective. The nice thing is we have seen some familiar faces that we know from different parts of Juniper that are stepping into new roles, which I think is helpful," said John O'Shea, senior vice president of Vology, a Tampa, Fla.-based solution provider, whose Juniper business was up 70 percent year over year in 2013. "It seems as though the dust has settled."
Juniper in 2013 lost at least seven channel executives, including U.S. channel chief Chris Jones, who left in November for Avaya. Jones' replacement, Jonathan Belcher, told CRN at GPC that, despite all the changes, Juniper's channel organization has the "bench talent" to move forward stronger and more stable than ever.
"We have the talent that's been here at the company, we've been working as a cohesive team for a number of years, and we are able to deal with this," Belcher said.
CXtec's Kobuszewski said the recent changes within Juniper's executive ranks haven't had too much of an impact on his Juniper business.
"Our Juniper business is up double digits, over 20 percent year over year, even given all the changes last year," Kobuszewski told CRN. "We haven't seen it affecting us that much. We kind of keep our head down in the trenches and lead with their products when it makes sense. That's what we're going to keep doing."
Other partners, while committed, are moving forward with an air of caution, realizing that the change that swept the Juniper channel organization over the past year may not be quite over yet.
"You have this new CEO coming in, so I think there is going to be some further changes there," said Terrapin Systems' Becerra. "I'm sure some of the team stays, and some will go. That remains to be seen. But I am expecting more change."
ROBERT WESTERVELT contributed to this story.
PUBLISHED JAN. 27, 2014