Juniper Builds on Software with $450M Deal for 128
Juniper Networks (JNPR) has announced it will acquire 128 Technology for $450 million in a bid to make Juniper’s software-defined wide-area networking (SD-WAN) capabilities more lightweight and user-specific.
“Today’s announcement is the next step in our AI-driven enterprise evolution, which began early last year with the acquisition of Mist,” said Rami Rahim, Juniper CEO, on a conference call with financial analysts today. “Our view at the time was that the networks for the next decade would be cloud-managed, AI-driven, and offer secure connectivity from client to cloud.”
Of course, that’s a view that’s increasingly shared by most SD-WAN suppliers. But 128 Technology says its approach, called Session Smart Routing, is uniquely lightweight. “What separates us from every other SD-WAN player in the world is that we have a much, much smaller computational footprint and we leverage the underlay, we don’t instantiate really costly, computationally expensive tunnels,” said Andy Ory, co-founder and CEO of 128 Technology, on today’s call.
Ory and Juniper execs claim that 128 Technology's use of sessions, not links or policies, improves network performance while dynamically connecting end users to specific portions of the LAN, WAN, or cloud. Adding AI via Mist, they hope, will speed up and smarten up the whole process, helping Juniper to claim a share of a market said to be in the double-digit billions.
Juniper’s Moving In the Right Direction
Most analysts on today’s call offered congratulations to both Juniper and 128 Technology. And the move seems promising, since it builds on Juniper’s efforts to expand and enhance its software offerings.
One of Juniper's moves toward more software intelligence was recently demonstrated in its alliance with Apstra for intent-based networking (IBN).
“Juniper sees the need for software solutions," said Zack Zilakakis, head of marketing with Apstra, in a briefing on the topic of its Juniper alliance. "They are looking at full automation of the management plane."
Broad Competition in SD-WAN
Still, analysts question how Juniper and 128 Technology will measure up against established rivals. In SD-WAN, every vendor is looking to make their technology lighter, cloudier, and smarter. VMware (VMW) and Cisco (CSCO) loom, with Velocloud and Viptela offerings, respectively. HPE recently purchased Silver Peak. Startups abound, with many routing experts bringing fresh ideas about networking to the table.
Juniper also must contend with the ties to its own hardware, an approach under siege by enterprises seeking to avoid vendor lock-in. For example, AT&T recently eschewed core routing from a single vendor, opting instead for a combination of Broadcom chips with DriveNets' cloud routing software and white-box hardware from UfiSpace.
Juniper Pivoting Toward Software
Despite competition, Juniper seems confident that its choice of 128 Technology will fit its software strategy well.
And it seems a good choice. Though founded in 2014, the Boston-based company has $120 million in funding from employees and other private investors, along with G20 Ventures and The Perkins Fund. It claims over 300 customers, including SoftBank, CMC Networks, ConvergeOne, Momentum Telecom — and an unnamed Fortune 10 healthcare provider, where 128 Technology met Juniper. also a supplier to that company.
128 Technology also has an energetic and knowledgeable team, led by Andy Ory; Patrick MeLampy, co-founder and COO; and Sue Graham Johnston, president. Ory and MeLampy worked together at Acme Packet, a session border controller startup that was sold to Oracle for $2.1 billion in 2013. Sue Graham Johnston integrated Acme Packet into Oracle’s product lineup.
All three will join Juniper, but the actual integration effort will be overseen by Sujai Hajela, former co-founder and CEO of Mist, who heads up what Juniper calls its “AI-driven enterprise business unit.”
Juniper says the acquisition will close by year end and is expected to be slightly accretive to revenue and gross margins in 2021, but dilutive to its EPS. It will be accretive to everything in 2022, execs say.
Juniper’s stock fell along with the markets today and by mid-afternoon was trading at $22.03, −0.40 (1.78%).
