Juniper, the only successful company to compete against Cisco´s service provider router market share has been plotting its entry into the Enterprise router market for well over a year now. Last year it purchased NetScreen, a producer of popular VPN hardware allowing enterprises to build private VPN networks between sites. Many thought that NetScreen would lead Juniper further in
the enterprise market, but it hasn´t. Juniper´s J-series routers could very well be used in the enterprise market, but Juniper has failed to take the leap. It has been very successful in the core of service provider networks and its acquisition of Unisphere Networks/Redstone Communications from Siemens in 2002 moved Juniper to the service provider edge, closer to the enterprise router market. With its strong relationships with service providers in the US and elsewhere it´s a natural to think that Juniper could do what only Cisco has successfully done: sell through service providers and link enterprise router features to service provider MPLS and frame relay offerings.

As Juniper slowly plots its entry into the enterprise router market new competitors have entered. 3Com now has a broad range of routers thanks to its joint venture with Huawei, which is starting to show progress. In addition to 3Com, Enterasys, the Cabletron spin-off also has a line of routers, as does Nortel. But Cisco owns 90% of the enterprise router market, which is as
dominant as dominant can be.

There is an up and down side for Juniper in the fact that Cisco owns 90% of the router market. On the up side, taking only 10% of this market would expand Juniper´s revenue by nearly fifty percent. Also, there is no mystery who you have to beat and what features, functions and price points you need to focus engineering, marketing and sales upon. On the down side, Cisco does
not only own 90% of the market share; it owns perhaps 100% of the mind share and its customers are loyal.

Cisco has an effective CIO and CFO program in place which allows Cisco to create relationships at the most senior executive level which heavily influence purchasing decisions. In short, if a network architect wants to purchase a non-Cisco product there has to be a darn good and very convincing reason for it. And herein lies the rub. NetScreen or Juniper has sold mostly to Chief
Security Officers (CSOs). Many CSOs have come from the physical security industry, meaning security guards, detectives, etc., and not from the IT industry. Many do not have technical or business backgrounds. In fact many CSOs were put in place primarily as a means for CIOs to CYA. That is, if something on the security front blows up, the CIO can say that´s the CSO´s job,
responsibility and fault, not mine. Alas, Juniper´s enterprise audience is the CSO, an executive who will increasingly lose control of technology decisions as network security increasingly becomes integrated into the network fabric.

Juniper´s enterprise market entry options are dwindling. Its enterprise audience will increasingly become irrelevant or out of the purchase decision loop at the same time competitors are adding IP telephony features to their routers, thereby putting Juniper at a disadvantage. If Juniper is unable to make the move in the next eighteen months, the window of opportunity may very well shut
completely. We´ll see if Scott Kriens, Chairman and CEO, Juniper Networks has an appetite for the enterprise market sooner rather than later. The question for Scott is what resources are required to gain 10% of the enterprise router market and what is that cost? Perhaps Cisco has increased the enterprise router market barrier of entry to the point where the gain is not worth the
pain.

Posted 29 October 2004 at 7:13 am under Lippis Report. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.