Juniper: Carrier Business Models Are Broken

Economies of scale

Sindhu said the move towards cloud computing presented a huge opportunity for networking companies. “The average server utilisation of a data centre is five percent. The reason this is true is because the infrastructure is siloed. And it’s siloed because every little company has its own small proprietary data centre, and you do not get the economies of scale,” he said.

Juniper is hoping to follow the model of the computing and storage industries in a move away from silos and towards a universal networking infrastructure: the cloud.

“Today in the networking industry, there’s a box for this, there’s a box for that, there’s a box for the other, it’s a box-centric view. In the computing and storage industries it’s not such a box-centric view because you have universal devices.

“Today there is not this notion of the computer for running Oracle or the computer for running Facebook, or the computer for running this application or that application. We have the notion of a universal general purpose computer, the same thing with a universal storage device.

“Well the first company that is talking about a universal networking infrastructure is Juniper. More than that we’re talking about a universal networking infrastructure, on top of which there is a open software platform. And that is the big news in the new network: we are trying to change the industry so that the very strong forces that brought computing and storage to where they are, they are applied to the networking industry as well,” he said.

[In fact, this sounds vaguely similar to what Paul Congdon at HP is promising, with a fully virtualised network – Editor]

Partnerships, but no consolidation

Juniper acknowledges that it cannot make this transition on its own, but needs cooperation from within people the computing industry and the storage industry. Sindhu says that its alliances with companies such as IBM, Dell and VMware are helping the company move in this direction. However, he is adamant that Juniper does not intend to move into these areas itself – as Cisco did with its UCS.

“Juniper’s strategy is to bring innovation to the networking ecosystem, which badly needs it because the ecosystem is not working currently. This business model is not going to be solved by consolidation. It’s going to be solved by innovative companies doing things that actually solve the real problems that the industry is facing …  and the best way in which we can do that is by staying independent,” he said.

Sindhu explained this in relation to Cisco’s position in the market, claiming that, for a company in Juniper’s position, the best strategy is to stay focused on a single area of expertise.

“Juniper and Cisco are at very different points of their development. Cisco has majority market share in most areas of networking and, in order to grow, it is necessary for them to look outside the networking space,” he said. “For Juniper, we are early in our development. We have 30 odd percent market share in the service provider sector, and a smaller percentage of market share in the enterprise. We have a lot of room for growth.

“I think that, given the complexity of the three technologies that we talked about, the strategy we are following – which is focussing on high performance networking and partnering people who are experts in their respective fields – is a better strategy, because it’s designed to solve the real problem,” he said.