Juniper Scores a Major OEM Victory with IBM

| Jul 24, 2009 | Enterprise Network Systems | Competitive Update

| Analyst: Bill Terrill

Current Perspective: Very Positive
Vendor Importance: High
Market Impact: Moderate

Event Summary

July 22, 2009 — Juniper Networks announced that it and IBM are continuing to broaden their strategic relationship by entering into an OEM agreement that will enable IBM to provide Juniper's Ethernet networking products and support within IBM's data center portfolio of products. The OEM agreement allows IBM System & Technology Group (STG) to brand, label and sell select Juniper EX Series Ethernet switches and MX Series Ethernet Services routers.

Analytical Summary

• Current Perspective: Very positive on Juniper’s announcement of an OEM agreement allowing IBM to rebrand the Juniper EX and MX Ethernet switch products, because this greatly increases Juniper’s profile in the market. While IBM had previously been reselling the Juniper switches, along with others from Cisco and Brocade, this agreement brings the two companies into a much closer alliance, which should raise Juniper’s overall profile with enterprise customers and add to its bottom line if IBM is successful in reentering the enterprise infrastructure market.

• Vendor Importance: High to Juniper, because it has only recently entered the enterprise switch market and this agreement greatly improves the company’s ranking with potential buyers. Even though IBM had been selling Juniper equipment previously, that equipment was just another offering from IBM. This agreement places Juniper much higher in the sales cycle within the IBM System & Technology Group along with Brocade and its IBM OEMed products.

• Market Impact: Moderate on the enterprise network systems market, because this agreement significantly raises Juniper’s credibility, and places the company in a much more visible position for future enterprise data center bids. Juniper will now be able to point to a Tier 1 data center supplier as offering its products as additional proof that it is a player. Other vendors, including Cisco, will need to pay closer attention to the growing portfolio of products being offered by Juniper, both through its own channels and via the IBM agreement.

CLIENTS ONLY

Competitive Positives and Concerns

Recommended Vendor Actions

| Client access - Full report in Enterprise Network Systems | More information

Recommended Competitor Actions

• Brocade needs to make the case that its products, which are also being OEMed by IBM, are not just aimed at the lower-end clients. Brocade is in a technical position to compete with Juniper but needs to ensure that it is not perceived as a little brother to the Juniper switches. This will require both working with IBM to clearly identify Brocade’s position within the IBM OEM universe, but also to proactively market its products as fully competitive with Juniper.

• Cisco can point to its own continuing relationship with IBM as an indicator that IBM is just looking for a range of partners. In addition it can use the clearly overlapping product sets from Brocade and Juniper to cast doubt on how serious IBM is in working with either of them.

• Cisco, HP ProCurve and 3Com (as well as virtually all other vendors) should focus on the fact that IBM will now have two product sets that use different OSes and different management tools. This should be used to let customers know that from IBM’s OEM agreements it has garnered two product sets that do the same thing but do it with different features. These firms should clearly point out that they offer a single integrated management infrastructure for their products, unlike IBM.

• Cisco and HP ProCurve can also show that they have a complete line of internally owned and developed products for the data center, including servers and infrastructure. They can point to IBM’s ongoing OEM efforts to show that IBM is attempting to fill a significant hole in its strategy. IBM left the infrastructure market a decade ago and may end up doing so again if these OEM agreements don’t work out in the longer term.

• 3Com can point to its full line of existing and new products from H3C as providing a single source for the network infrastructure. Since 3Com does not offer servers it will be at a disadvantage in bids where the customer is requesting a complete data center solution from one vendor. 3Com needs to develop a close relationship with some other server vendors so that it can be included in all-inclusive bids.

• All of the primary vendors in the market can use their greater market share to show that they are the leaders in this area and that Juniper, while offering a small set of top-end products, does not have the full range of offerings needed to completely outfit a data center. Implying that further consolidation is on the way (with Nortel on the ropes, Brocade having bought Foundry, Enterasys merging with Siemens Enterprise Communications) can cast some doubt on whether or not Juniper will ever be a major player or will survive independently for long.

CLIENTS ONLY

Competitive Positives and Concerns

Recommended Vendor Actions

| Client access - Full report in Enterprise Network Systems | More information

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