The big news today is the rumor on the Street that EMC is about to do a deal to acquire Juniper, a rumor that sent Juniper up about 7% pre-market today. This has been speculated on before (Light Reading did a piece, for example), and there are some seemingly strange things that such a deal could explain. One is why Juniper went silent so suddenly on SDN, appearing to stall all its strategic positioning while continuing to make the usual box-pushing announcements. Another is why the stock seemed so resilient recently given continued speculation that both enterprises and providers were holding back on spending.
The biggest news in this deal would, of course, be the notion that EMC’s VMware could be better positioned to go after Cisco. Given that Cisco has recently been pulling back from VMware, relationship-wise, this is another interesting data point because it suggests Cisco might believe that VMware is going to be more a problem than an ally in the future.
On the surface, the deal would have possibilities because it could create a network/SDN vision that would link software and hardware in one company. While EMC doesn’t have servers per se, they do have a decent position in the data center, and in our most recent survey they suddenly jumped in credibility based on their VMware position. The burning question would be whether EMC could quickly change Juniper’s positioning, which has been far too pedestrian cloud-and-SDN-wise to allow EMC much of an upside. That would probably depend on what might happen with management and the board. Sticking Juniper-as-it-is under an EMC/VMware brand would accomplish absolutely nothing other than make Cisco—and likely IBM, and HP—intractable enemies.
If the deal gets done, that is, and in my view this is a VERY BIG “if” indeed, for all the reasons I gave when the notion first surfaced in LR. EMC is still operating at a P/E far lower than Juniper and so the deal would be rather rich for them. There’s also an industry aversion to the whole storage-net-buys-regular-network play based on Brocade’s Foundry experience. Not to mention management challenges, integration challenges, and the fact that the deal would put EMC in the service provider network equipment sector more than in the enterprise sector. They have no experience in the SP space. What’s my view? I think the deal is TOO rich for EMC’s blood. I think this is just a rumor.
It’s study time, cloud-wise! There are a couple of new and interesting ones that have come out recently and I want to take a minute to comment on them since my own fall survey of enterprises is now underway. We’ll be reporting results in our December Netwatcher issue.
The first study is from ISACA (http://www.isaca.org/Knowledge-Center/Research/ResearchDeliverables/Pages/2012-Cloud-Computing-Market-Maturity-Study-Results.aspx) shows a number of interesting things. One is that the cloud market is not yet mature; in fact, it’s in its infancy (which means that calling Amazon the winner is decidedly premature). Another is that business enablers are a bigger driver of cloud adoption than “financial considerations” meaning cost. The biggest business factor is improving availability and quality of experience for applications.
There are some other interesting elements in the ISACA study too. One is that only about a third of respondents said the cloud market had a high level of innovation, and a fifth said it showed “limited” innovation. Another is that cloud users were more confident in their strategy than in the service or problem resolution capabilities of the cloud operators. I think that the study points to an industry that is convinced the cloud will mean a lot for them, but also of the view that it’s not yet delivered on its promise to the market at large. It’s not that they’re unhappy with the cloud (the numbers on service satisfaction in the study match our figures for internal application satisfaction almost exactly) but that they’re not far enough along yet to be fully convinced or committed.
Given that one of the findings of the ISACA study was that PaaS was more an infant than the other cloud service models, the IBM study (http://www.ibm.com/cai/paas) is interesting in its focus on PaaS. In fact, the study suggests that PaaS is the logical way for enterprises to migrate their OWN applications to the cloud.
PaaS is underrated, I think. If you look at the cloud from the buyer side, it just makes sense to presume that they’ll eventually adopt a cloud model that offers a unified middleware/OS framework for applications, and then host components of SOA-modeled software where cost/benefit dictates. That’s a PaaS model. If you look from the seller side, it makes sense to offer higher layers of software because you displace more cost, easing the ROI barrier to buyers and also raising your own profit. I think that both IBM and Microsoft have designs on making their current PaaS model the “cloud OS” of the future, which is one reason why I think both companies tend to avoid discussing that sort of thing. Why tip your hand? At any rate, there’s lots of potential excitement here too.