About a half-dozen years ago, Juniper made news with a series of aggressive cartoon ads that stuck it to arch-rival Cisco in various ways. Now Cisco is apparently taking that same tack, at least to a degree, with a website that’s a pretty clear swing at Juniper. The focus of the site is the claim that Juniper is over-promising and under-delivering. Well, gosh, Cisco, how many times has that been said about you, or pretty much any other player in the space?
Both Cisco and Juniper have public events coming up, and I’m not of the view that either is likely to say much of substance at them. To me, both companies have the same fundamental set of issues. In fact, one of the two reasons we think that Cisco is embarking on this campaign right now is that Cisco and Juniper are the most direct competitors, the most alike. In the current market, that means not that they share common strengths as much as that they share common limitations.
When you’re in the bit-pushing business, everything is a bit to you. That’s not a bad focus when bits are the thing the buyer is going after, and during the decade of the ‘90s when IP supplanted IBM’s SNA and enterprises were limited in their productivity visions more by connectivity than by applications, you needed “power IP”. Bandwidth was expensive so equipment costs were smaller relative to network costs overall. Today, both in the carrier and enterprise world, bandwidth cost is declining. Capital costs now matter, but more significantly we’ve solved the connectivity problem enough to grab all the low-hanging benefits. More network spending is contingent on more productivity for enterprises, or more profits for carriers. Revenue drives investment, not “demand”.
Neither Cisco nor Juniper has been able to create a convincing connection between their product strategies and monetization for the operators. Neither has been able to tout a credible productivity-enhancing vision for the enterprise. Thus, neither has been able to attack the benefit side of ROI at a time when that’s what the buyer is demanding. Competitors like Alcatel-Lucent, Ericsson, and NSN who have a direct monetization strategy are gaining steadily in strategic influence in our surveys, and both Cisco and Juniper are losing ground. In the enterprise space, both Cisco and Juniper are under threat from the big IT giants like HP, IBM, Microsoft, and Oracle. Even if they don’t sell network gear (or if they OEM your own) these players are tapping off buyer influence, driving projects. That means those projects are likely spending more on servers and software and storage than on networks. And Huawei is waiting in the wings, ready to strike at any market that truly is cost-driven.
Remember I said there were two reasons for Cisco’s timing? What’s the other one. Well, the story is that Cisco believes from its account contacts that Juniper is truly vulnerable now. There’s no point trying to deliver a knock-out blow to a competitor who’s fresh and strong, in Cisco’s view, so why waste negative campaign ads when they won’t really change anything?
Is Juniper really vulnerable? In one sense, as I’ve said, they share the stage in the Benefit Disconnect Waltz with Cisco. But Cisco is an incumbent, with much stronger account relationships. They can weather a short-term storm better than Juniper. Which is in my view the key point to Cisco’s strategy. If they believe that they are on the edge of solving the benefit-case problem in the market, then it makes sense to try to tackle Juniper right now and leave the path to the goal-line open. If they aren’t going to fix their own problems quickly, then this is going to backfire.