Cisco and Juniper are both key players in the network equipment space, for slightly different reasons. Both had good quarters and were rewarded by Wall Street, but there have always been major differences between the style of the two companies. Whether those differences are widening or narrowing is important both to the competitors themselves and to the market at large, so today we’re going to look at those differences and what they might mean.
First, let’s look at the numbers. Cisco defines six product areas, and they were up in three of them. Juniper defines four product areas and they were up in all four. Both companies benefited from a reduction in order backlogs created by easing supply-chain issues. Juniper, based on my input from the Street, was generally rated lower than Cisco and generated a bit more of an upside than expected, but I think their objective financial performance was better. The difference in Street viewpoint and that potentially improved upside on Juniper’s part are the things we have to look at now.
Cisco, as I’ve noted before, is a sales machine. Their approach has been pretty consistent over the last couple decades, in my view. They focus on making the deal, on the current quarter and making sure not to undermine it, and on making sure they do undermine competitor initiatives aiming at rocking the boat. The company doesn’t innovate as much as execute, and its ability to consistently turn in good numbers has made it attractive to the Street.
Juniper is in some senses the same, in that they’ve tended to respond to their market-leading competitor in taking a sales focus. That leads to their being characterized by many on the Street as “playing Cisco’s game”, and given Cisco’s strength in sales, that’s a sub-optimal approach. That likely accounts for Juniper’s lower Street-cred, so to speak. On the other hand, Juniper has made some incredibly smart product-strategy moves, especially in M&A. Of the two, I believe they have the best product portfolio, and by a decent margin.
Who wins in 2023? To decide that we need a formula to define what a win would require, so I’m going to have to propose a model. In my view, you start with a broad vision of market evolution that frames your value proposition. You add a network model that fits that vision, and close with a product set that fills out the model, a marketing position that evangelizes the vision and product set, and a sales strategy that frames current buyer needs into the market vision, thus fits into the first two things. Do our vendors have that? Let’s start with my own view of what’s going on in the markets.
For most of modern times, commerce has been driven by processes initiated and controlled by the seller. You read an ad in a magazine, you went to a store or you ticked a reader service card to get information, but the real process got started when you encountered product information the seller provided explicitly, and the sales process was controlled by a retail outlet and/or a salesperson. A company’s IT process and network had to run the business, but that meant largely supporting non-real-time steps.
Today, if you want information on a product or vendor, you go online. If you want pricing you go online. If you want to buy something, you’re increasingly likely to go online. Commerce now takes place in real time, driven by the buyer’s attention and drawing on information resources the seller presents not explicitly to you, but to the market at large.
This shift has enormous significance, because human participation in the normal flow of online commerce doesn’t exist, can’t exist for the process to work efficiently. Information technology is the instrument of commerce now. It’s not just supporting the business, it’s the instrument whereby marketing and sales are realized. This is “mission-critical” at a whole new level, a level where “the normal flow” is what generates revenue, and where sustaining that flow in real time, for all is the fundamental mission of the company.
Historically, nothing in IT has worked that way, including networking. Historically, something breaks and humans have to cooperate to get it fixed, sometimes replacing things, rerouting, rewiring. Historically, we could not assume that a remote transaction was authoritative until the paper copy validation caught up. Historically, we could protect goods, records, and bank accounts with armed guards. None of those historical assumptions hold up in today’s world. We need a new basis for the fundamental promises that make up successful commerce, successful economies, and a big part of that new basis has to come from the network.
OK, this is my view of a good vision statement. What do our competitors offer? Neither has this kind of high-level view, but what views do they have? It’s somewhat difficult to say, because both companies tend to take sales messages into their marketing/positioning channels rather than articulating strategic messages. That also applies to their websites, which should reflect the issues they believe are driving network technology planning.
Cisco, IMHO, presents no vision of the evolution of the market at all. Their homepage dives into security immediately (one of the areas where they indicated they would prioritize for shareholder value reasons). Digging deeper in their site, you still find no statements of market evolution or buyer need. This is totally consistent with Cisco’s sales-centric approach, but it leaves an opportunity door wide open.
Juniper doesn’t do much better on their website, but they have articulated something that at least can be called a high-level vision, “Experience-Based Networking”. Not only is that a tagline that could be linked to the market vision I opened with, it’s also one that supports the evolution from the old model to the new. All of that is good news, but Juniper doesn’t make the positioning connection strongly (their tagline isn’t immediately visible on their website, for example) so I guess it would have to be considered “potential good news.”
Let’s move down a level now, and construct a network model to support the vision. For reasons that will become clear, I’m going to conflate this with the product-map-to-model step (one more layer down).
You need quite a few things in a network model, including enhanced management to reduce outages and impacts, tight integration between cloud and network, tight integration between data center and network, and a high level of network portability across multiple infrastructures/operators. All of these things are aimed at ensuring that the online experience is highly reliable, presents a consistently high QoE, can be efficiently linked to applications, and can be delivered over the Internet, a VPN, or a private network.
Cisco defines no particular model or vision to achieve these goals, hardly a surprise since they don’t define high-level goals at all. However, Cisco’s product line does have the elements that could address these specific model elements. What both enterprises and service providers tell me is that Cisco tends to focus on product sales rather than on network model, which again isn’t a surprise. They seem to believe that if a given product is needed, the prospects will decide their model and ask for products to fill it out. This, again, is reasonable on the surface, but risks strategic intercession by competition.
Juniper does have a network model, and it does in my view, a better job of aligning to the reference network model I described above, one that I think is better aligned with real market trends. Juniper also biases its website and positioning more to the model level. For example, their most visible positioning strategy is to promote AI and the cloud integration of network and other telemetry to enhance visibility and management. Mist AI is a strong product, and the notion that AI could enhance operational responses to network issues is congruent with the tagline (Experience-Based Networks) and with my presumptive mission and network models.
Enterprises and service providers who have commented to me about the two companies place Juniper at the top for “innovation” and Cisco at the top on “execution”. They confirm that Cisco is more likely to have account control and influence, given their market-leader status, but that Juniper likely has technologies that better fit conditions and how they’re likely to evolve.
One new factor in the competitive mix is Cisco’s restructuring announcement. While it will include layoffs, the major point that the company raised was a realignment of effort toward profitable segments, to enhance shareholder value. This has been interpreted by some financial news services as a shift more to an enterprise focus, and by some Street analysts as a move to sustain and improve share prices. It’s also possible that Cisco is reacting to Juniper’s success, consistent with its normal goal of being not a leader in tech but a “fast follower” who will exploit (and step on) the success of others.
This whole swirling mix of points suggests to me that 2023 will evolve in two stages. The first, which I think will last into the mid-spring timeframe, will be a gradual “evolution” of the two companies’ current positioning and strategies. The timing of this roughly aligns with what I expect will happen in the global economy, as the inflation and rate hikes shocks dissipate. I don’t expect a major change, particularly with Cisco, but just what they mean in their restructuring story will become clear.
The second stage is what I think we could call the “awareness” stage, where network buyers will respond to the developing conditions in the market, and both Cisco and Juniper will have to respond to changes in attitude. I believe that the evolutionary model for the role of the network that I opened with here is now emerging to the point where at least some planners in both our competitors now see the conditions. Of the two, as I’ve said here, Juniper seems best-positioned to address the future, and they are even now a bit more willing to be strategically innovative than Cisco. That means that they could, in the “awareness” stage next year, jump out and change the dynamic of their space, at least a bit.
What’s behind all my “could” qualifiers here is the fact that “awareness” happens at the pace of marketing. Aggressive positioning leads to more media engagement, which leads to more website visits that can set agenda points for network planning. That leads to sales calls that are conveying a solution to a problem the vendor itself has defined, and so are very likely to fit. And that leads to a change in dynamic. All this stuff starts with that aggression, and neither of the companies have shown aggression in the last five years or so. The “awareness” phase of 2023, and the advantage in 2024 and beyond, will lay with the vendor who comes out of their shell first, fastest, and best.