In announcing its Q1 earnings yesterday Juniper company executives were delighted about the company’s returns on its cloud computing directions.
In the results conference call Juniper CEO Rami Rahim said cloud computing sales grew 25% year-over-year and noted that four of the company’s top 10 accounts were cloud-related. Specifically, the cloud vertical earned $331.6 million in the first quarter, over $264.8 million a year ago.
“As the industry evolves, cloud architectures are no longer the exclusive domain of the cloud providers. Customers across all verticals are developing strategies for moving to cloud service delivery models and this aligns with our strategy to power the cloud transformation,” Rahim said [Seeking Alpha has a full transcript of the call here]. “The cloud is a massive paradigm shift that is reshaping all industries, and I’m excited about the opportunity we have in front of us.”
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Juniper pointed to a couple cloud improvements it has made just this year as proof the company expects the growth to continue.
For example in January the networking company rolled out Unite Cloud – an architecture that the company said combines Juniper’s switches and software to simplify management and growth of corporate cloud computing.
“Customers are evaluating and rapidly moving to hybrid cloud environments and with Unite Cloud we are looking to help them more easily address this challenge by offering them the tools to manage public, private, hybrid and multi-cloud environments,” said Scott Miles, senior director of Juniper’s Cloud & Enterprise portfolio. “It is a framework designed to also provide transition from one cloud mode to another and implement common policies and look and feel across the enterprise.”
Unite Cloud helps Juniper push into a growing market of cloud infrastructure players that pits it against the likes of Cisco, Huawei and others.
In a report issued Jan. 12, IDC wrote “vendor revenue from sales of infrastructure products (server, storage, and Ethernet switch) for cloud IT, including public and private cloud, grew by 8.1% year over year to $8.4 billion in the third quarter of 2016 (3Q16). The overall share of cloud IT infrastructure sales climbed to 39.2% of all IT infrastructure spending in 3Q16, up from 34.7% a year ago. Revenue from infrastructure sales to private cloud grew by 8.2% to $3.3 billion, and to public cloud by 8.0% to $5.1 billion. In comparison, revenue in the traditional (non-cloud) IT infrastructure segment decreased 10.8% year over year in the third quarter.”
Then in March the company announced Open Cloud Interconnect for large data center users needing high-speed connectivity and bandwidth for access to massive cloud resources.
The Open Cloud Interconnect package which includes Dense Wavelength Division Multiplexing optical boards for its QFX10000 Layer 3 spine switch and BTI7800 optical transport switch families as well as software to manage those systems.
“Open Cloud Interconnect offers customers multiple ways to build DCI networks, including over open and disaggregated optical transport,” Juniper said. The package supports a mix of routing, switching, packet optical, network management and software-defined networking to enhance the performance of cloud content, services and applications.
Cloud application delivery is certainly one of the main drivers for this kind of offering but users are looking to tie together data centers as a virtual pool of resources as well, said Shin Umeda, a vice president with researchers at the Dell’Oro Group at the time of the rollout.
Add to this mix the fact that Juniper bought AppFormix for an undisclosed amount in December to bolster its cloud analytics and machine learning technologies. AppFormix is unique in that it combines the power of machine learning and streaming analytics with application awareness of orchestration systems like Openstack and Kubernetes. This gives cloud operators, as well as application developers, a dashboard and APIs to understand both the workloads and the infrastructure stack, improving both applications and operations management, Juniper said at the time.
Indeed, the cloud arena is ripe for growth. A Gartner report in February said worldwide public cloud services are projected to grow 18% in 2017 to total $246.8 billion, up from $209.2 billion in 2016. The highest growth will come from cloud system infrastructure services (infrastructure as a service [IaaS]), which is projected to grow 36.8% in 2017 to reach $34.6 billion. Cloud application services (software as a service [SaaS]) is expected to grow 20.1% to reach $46.3 billion. By 2019, more than 30 percent of the 100 largest vendors’ new software investments will have shifted from cloud-first to cloud-only, the researchers stated.
“The overall global public cloud market is entering a period of stabilization, with its growth rate peaking at 18 percent in 2017 and then tapering off over the next few years,” wrote Sid Nag, research director at Gartner. “While some organizations are still figuring out where cloud actually fits in their overall IT strategy, an effort to cost optimize and bring forth the path to transformation holds strong promise and results for IT outsourcing (ITO) buyers. Gartner predicts that through 2020, cloud adoption strategies will influence more than 50 percent of IT outsourcing deals.”
So, while the cloud arena looks hot for Juniper, security sales do not. The company reported security revenues decreased to $65.7 million, down from $73.4 million a year ago.
Rahim said of Juniper’s security products: “The newer products are growing. [for example the company’s Software-Defined Secure Networks architecture] The older products are declining. The math is not working for overall growth. This year I think is going to be a critical year for us as we get back to stability and growth probably in the latter half of the year.”
Rahim said the company has “a concerted effort right now in terms of go-to-market, marketing, rebuilding our channels, and rebuilding confidence in our customers and our partners’ mind where we have quite frankly lost some of that confidence.”
Some of that confidence may be lost in the face of unrelenting competition, especially from Cisco which has gone all out in the past couple years to make security a priority.
In an interview with CSO India last month, Mather Hurley, Juniper’s corporate VP, global channels, said that “Juniper is completely committed to the security business. We are open to competing again with the industry vendors. We take pride in Juniper’s innovations across networking and security solutions over the years. We have relaunched a brand new roadmap in the security space, from low end firewalls that goes right up the stack. We have addressed security on lots of different fronts, including going back to the channel partners to re-embrace this marketplace.”
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