The Cisco killer speaks
Published: 07 Dec 2004 16:45 GMT
Is Juniper looking to acquire more companies? Or do you think you'll do more internal development?
We have already spent, and will continue to spend, hundreds of millions of dollars on internal development. In 2005, we'll spend more than a quarter billion or probably closer to $300 million on research and development of our own technologies. That will always be the primary focus and priority of the company.
Acquisitions or any partner relationships are tactics at Juniper. The strategy is expansion or coverage of a critical technology area. In the case of security, there is enormous development inside Juniper to build security functionality in our existing portfolio. We made the tactical decision that acquiring the NetScreen portfolio of products and the talent and experience of the NetScreen people was critical to our security strategy.
Sometimes companies get strategy and tactics confused when it comes to acquisitions. Making decisions with that priority reversed creates a portfolio of products that are unlikely to leverage one another. This is why most acquisitions don't succeed, because they are bought as a strategy, as opposed to being an element within a larger plan.
I think I read somewhere that half of all acquisitions don't work out. How would you rate Juniper's success?
I think the number is actually closer to 80 percent failure, believe it or not. So, what's our batting average in this game? On the large moves, of which I would say there were two -- Unisphere Networks and NetScreen -- we are 100 percent on target. With the smaller moves, we made a couple of mistakes. And you know, I suspect they won't be the last mistakes we make.
The service provider market is Juniper's largest customer base. Are carriers really buying into this idea of converging their data, voice and video networks onto IP?
The way to tell is if capital expenditure (capex) spending is going down -- then convergence is achieving success. The collective goal is to reduce capital spending by simplifying the network. I think the industry sometimes is confused by this leading indicator, because they think capex going up is a good sign and going down is a bad sign. In the next-generation IP network, exactly the opposite is true.
So where are we on this continuum now?
I don't know what the latest capex projections are. But the ones I saw last projected an increase in the total spending. Personally, I don't believe it. I think what's happening is carriers are spending a bigger percentage of their total budgets on next-generation networking equipment. At the same time, they are decreasing spending on older, legacy gear as rapidly as they possibly can. At best, the total will result in flat growth.
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