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RB | January 17, 2024

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HPE Buying into Artificial Intelligence Market

HPE Buying into Artificial Intelligence Market In the first mega-deal of 2024, Hewlett Packard Enterprise (HPE), the offshoot of industry pioneer Hewlett-Packard, announced a $14 billion acquisition deal with networking equipment maker Juniper Networks (JNPR). HPE is positioning the deal as an artificial intelligence play. HPE CEO Antonio Neri claimed the acquisition was, “… a major leap forward in our AI and hybrid cloud strategy.“

HPE is buying Juniper for $40 per share. That is a 32% premium above Juniper’s closing stock price on the day before the HPE announcement. The deal is expected to close in early 2025. Juniper CEO Rami Rahim will lead the combined HPE networking business and report to HPE’s Neri. The deal will add $11.2 billion to HPE debt, including $1.7 billion of assumed Juniper debt. HPE will pay for the acquisition in part through cash from a 2023 sale of its remaining interest in China-based joint venture H3C for $3.5 billion.

About Juniper

Juniper has been under performing of late. The company’s stock price fell about 8% in 2023, while the NASDAQ Composite gained 43%. The firm has struggled against Cisco (CSCO) in the networking equipment market. Juniper Networks was founded in 1996. It has grown its networking product line-up, including routers, switches, and security products. But the company also runs Mist AI. Mist AI is an AI and machine learning business that specializes in AI-powered network management.

About HPE

HPE has a long history of acquisitions.

In 2001 the original HP purchased Compaq for $25 billion.
HP acquired services provider Electronic Data Systems for $13.9 billion in 2008.
In November 2009 HP acquired switch maker 3Com for $2.7 billion.
2010 saw HP spend $2.35 billion on the acquisition of 3PAR.
In 2015, HP spun out its software, services, PCs, and printers to a new firm called HP Inc.. HPE kept the server, storage, networking, tech support, consulting, and financing for data center gear businesses.
HP acquired Aruba Networks in 2015 for $2.7 billion.
During 2017 HPE bought flash storage maker Nimble Storage for $1 billion.
HPE bought Cray Supercomputers in 2019.

Artificial Intelligence

HPE has already benefited from AI industry growth. It told investors in November that orders for servers containing accelerated processing units for use in Artificial Intelligence Market had added up to 32% of its server segment. Overall net revenue for 2023 was $7.4 billion.

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This latest HPE acquisition follows a familiar pattern to HPE’s other networking acquisitions over the last several decades. They seem to be trying to buy market share. And the results have been meh.

When I started in the business it was Compaq Deskpro’s on the desktop and Proliant’s were the go-to servers. We had an end-to-end 3Com network. Today we don’t buy HP desktops and the network guys don’t even know what a 3Com is. Both HPE and Juniper have struggled behind Cisco. It is unlikely the merger will change that.

HPE seems to be hanging its hat on growth in the server sector to support AI deployments. I am sure they want to bundle the Mist Artificial Intelligence on a server and a 3PAR SAN and sell it to us as a network management/security solution, at some inflated price. Who remembers HP OpenView?

Good luck HPE.

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Top 10 network management technologies worldwide in 2023, by market share (Statista)

Ralph Bach has been in IT long enough to know better and has blogged from his Bach Seat about IT, careers, and anything else that catches his attention since 2005. You can follow him on LinkedIn, Facebook, and Twitter. Email the Bach Seat here.

Category: Artificial ntelligence | Tags: 2024, Artificial intelligence, Business, HP, HPE, Juniper Networks

RB | February 24, 2018

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Switch Sales Stalled

The stats for sales of network switches are in for Q4 2017. Only one of the top 5 networking vendors was able to squeeze out a small gain in switch sales. The data comes from New York-based NPD. NPD tracks monthly network switch sales data from the sales channel, distributors, and resellers in North America.

The article on CRN notes that the total number of switches sold through the channel in the quarter was 514,095. The number is up slightly from 510,822 in the fourth quarter of 2016, according to NPD. Here are the five vendors that sold the most switches through the channel in the fourth quarter, according to NPD.

D-Link Systems

Taiwan-based D-Link Systems (2332:TT) sold 25,259 switches during the fourth quarter, according to NPD statistics. That total kept the company steady with the same period in 2016 when it sold 25,277. D-Link did not have a switch model among the top 10-selling units during the quarter. Its market share was unchanged at 4.9%, CRN said.

TP-Link switch sales

According to NPD’s data, of all the five best-selling switch brands, TP-Link saw the steepest decline during this period. The company based in Shenzhen, China sold 26,023 switches in Q4 ’17 compared with 29,798 in Q4 ’16. That’s a 12.7 percent year-over-year decrease. There is one bright spot for the firm, the article reports that the company’s TLSF1005D Ethernet switch was the third-best-selling unit during the quarter. But that was not enough to prevent a market share decline from 5.8 percent in 2016 to 5.1 percent in 2017.

Hewlett Packard Enterprise switch sales

The news from NDP is not good for former networking giant Hewlett Packard Enterprise (HPE) either. The Palo Alto, CA-based firm saw a 1.8 percent decline in switches sold from 55,923 in Q4 ’16 to 54,941 switches in Q4 ’17. The quarter’s total was enough for a 10.7 percent market share, down slightly from the year-ago period. No HPE switch models were among the top 10 for the quarter, according to NPD.

Netgear sales

CRN reports that sales also slipped for Netgear. The number 2 switch company saw its market share dip from 18.3% to 17.9% year over year. The California-based firm sold 92,274 switches through the channel in the fourth quarter, down slightly from the 93,531 it sold in the same period a year ago, NPD said. Netgear had four switches in the top 10-best-selling switches during the quarter, including the top two models, the FS105 and GS105NA five-port models.

Cisco switch sales

Cisco (CSCO) was able to hold on to the #1 switch vendor position according to NDP. It sold 225,051 units during the period, a 5.7 percent increase that boosted the company’s market share to 43.8 percent from 41.7 a year earlier. Six of the top 10 best-selling switches in the quarter were Cisco Catalyst‘s led by the WS-C2960X 24– and 48-port models.

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What happened to the network switch market? It’s still reeling from the 2007/08 recession and the Wi-Fi takeoff. Other than the Cisco switches, most of the top switch models sold were unmanaged, desktop switches limited to 100 Mbps uplinks. These types of switches make it OK to randomly add an unauthorized switch at the desktop and POOF there does your data. These desktop switches with their limited feature set don’t include Spanning Tree, so users can create a network loop and take down the whole network segment.

Not much to shout about.

Where are the vendors? Brocade? Extreme? Juniper? Dell? I am old enough to remember when switch manufacturers had a #2 strategy. 3Com, Lucent, Bay/Nortel all came into my office and said they wanted to #2 – now they are gone.