Questions for Juniper

That Juniper has been snatching core router market share from Cisco at 6-7

percentage points a quarter is not news. Neither for that matter is Cisco’s

acknowledgement that the Juniper threat is for real. Also, nothing new about the

fact that at $140-odd, analysts still give Juniper (NASDAQ: JNPR) a strong buy.

Enough has been written about what Juniper has done and how. Today, the point

of debate is not whether Juniper has…? The question is what Juniper can…?

And how?

We raise five questions here, on the answers to which, depend how Juniper

moves from here.

Over to the future…

1. Will Juniper get out of the Cisco challenger image–and when?

This is ironical–the first question we ask about Juniper has something to

do with Cisco. But then, there is no other way. No matter how much you try, you

cannot talk about Juniper, at least today, without referring to Cisco.

The question is: will it change tomorrow?

Scott Kriens, the CEO of Juniper, and the man behind its phenomenal success

is trying to ensure it does.

In an hour-long conversation, despite asking so many direct

questions, this writer failed to make Kriens utter the five-letter word.

Interpret it as his non-aggressiveness or arrogance, depending on which side of

the debate you are. The fact is–it is anything but unintentional.

And this–getting out of the tags like Cisco Killer, Next

Cisco, Cisco’s Waterloo and the like–has been a priority for Kriens for some

time now, though media and analysts refuse to oblige.

Well, good luck to Kriens on that. For the work is certainly

tough. For a long time, Cisco has not just been the leader but a virtual

monopoly in the core router segment. And here is a company that is not just

diluting the TINA factor but also snatching market share from it like no one has

done before. So much so that people have started asking who will be the leader

and who the challenger by the end of 2001.

Well, Juniper will cross the first milestone on its way to

emerge out of the Cisco challenger shade if it really manages to top Cisco in

the core router segment. However, for that, we will have to wait and watch.

The other reason for the direct comparison is that there is

no significant No. 3 in this space. Lucent, one of the initial stakeholders in

Juniper, which off-loaded it in the first IPO, has been unsuccessfully trying to

penetrate the market, with the core routers of Nexabit, a company that it

acquired. Of course, there have been many also-rans like Foundry, which has

almost withdrawn from this segment and IronBridge, nothing much about which is

being heard of late. The summary: it is Juniper vs. Cisco in the market. And

hence Juniper vs. Cisco for the media and analysts.

Not that new start-ups are not trying. And they could be a

serious challenge. The prime among them is Avici, another India-promoted

company, Avici is slowly but surely gaining ground. There are a few more that

are entering the space.

"If history is any teacher," says Scott Kriens,

"there are just going to be two successful companies in each segment."

Agrees Carl Russo, Cisco’s chief of optical networking.

"Cisco is the leader in that space. Juniper is a viable No. 2. I think

service providers have demonstrated that they do not feel like they a need a No.

3," said Russo speaking to the optical networking magazine, Light Reading.

However, Kriens is not betting on the status quo. "I do

not mean to say it is the current two players, it may be two different

ones," he says.

You, of course, are entitled to your own opinion.

However, if it really becomes a market of three or more

players, Juniper’s comparison will not always be with Cisco but with the

challengers as well.

The other way Juniper can get out of the Cisco challenger tag

is to show leadership. In a pure product comparison basis, yes, Juniper has been

the first to introduce products with OC-192 (10 GB) interface and Cisco has

followed. But that leadership is too technical for the media/analysts to digest.

The only way it can become a true leader is by creating a new

market through technology innovation, its core strength. Cisco will definitely

try to get into that space and in all probability will succeed, given its

successful track record of getting into new areas through acquisition.

But then, Juniper’s purpose will have been solved. Though

the Cisco comparison will not go, the challenger tag will.

And what about their weaknesses?

Yes, they are still considered low on the value chain. One,

most of their revenue comes from technical consulting, rather than strategy and

creative. In fact, there are cases where a client hires a Scient for strategy, a

Razorfish for creative and an Indian company for technical, though such cases

are not very common.

Two, there is still a low-price image that they have, being

from India. So many clients do not really talk to them for major projects. Many

Indian companies like Netacross, Planetasia and MindTree compete with each other

for many US projects, along with the e-biz practice groups of Infosys and Wipro.

Three, the strategy and creative manpower base in India is

limited, unlike technical manpower. So, many of these companies have to hire

from the US. That creates a problem, as not many good people are willing to work

for Indian companies in the areas of strategy and creative, because of the low

mind share that they have.

Four, the Indian operations of most companies are in bad

shape. Projects are too few. And revenue is still lower, project sizes being too

small. In fact, many Indian companies’ objectives behind building brands in

India are actually to impress prospective employees. As our survey shows, the

Indian revenue of the top five company’s account for just above ten percent of

their total revenues.

Overall, it is thought, the large spate of consolidation that

is underway in the US will affect Indian companies as well. Many of them, being

smaller companies, will be softer targets for US companies, which are good in

strategy and creative but want to scale up their technical expertise.

However, some companies will definitely make it to the top

bracket and may even replace the big Indian names as the most premium services

companies from India. As Arjun Malhotra, CEO of TechSpan and co-founder of HCL,

puts it, "Tomorrow’s Big Five could be totally different from today’s

Big Five."

Let us see whether any of the Indian pure-play e-biz

consulting companies will make it to that coveted Top Five of tomorrow.

Shyamanuja Das