Juniper Networks’ Rami Rahim On Apstra, ‘Experience-First’ Networking and How Juniper Mist is Taking Off ’Like A Rocket Ship’
‘I have a high confidence level that we‘re on to something in the data center, with Apstra, that looks very similar to Mist, in terms of crushing the cost and the complexity of running data center networks,’ Juniper CEO Rami Rahim tells CRN in an interview.
Growth Curve
Juniper Networks is seeing unprecedented, triple-digit growth in bookings thanks to its strong “experience-first” approach to networking and a significant and growing software business, according to CEO Rami Rahim.
In fact, Juniper‘s fiscal Q3 was the company’s fifth consecutive quarter of year-over-year revenue growth, with orders growing more than 50 percent both during this most recent quarter and Q2 2021, even in the face of supply chain challenges. The Sunnyvale, Calif.-based company also captured its highest-ever quarter of software orders, with software revenue up 67 percent year over year. Juniper’s annual recurring software revenue, or ARR, grew by more than 34 percent year over year.
Juniper has been injecting AI all over the network via its Mist platform, which is helping the company win against the competition. And it‘s a huge part of the company’s differentiated networking strategy that involves harnessing data to radically simplify life of the network operator or channel partner. The next step, Rahim said, is incorporating SD-WAN via its acquisition of 128 Technology and reducing complexity in the data center via its purchase of intent-based networking startup Apstra.
Rahim sat down with CRN during Juniper‘s virtual 2021 Global Analyst, Influencer and Media Summit for an exclusive talk about the company’s burgeoning software business and how partners are contributing to that growth, the rebalancing that’s happening between public and private cloud, and the integration of its 128 Technology acquisition and how Juniper is “on to something” in the data center with its Apstra buy.
What follows is excerpts from the conversation.
How are partners contributing to Juniper's record-breaking software growth the company is seeing this year?
A substantial amount is coming through partners. Practically all of our enterprise business comes through partners in some way, shape or form. Generally speaking, fulfillment and services and things like that are done through partners. But there is a long tail of smaller enterprises and medium-sized enterprises that are increasingly becoming partner-led motions where honestly, Juniper is doing less and less of the upfront selling. And that‘s great. I think that the investments that we’ve made, especially in our enterprise solutions around client-to-cloud and data center, have caught, first, our customers’ and prospective customers’ attention. But now they’ve definitely caught our partners’ and prospective partners’ attention, because what we’re seeing is a record number of partners that are coming to us and asking us how they can participate in the sales process. So that, of course, is music to our ears because we rely heavily on our partners.
Software-related services grew 67 percent year over year. So clearly it‘s becoming an increasingly significant portion of our business. Our ARR recurring revenue software grew at 34-plus percent year over year. That’s the portion of software that we care the most about, honestly, because recurring revenue is sticky. It’s very strategic [and] predictable. In 2020, total software represented around $500 million of Juniper’s total revenue and we committed to the street that we would grow that by 1.5 x by 2023. So far, just based on the performance of our software business, we’re expecting to exceed that number. We’re ahead of our own planning.
How are partners getting involved in Juniper's experience-first networking strategy?
[Experience-first networking] really is a true north at Juniper. In everything we do, every investment we make, every product we decide to build, or any new service offering that we provide, our customers or even partner-led options and strategies that we are evaluating, we‘re looking at it through that experience-first networking lens. It certainly starts with our products and making sure they are developed to delight two important stakeholders: the network operators that are in the trenches keeping that network up around the clock, and the end user, where we recognize that just because the network is up, it’s not necessarily good. We want to understand, in any network deployment, what the experience is like down to every single individual user on that network. So, that in and of itself is a super-differentiated strategy that’s leading to differentiated products.
And, of course, our partners are seeing the results from that differentiation and they want a piece of it. I think there is an opportunity for our partners to embrace technologies that allow them to sell on value, to win more networks, to win more logos, to achieve greater levels of profitability because of their ability to sell on total cost of ownership, and then add to that their ability to innovate on top of it through the open APIs on our solutions. I really think it‘s a very compelling value proposition for partners today.
How is Mist competing against the likes of the competition, like Aruba ESP and Cisco Meraki?
Mist is like a rocket ship right now. We had another quarter of triple-digit growth. It‘s the first triple-digit bookings quarter for Mist, just standalone wireless. But in addition to that, now we’re absolutely seeing the pull-through effect Mist has on other parts of our portfolio. Integrated wired switching, our EX portfolio, is part of the Mist end-to-end automation framework, and we are seeing record EX pull-through. In fact, the EX pull-through business grew 200 percent year over year and that’s entirely because of the Mist pixie dust.
And then, we‘re integrating 128 Technology. It’s still early for 128 Technology, but the number one priority for us is to integrate 128 so that becomes part of the same seamless client experience that goes with wireless, wired and SD-WAN. But even absent the Mist integration, 128 is growing really nicely on a year-by-year basis. We’re winning customers, we’re certainly getting the attention to more and more customers that are understanding the value proposition of 128 as being a very unique SD-WAN solution that doesn’t depend on tunnels, that’s very lightweight and cost effective. I just think that once integrated with Mist, 128 will have the ability to ride the Mist coattails and that growth will only accelerate. That will happen in the early part of next year.
Where to next with the experience-first networking strategy?
The next natural piece of that end-to-end path is SD-WAN. We chose 128 Technology for some very specific reasons. First, it‘s an exceptional team with truly unique technology, but it also is the solution that has the greatest synergy with Mist. And what I mean by that is, the Mist AI engine, Marvis, thrives on data. The more data you can feed Marvis, the more it learns and the smarter it gets. And because of 128’s unique tunnel-less architecture, it can provide an unprecedented level and depth of data across the network, that then becomes precious to the AI engine Marvis as part of Mist. So, that’s the next big thing that we are focused on.
But that said, because Mist is a cloud-delivered value proposition, the pace of innovation has never been greater at Juniper across any solution, because we‘re able to roll out new features and new capabilities practically every week. One thing that we recently introduced was the idea of Mist now controlling, operating and assuring campus environments that are using EVP [Ethernet Virtual Private] and VXLAN [virtual extensible], and if anybody knows anything about EVP and VXLAN, is that it’s got some great capabilities, everybody wants it as a network architecture, but it’s not necessarily the easiest thing to go and deploy and operate. Well, Mist can dramatically reduce the cost and the complexity of operating campus environments that are based on EVP and VXLAN.
Are supply chain challenges impacting Juniper’s business?
It‘s obviously a challenge and it’s not specific to Juniper. It’s not even specific to networking or IT – it is really a global challenge that right now is affecting practically every industry. At this point in time I think we’re working very effectively to navigate around that challenge. We’ve seen meaningful growth in revenue this year, despite the headwinds due to supply chain. We’re increasing the strategic nature of partnerships and engagements with our own suppliers. I do expect that it’s going to persist for some period of time, but I expect it to start to get easier next year. I don’t think it’ll come back to normal next year, however, the situation should gradually improve next year. My hope is that by the time we get into the first part of 2023, things will be much more normal.
Is Juniper seeing a resurgence in the data center business as more businesses adoption hybrid cloud?
In general, yes. And really, the key is going to be both. There will not be a single winner – it‘s not going to be all public cloud or all private cloud. There has been a bit of a recent rebalancing of thought in terms of what payloads, applications and data sets stay in the private cloud and which ones move to public cloud. But I’ll tell you, many customers have already decided that there will be, necessarily for a variety of reasons, large amounts of apps, workloads and data that needs to stay in private cloud, but honestly are scared and concerned about the complexity of operating a data center that is truly world-class that can essentially be secured and can provide assured connectivity all the time. And this is precisely why we bought and why we are integrating Apstra. It is designed ground-up by industry luminaries in the data center space to address that concern for our customers so they can achieve public cloud-like automation, but with the simplicity of what the public cloud brings to the table. And this is why I feel so confident about that strategy right now.
What's the next big area of opportunity for Juniper partners?
I think that partners are really responding well to the areas that we‘ve innovated in, especially in the enterprise. I think with Mist, everybody gets it. Honestly, every partner conversation I have today, Mist is a key component. I think winning brings momentum and momentum brings attention. And there’s a virtuous cycle here that we’re very proud of.
I’m seeing similar data points – although it’s earlier – in the data center, with our Apstra acquisition, as I was seeing with Mist in the early days. So I have a high confidence level that we‘re on to something in the data center with Apstra that looks very similar to Mist in terms of crushing the cost and the complexity of running data center networks It’s really going to pay off for our customers and our partners. So my call to action for partners is to take another closer look at what we’re doing in the data center space because I think they’ll find it really compelling.