Juniper has leapt on the truth that it will not be enough for operators to upgrade their radio and core networks to support 5G – to get the full benefits, and justify the cost, they will have to transform their whole platform, including fixed-line xHaul and digital infrastructure. This is the way for a company with no cellular presence to jump on the 5G bandwagon and try to increase its footprint within some of its existing operator customers, or secure new ones.
Juniper and Cisco (see below) have both been under pressure in their service provider businesses, partly because of the recent years of slowdown in telco capex. 5G may bring new opportunities, but they are faced with an increasingly powerful router offering from Nokia, which also has the ability to offer end-to-end deployments. So Juniper is making its message as 5G-oriented, and as end-to-end as possible for a non-radio supplier.
It has refreshed its metro, core and edge network portfolio to support 5G requirements, including virtualized networks and better integration with cloud and edge infrastructure and services.
“The reason we’ve leaned in on 5G transformation is because the service providers have to transform the way their networks fundamentally operate,” said Donyel Jones-Williams, a director of product marketing at Juniper.
He is particularly focused on the need to address the metro and edge networks, not just the big central core routers, because 5G will be even more distributed than its predecessors, with base stations and cloud compute nodes being implemented ever closer to the user to improve responsiveness and support analytics on massive amounts of data.
Juniper sees the metro as the boundary of the service provider’s network – so the cell tower, in 5G. Jones-Williams told FierceWireless: “We’re anticipating the infrastructure needed at the cell tower all the way back to aggregation will need to go through a refresh.” Then the edge runs from the tower to the consumer, in Juniper’s definition, or where the evolved packet core and data center will often be placed in 5G.
“The one trend we’re seeing moving forward is we’re going to see more of the traffic be consolidated in the metro and edge, and less consolidation in the core network,” he said, and so transformation will start on the outer reaches, where content and services need to be delivered closer to customers, and then spread to the core.
To support this thesis, Juniper introduced an expanded Metro Fabric portfolio with updates to its ACX700 universal metro routers (though these will only be available during the first half of 2020). For the edge, it announced a new MPC11E line card for its MX2000 series 5G universal routing platform, which is powered by its own Penta silicon. And for the core, it has unveiled the PTX10008 and PTX10016 universal chassis, which also use its own silicon, Triton. The edge and core products will be available during the second half of this year.
Combined with Juniper’s Contrail software portfolio, the vendor claims its new infrastructure offerings enable “a secure, automated and cloud-centric architecture that will unlock new revenue opportunities for service providers”.
“Service providers seek agility, cost savings and new services from 5G networks, but capitalizing on these benefits requires a complete transformation of infrastructures, operations and services,” said Brendan Gibbs, VP of product management. “With today’s announcement, Juniper Networks is giving service providers the building blocks required to create 5G-ready networks built for simplicity and agility that are capable of supporting immense traffic demands for the future. By combining the attributes of secure and automated cloud architectures, Juniper is ushering in the next era of service provider networking.”
Juniper’s arch-rival Cisco will also be hoping that 5G will help it turn its service provider business around. This was a dark spot in its most recent quarter, as it has in many quarters over recent years. Service provider revenue is falling as a percentage of total revenues and that was the main factor in a decline in router sales, even as overall revenues rose year-on-year.
For the second fiscal quarter of 2019, Cisco reported total revenue of $12.4bn, up 7% year-on-year, while non-GAAP net income was was $3.1bn, up 6%. Switches, routers and other infrastructure were up 6% year-on-year to $7.13bn, representing 57% of the total. But the increase in infrastructure sales was far slower than in software units, which are gradually replacing hardware as Cisco’s key drivers, and so changing the nature of its business.
And within hardware, the growth was driven mainly by the Catalyst 9000 switches and SD-WAN, while the more traditional router products declined because of weakness in the operator segment.
On the software side, sales of applications, including AppDynamics and WebEx, were up 24% year-on-year to $1.465bn, and security was up 18% to $658m. Subscriptions are an increasingly large percentage of software revenue, growing by about 10 percentage points year-over-year, to 65% in the most recent quarter, up from 54% in the year-ago quarter, said Cisco.
The strongest industry business was the public sector, with 18% growth, followed by enterprise on 11%, and commercial (small and medium businesses) on 7%. Only the service provider segment declined, by 1%, though Cisco did not comment on the reasons.
The company offered guidance for 4% to 6% revenue growth in the current third quarter, with non-GAAP earnings per share of $0.76 to $0.78.