Juniper's purchase of Unisphere a 'smart move'

Juniper Networks is buying edge-router rival Unisphere Networks in a deal that will blend the second- and third-largest sellers of service-provider edge routers and pit them as a combined force against Cisco Systems Inc. in that arena.

The combination also means Unisphere's parent company, Siemens AG, will resell all of Juniper's gear.

"Juniper had actually lost some of their market to Unisphere, so this was a smart move on Juniper's part," says Christopher Nicoll, vice president of Current Analysis Inc. Plus, Siemens reselling the gear brings Juniper worldwide sales and support networks, as well as an established stable of service-provider customers, he says.

The challenge the combined company will face is integrating two edge router platforms the companies have developed, Juniper's M40 platform and Unisphere's ERX, says Ron Westfall, an analyst with Current Analysis. That will require them to somehow give their disparate operating systems a common look and feel.

One of the attractions of Juniper has been that a single piece of software was common to its entire product lines from edge to core, he says, unlike Cisco, which has several.

But these different software platforms can be seen as a strength, says Joe Ferguson, Juniper's vice president of strategy and product marketing. Juniper's operating system is optimized for core routing, and Unisphere's is customized for handling aggregation and subscriber management, he says. "We have two (operating system) code bases developed from positions of strength. There is no one with an integrated, clean code base that can challenge us," he says.

Lloyd Carney, Juniper's chief operating officer, will be in charge all research and development for Juniper and the research team it acquires with Unisphere, the companies said in a statement.

The planned purchase for US$375 million in cash and 36.5 million shares of stock comes to about $740 million total. The deal is expected to close by the end of the year. The announcement comes just weeks after Unisphere divested itself of its voice gear to Siemens in a private sale for an undisclosed amount.

The deal gives Juniper an edge router that has impressive subscriber management capabilities for IP (Internet Protocol) services as well as high port densities to aggregate customer traffic, Westfall says.

Juniper's Ferguson says he views his company's gear as complementary to packet voice equipment, such as the lines of voice gear Unisphere sold to Siemens. But that doesn't mean Juniper wanted to get into that business directly, he says. "There's lots to understand about voice," he says, and Siemens is in a better position to focus on it.

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