On January 26, 2106, Juniper Networks announced that it was acquiring BTI Systems. Terms of the deal were not disclosed. The acquisition will allow Juniper to more effectively compete in the fast-growing cloud and data center interconnect (DCI) market.
Juniper’s main business since its inception has been in the switching and routing market. The company has never been directly involved in the optical transport market, choosing instead to develop partnerships that bring optical capabilities to its product line.
Over the past several years optical and packet technologies have converged; switching and routing vendors (including Juniper) have introduced optical transponders on their equipment and optical vendors have added IP/MPLS features to optical gear, creating a new WDM segment called converged packet optical (CPO). Additionally, SDN network control software has emerged as a way to provide multi-layer convergence between the switching and routing and optical layers, creating an end-to-end solution. At the same time, optical transport for DCI has become an important market for both switching and routing and optical vendors.
Acquiring BTI systems is a good move for Juniper. BTI Systems is the leading provider of metro DCI equipment to Internet content providers (ICPs). The company was one of the first to recognize and take advantage of the emerging DCI market, and the acquisition bolsters Juniper’s ability to compete directly with rivals Arista and Cisco. Cisco has its own line of CPO equipment, and Arista has a partnership with Infinera in addition to its own transponders.
More importantly, Juniper’s SDN solution will dovetail nicely with the BTI CPO and Ethernet access equipment and significantly increase the R&D resources available for product development. BTI Systems was facing strong headwinds because many of its optical rivals have been developing purpose-built DCI products to address the metro DCI opportunity. Still, many ICP and carrier-neutral providers (CNPs) are looking for integrated packet processing and MPLS routing features in addition to transport, which is the main strength of the company’s CPO products.
While we view the acquisition as a plus for Juniper, BTI’s 100G transponders were developed using merchant component technology, and the company may find itself at a disadvantage in the DCI market over faster-moving ON vendors that are developing coherent DSP in-house. As for Juniper’s optical partners Adva and Coriant, we expect commitments to be honored, but over time the company will likely move away from partners and rely instead on internally developed technology.
Market Share Spreadsheet: 3Q15 Data Center Interconnect (DCI),TE0006-001164 (December 2015)
Market Share Report: 3Q15 Data Center Interconnect (DCI), TE0006-001163 (December 2015)
2016 Trends to Watch: Optical Networks, TE0006-001165 (December 2015)
Ron Kline, Principal Analyst, Intelligent Networks
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