Antonio Neri: HPE has ‘pretty significant’ network market share runway with US$14 billion Juniper acquisition

“We more than triple the addressable market and the combined business is still below 20 percent market share which means the runway is pretty significant,” said Neri.

Hewlett Packard Enterprise CEO Antonio Neri told Barclays Global Technology Conference attendees that his company’s US$14 billion acquisition of Juniper Networks has the potential to pack a high margin network market share punch in the years ahead.

“We go from approximately a US$35 to US$40 billion total addressable market to $135 billion addressable market,” Neri said. “So we more than triple the addressable market and the combined business is still below 20 percent market share which means the runway is pretty significant.”

The proposed acquisition would set into motion an epic AI networking battle with longtime network market leader Cisco Systems, who have dominated the networking market for decades.

Neri said the market share runway with the Juniper service provider and data center networking portfolio comes with a higher margin profile than the current HPE product set. “That is why I am excited again from an innovation perspective, from a customer relevancy perspective, and from a shareholder perspective,” he said. “This is a very unique combination that is very strong”

Once the HPE-Juniper networking deal is finalized, Neri has said, HPE will be a networking company at its core with an US$11 billion networking business that represents about one-third of the company’s revenue and more than 50 percent of its profits.

Neri told investors just last week he is confident that the deal will be finalized in the early part of next year. What’s more, he said, looking at “margins and contributions from each of the businesses” networking will be the “biggest upside HPE will have in 2025 and 2026.”

When HPE unveiled the blockbuster deal nearly one year ago, it emphasized that once completed the combined HPE Juniper portfolio will be weighted toward “higher-growth, higher-margin businesses with large free cash flow potential, positioning HPE to enhance shareholder return,” while also opening the door to additional investments in “high-growth areas” such as AI and cloud.

Neri said that once the deal is closed HPE will have “every aspect of the networking stack” to “challenge” what he referred to as the unnamed incumbent. He said the HPE Juniper combination will provide customers with a “modern, secure, and AI” driven network stack that will be able to keep up with the demands of the AI era. “The networking infrastructure today is not keeping up today with the demands of AI,” he said.

Fundamentally, the HPE Juniper combination will provide a full edge to cloud architecture with its own silicon. In fact, Neri said, HPE has with its own silicon with its Aruba campus switching product. “I do not buy 90 percent of the silicon from Broadcom,” he said.

Besides the HPE Aruba networking silicon, Juniper will bring a “lot of silicon along with a high-performance fabric with routing and data center switching products,” said Neri.

“So those are two aspects – silicon, infrastructure, operating systems- they are proven on the Aruba AOS-CX which now has more than 30 million ports deployed and then obviously the Junos OS on the Juniper side both for switching and routing, and security, traditional firewall with Juniper and what I call cloud native approaches with SSE with SD-WAN,” said Neri. “We have an SD-WAN business which I acquired in 2020 with Silver Peak and then all the AI Ops capabilities.”

Ultimately, the HPE – Juniper combination will provide customers with a “much better architecture that will catch up with the demands of AI,” said Neri.

HPE’s breakthrough Slingshot high performance network interconnect fabric and HPE’s breakthrough liquid cooled supercomputing architecture is also critical to bringing customers a big AI architecture advantage, said Neri.

The HPE Juniper technology muscle will also give HPE an advantage in the storage business where it will now be able to replace third party switches in storage arrays with its own switches, said Neri.

Juniper gives HPE an 800-gigabyte router and a data center QFX fabric that will provide the data center muscle to further propel an AI architecture, said Neri.

“With our Slingshot fabric plus high performance silicon from Juniper we can collapse that fabric and provide more capex and opex savings because you don’t have to manage two control planes or sometimes three control planes,” he said. “That is an opportunity for us.”

HPE also has silicon photonics that it intends to make available to the networking business to capture the “interconnect opportunity” outside the data center, said Neri. “That’s why the opportunities are pretty significant beyond just the synergies of the deal that generally financial people tend to understand,” he said. “But what excites me is the ability to capture this massive inflection point with synergies of the deal that makes this a no brainer for shareholders.”

C.R. Howdyshell, CEO of Advizex, a Fulcrum IT Partners company and a top HPE and Aruba partner, said he sees the combined HPE Juniper Networking business as one of his company’s biggest upsides to high margin revenue growth in 2025.

“The Juniper acquisition completes the puzzle for HPE,” he said. “It solidifies their position as a networking partner with a much bigger total addressable market. That is one of the reasons we are making a concerted effort to grow that networking business working with them. In fact, we are putting together a networking SWAT team to go after this business. We see the opportunity to grow our networking market share with very strong margins. HPE demonstrated they could do that with Aruba. I would expect the same success with HPE Juniper and the partner community.”

One of the big upsides for Advizex is that it already has top networking talent to go after that networking business, said Howdyshell.

“We already have the skill set,” he said. “We just haven’t had a concerted focused effort with one of our top OEMs like HPE. Next to AI this will be our second most significant opportunity for revenue, gross profit and market share growth.”