 Live from Santa Clara, California. Extracting the signal from the noise. It's theCUBE, covering Nextwork 2015. Brought to you by Juniper Networks. Now your host, John Furrier and Stu Miniman. Hey, welcome back everyone. We are here at Live in Silicon Valley for Juniper's special presentation of theCUBE. This is Networks 2015 NXTWRK, that's the hashtag. Juniper's customer summit. Our first summit, we have a special CUBE presenting, we go out to the events and extract the signal from the noise. I'm John Furrier, the founder of SiliconANGLE, showing my co-student Miniman of wikibon.com, our analyst in infrastructure and cloud. Our next guest is Brad Casemore, IDC Research Director of Data Center. I am super excited to have two analysts here to break it all down because a lot of action. Brad, welcome back to theCUBE. Thanks very much. Really appreciate it. The numbers, I mean you can slice and dice the market shares 10 ways from Sunday. I know you guys do that at IDC. Do a great job doing that. But there's a seed change going on. We saw the Dell buying EMC, Western Digital, and HTST, huge consolidation, Oracle with their messaging last week in the cloud. All the moves are being made. The ones that have founder-led with Pradeep is still in the company. The seed changes happen. The waves of innovation are here. Platform three is crashing on all the boats. Who's going to sink? Who's going to survive? That's the number one question. So you can, the market share will shake itself out. But what's your take right now? The data center really is a full-on frontal, total warfare going on right now. What's your take? Absolutely. Great questions. And I do think that what you're seeing is, I mean we're seeing industry consolidation. We're seeing some companies go from being public to being private. We're seeing tremendous competition in the traditional data center for the amount of spend on data center infrastructure across compute, across storage, across the network. And I think we're seeing some, of course the whole thing that's happening across this whole spectrum is the move to cloud. And I think obviously cloud will have a growing impact on the traditional enterprise data center market. And as enterprises move workloads out to the cloud, that will have an effect on the infrastructure providers to those enterprises. So cloud is a huge factor going forward. And I think it's the underlying driver for a lot of this consolidation we're seeing. Yeah, Brad, you and I've been talking about this for years now. How's Juniper doing? We talked to some of their executives about hyperscale. They said it's grown really fast. They are partnering with some big companies. Of course they're not sharing names, but if the cloud becomes what many of us think it becomes, and it's obviously real, Juniper has a few places that they play, but how are they positioned for that hyperscale market? Right, that's a great question. I think one of our analysts, Rick Viller, often says many enterprises from the medium size ones to larger ones in the next few years will decide whether they want to stay in the data center business. In other words, whether they want to continue to run all the wraps in their data centers. And they'll move some to the cloud and the question is how fast they move. I think the question for Juniper is, I think they are, they certainly have a presence in many of these hyperscalers. And the interesting thing is the hyperscalers move forward is they usually put out, obviously they put out bits in their environments to OEMs and ODMs. And they look at their data centers and they say, here's what we're going to do. You know, with our servers, with our top of racks, which is with our storage, with our core switches, with our data center interconnect solutions. And I think for Juniper and all the other OEMs, it's a question of where you feel you want to play and where you feel you can viably play going forward in those environments. I think there's definitely a place. Like you look at the spine, you look at the core routing, you look at data center interconnect. There's definitely business there still for the OEMs. It's tougher at the top of racks, which it really is. Yeah, it's interesting. We've had some of the big companies seem to be making a renewed push into hardware. I mean, we were at Oracle Open World last week. Look at what IBM's doing with their power systems and as they build their kind of hybrid environments, you know, there's hardware in there. I come here to this event and, you know, the message is really clear. We're pivoting to be a software business. What do you think of the strategy? And as that transition happens, we asked, I asked Rami, do you guys need to be private to make that transition happen? And he's like, well, I've got the full support of the board and we're doing what we have, but what's your take on the strategy overall? And do you think by the time we come back next year, Juniper's a private company? Well, great question. I'll do with the first part of it, which was you talked about the different strategies being put forward by Oracle and IBM and so forth. I think, you know, Oracle's trying to sell an entire stack from applications right down to the infrastructure and they're trying to sell to a lot of the enterprises where they already have a presence. I do think they are threatened by cloud though. And I do think, you know, over time, we're going to see some migration. Certainly new apps that are being spun up are being spun up in more of a DevOps model, more of an orchestrated model where the infrastructure has to be more flexible and not tied to a specific software stack. If you ask about whether Juniper will be private, I think certain companies, I think it's an open book. I think they right now have done a good job of getting the activist investors on board with their strategy. And they seem to be happy with the way the company has proceeded over the last few quarters and the company has delivered solid results over the last few quarters. But maybe as they look further out with the strategy, the private option might be attractive to them. Absolutely. Yeah, you know, I liked a lot of the messaging here, but one of the concerns I have is that, you know, I heard the words choice and I hear open a lot. And we've heard some of these messages in networking for quite a bit. I mean, for the longest time, it was, you know, I'm the alternative to, you know, the elephant in the room, Cisco. And, you know, open source is, you look at many of the other providers and everybody's hanging their hat on open, especially if I look at, you know, say, Contrail. It's like, well, Contrail's open now, but so is open daylight. And, you know, there's the open V-switch and some of the things and some of the other pieces. Smaller players like Mitakura. Yeah, yeah, many of the players here. It's, you know, everybody's working on open stack too. So what's your take on the strategy? Where does Juniper win? And, you know, where are they in trouble? Well, I think it's really interesting, right? You mentioned open daylight and we've talked to enterprise customers and we've done surveys. And it's not resonating well right now among enterprises. And I think enterprises may feel it's, you know, maybe too early, maybe difficult to stand up. I think in Juniper's core markets, Contrail has a good profile. I think the open Contrail initiative was a good move by Juniper. And, you know, Telcos are looking at how they can use Contrail. You saw the AT&T announcement that Juniper made. I think there are some cloud providers and also some, for one of a better term, I'll call Web 2.0 companies who aren't hyperscalers, but basically are, you know, very much of the cloud model, born in the cloud companies who have bought into DevOps. And I think that they tend to like it too. It's an open book as to, you know, who, how the, we'll call it the network virtualization overlay market will shake out over the next little while. Juniper's certainly got a strong horse in the field with Contrail, I believe. What's your take on the analytics piece of this business? Because the data center is internet of things, you know, storage ground, whether that's on-prem, private, or public. A lot of data being ingested in, more surface area for attacks, for security. How do you see that shaking out for these guys? Are they in a good position or this open platform going to be good? Yeah, the analytics are going to become a key piece. And the analytics are going to become a key piece, not just in the sense of the internet of things, where, you know, you would expect it to play across a wide variety of vertical markets. But I think it's also going to play a very critical role going forward in security. And it's going to play a very valuable role in terms of network visibility, especially as we move to cloud environments and hybrid cloud. So I think we're going to hear more from vendors like Juniper and the other networking vendors and system vendors about how analytics plays into infrastructure performance and visibility. It's going to be security. I mean, it's a big opportunity for them. And they've always had good technology leadership. They've always taken bold moves. We heard that from the management team. But I got to get into the disaggregation of Junos, which is a gamble. It's a good, I mean, they're moving the ball down the field. This is very much a, you know, Tom Brady-like, you know, play go deep and score with this one. Or, you know, we'll see. But other vendors are not taking that approach. They're coupling Oracle, for instance. Engineered systems, encryption on silicon. Juniper's taking a much more of a horizontally scalable approach. It's different religions. We've got the Democrats and Republicans here. I mean, something's going on. What's your take on this? How do you make sense of that? And how do you advise your clients? I think a lot of it comes down to the customer basis that they have, right? If you look at Oracle, started of course as an application and of course database company. They're looking at, you know, how they can serve those customers by providing them with, you know, integrated infrastructure for those environments. I think Juniper's dealing with a telco environment and with cloud providers and some large enterprises who are actually looking at how they disaggregate, how they automate, how they orchestrate. And I think it's pulling them in the direction their customers want to go. You know, Oracle is certainly trying to serve their own customers in their own way. But you know, I think a lot of it comes, it's a result of where they are and where they play. And not just in terms of customers, but what they're providing, right? Oracle started with the app and they're trying to provide an Oracle stack, if you will, right? Juniper's trying to provide an application market. And that application market's going to be a tsunami. We can see that kind of developing. But it's interesting, database trying to drive down, network moving up the stack, classic dilemma that Cisco Juniper have been in for a while, so I want to get your take on the telco kind of use case. And is that the proxy? Is that the tel sign for the enterprise? Because telcos have been building out really, really fast. Well, you know, a lot of it is, we kind of see it as the most advanced folks out there in terms of pushing innovations, whether it be in, you know, containerization, microservices, you know, new approaches to infrastructure or the hyperskill guys. And they've kind of, they have tremendous talent at their disposal. You know, if you look at their engineering teams, it's cream of the cop, crop PhDs, tremendous talent in those organizations. Telcos are trying to emulate them in a sense right now in certain respects, not across the board, but in certain respects. And they're trying to disaggregate in very many places in their network, like for instance, the central office. You know, the whole idea is, we're going to use web scale principles there. And then you've got a lot of enterprises in financial services and your large companies that sort of look like hyperscale, right? They've got multiple data centers. They've got a lot of infrastructure. They want to automate an orchestrate, tier two and three cloud providers. I think the challenge for a lot of enterprises isn't necessarily a technological challenge around architectures. It's resources and it's talent. I think it's tough for the enterprises to win the talent war when they're competing with hyperscalers, vendors, telcos. It's, it's very good. So this is a good point. I love this conscious because the telcos, I mean, let's tend to take it down to low hanging fruit and we'll move up the tree of self preservation. Telcos really were put on notice even like five, six years ago. I mean, so over the top, they saw what's going on. So they've been really building out and seeing OpenStack. All these markets, they're early adopters in there. They're jamming hard because they have to. So there's a little self preservation there. Absolutely. Are the enterprises at that point of self preservation because they're born in the web companies they're moving, you're seeing box.net, I mean, they're. I think that point probably hasn't come across the broad based enterprise market, but I think it will, right? And we've seen this before with a number of technologies previously. As soon as a leader or, you know, a fast follower in your vertical market decides to do things a certain way and it confers competitive advantage, right? A new architecture, a new operational model, whatever. I think that all of a sudden gets the attention of everybody else in that vertical market in that enterprise vertical. And they say, well, I have to make the same move. I think the challenge for a lot of enterprises across not all the vertical markets, but a great many of them, is that they haven't yet felt that direct competition. Although there has been some disintermediation from some of the newer companies in various vertical markets. You know, you referred earlier to the third platform. A lot of companies were born on the third platform. And in the last 10 or 15 years, they've been some of the companies that are disrupting some of these vertical. They're nipping at the heels of the incumbents. And I think that might, that self preservation might come. Exactly. So that self preservation and say, wow, I got to do these things, or else I'm going to lose market share and I may become less relevant. So let's talk about the operational models. You mentioned that. I want to drill into that. Where do you see the disaggregation of Juno's really having the big splash right away? What's the obvious landing point for that? Well, I think if you look at Juno's customer base and some of the folks who've been talking about white box, like for instance, AT&T, right? They've ever since O&S, I think Stu, you were there this year and you might have been there too. They were talking about how they can use white box, how they can disaggregate. And I think this is a natural play for some of those telcos who are very aggressively moving down this particular road. And some of those are very big telcos who have a lot of buying power and considerable influence. You know, there may be some cloud provider, public cloud providers, OTT cloud providers who are interested in this. There are certainly some, what I'll call again, those web 2.0 companies, companies that are born on the web and operate on the web. Web is the primary storefront. I think a lot of those companies are already DevOps and Linux shops. They may be interested in getting the power of Junos through disaggregation in their environments. I think there's a number of different candidates, but I think the telco install base that Juniper has is one market that they're aiming at with this. Yeah, so one of the challenges we always have is that you're fighting inertia when you try to drive new technologies. In the networking space, I draw diagrams and you talk about the decades that it takes to make these moves go forward. Service providers seem to be moving faster and the people here and the message here is about embracing change. How would you rate Juniper? Are they still, for a company that's been around since really the growth of the internet? Are they driving innovation? Are their customers moving forward? Are they fighting for the future or defending the past? I think they're relative to certainly pure play networking vendors. I think they're being relatively aggressive and they're trying to embrace this change rather than let it wash over them or be reactive to it. And I think we saw that with the disaggregation announcement. We saw that with what they're doing with the virtualized CPE. I think we're seeing that in a number of different areas. I think they're obviously trying to address all of their customer base and their customer base may not be ready for some of this, some of their customer base, but they want to make sure they're moving in lockstep with the customers at the leading edge as well as serving the ones who maybe aren't ready to make these moves. So I think though on the whole, they've been for what I would call pure play networking company, not a company that has the rest of, you look at some of the major IT infrastructure players, certainly Dell and HP, they also have servers and storage and a lot of other stuff. I think I look at Juniper and I think from a pure play networking company, they've been pretty aggressive at trying to get out in front of this change. So take a step back on the SDDC. You guys are analysts too, Brad. Let's talk about who's winning, who's not winning. I mean, I see, I mean, that hype of SDDC self-driving data center has been out there for a while. Is there meat on the bone yet? I mean, are we seeing it? Is it NFV? Is it SDN? Is it happening? What speed is it happening? Can you peg an inning on it? Well, you know, it's doing, you can jump in. I'm sure you've talked about this. I know I've seen some of the stuff you've written on it too. You know, I think it all depends on where you're looking in the market right now. And certainly NFV in the telco world is a hot button issue, certainly at the CPE where Juniper's aimed right now. I think that's where they're feeling the most pain and opportunity. You know, they want to reduce their operational expenses. They want to lower CAPEX as well. They want to provide more agility. I think that makes a lot of sense there. I think we are seeing, if you look at it, certainly what some of the hyperscalers and public cloud vendors are doing, they've kind of done their own software-defined data center. And the question is, where can the OEMs play as private cloud happens with the SDDC? And how well can they do in that enterprise market? And I think certain verticals that's happening faster than others. And we'll see how it plays out. Stu, what's your take? I mean, definitely, I think much what Brad said. NFV kind of came in after we were starting talking about SDN and it's a simpler deployment model. I mean, it's just telcos had services that they have and now it's simpler to deploy it and they kind of own the end-to-end solution. SDN still feels like there's a lot of pieces involved in it. And you've got Cisco pushing hard with their ACI message, starting to make some progress and starting to see some real stack solutions put in the whole piece together. Of course, VMware's got a big push with NSX and Juniper's a partner there, so they're going to offer that. I've gotten kind of mixed response on some of the contrail and SDN discussion here. I know it's of top interest to the attendees here, but I was actually surprised that more of the service provider kind of, as you would call tier two cloud guys aren't fully embraced in it. They're kind of looking at it, testing it, kind of get ready of it, as opposed to the big cloud guys have been using some of these technologies that they've built themselves for years. So we're getting there, as I always say, we're knocking down some of the red flags and do I see a runway to be able to get there? But if we're in hockey, I think we're still in the first period, John. So, move to a hockey analogy from baseball and football. No, we go right to hockey. So, are they playing good press? Are they forechecking well? I mean, they're taking an offensive strike here. They're dumping and chasing, they got the pressure on. Juniper is making a big bold move. They're taking an offensive strike, certainly by disaggregating Juno's. The new switch has been called a monster, beast, whatever, and we saw that on Twitter. Break that down. The new switch 5200 has been called a monster. How does that impact? Do you see that taking share? Well, it's interesting because I think one of the reasons you're seeing disaggregation is because if you look at top of Rex switches, for the most part, right now they're using merchant silicon, specifically Broadcom, and all the vendors have essentially a very similar box based on Broadcom, depending on which Broadcom rev of chip they're using or chips that they're using. So, the differentiation will be occurring in software and how your software works with orchestration system, how programmable it is, and so forth. And I think at least at the top of Rack, the performance will be similar. There are certain things you can do to maybe differentiate a little, but it's going to be the same merchant silicon, and is the same merchant silicon, for the most part, at the top of Rack. I don't want to use the word commoditization purely, but it's heading in that direction. Talk about the data center trends. We heard, again, Larry Ellison, again the keynote at Oracle, bring that back up because he put some stakes in the ground, classic rhetoric and dogma we hear from Oracle, and it makes sense. Oracle on Oracle runs better when you're on Oracle. So, engineer systems kind of make sense there, but he's saying push down, flatten the commodity hardware. That puts the server, storage, networking vendors kind of flat footed if you're a pure play box mover, which some people will say Juniper is. He's also made a statement that I want to push encryption and security into the chip, software and silicon. So, a lot of in memory, a lot of that silicon, how does that vision and or that vector change or impact Juniper in any way? Well, I think that'll play with certain Oracle customers who are very comfortable buying into a complete Oracle stack. There are some enterprises who will do that. I don't think that's going to be play for some of the telcos that wanted to segregate and want that sort of open orchestration where they can innovate on top through software. I certainly don't think that's going to play at all with hyperscalers who've kind of gone in a different direction anyway with their applications and their database technology. So, I think it's a question of what you're targeting and who you're targeting. And, Stu, I think that's something we've talked about before. I think Oracle's got a very different conception of where they think they can maintain their installed base and maybe grow it over time compared to some of the other vendors. So, Brad, one of the things we love about an event of this size is you get really good access to some of the executives there. They've had the analysts, big room down the hallway, some open sessions, some deep sessions. Any particular nuggets that you could share is just something that you're saying, Juniper's doing something really cool maybe not getting the attention that it should. Absolutely, I think they've done a very good job at being, it sounds weird, but bold and pragmatic at the same time, right? Because they will work with VMware in VMware environments where they can provide the underlay and gateways and visibility and security and so forth. Security complement VMware security. And they understand that NSX is going to be certainly forced within the VMware installed base. At the same time, they realize they have an opportunity with Contrail and OpenStack environments and other telco environments as well. They understand that network disaggregation is something that's going to be popular with a certain segment of their customer base and they've got to embrace it and really move forward with it. I think those things came through loud and clear. I think they're really trying to be forward looking and to John's point earlier, I think they're really trying to embrace these changes rather than be defensive about them and that's really important because if you're defensive and seem to be fighting the trend, it's not a good thing. Brad, thanks so much for coming on, your busy schedule. Thanks for sharing the data here and inside, inside theCUBE. Appreciate that. I'm here sharing the data here on theCUBE, our flagship program, SiliconANGLE TV for all the videos and go to our new crowd pages technology, crowdpages.co slash nxtwork for next work, crowdpages.co slash nxtwork. It's a special site, I just loaded up today and all the videos are up there, all the keynotes are up there, all the social networks are up there and that's powered by CrowdChat. We'll be back with more after this short break.