 Live from Santa Clara, in the heart of Silicon Valley, it's theCUBE, covering Juniper Nextwork 2016. Brought to you by Juniper. Now, here are your hosts, John Furrier and Stu Miniman. Hey, welcome back everyone here live in Silicon Valley at Juniper Networks 2016. I'm John Furrier, Stu Miniman. Our next guest is Brad Case-Moore, Research Director, Data Center Networks at IDC. Breaking it down, welcome back to theCUBE. Good to see you. Thanks, it's great to be here again. So, the market's changing, so you guys do a lot of research. The data center is going to the cloud. Every show we go to, it's cloud, cloud, cloud, data center's going away, but the networks are still there. Give us the update, what's going on in the landscape and what's Juniper doing? Well, you're absolutely right about, if we look at where the market has gone, and our numbers are quants and the research that we do all the time, you can see that the growth for data center networking is in these large cloud providers, the large public cloud players. So, that leaves the networking vendors and Juniper's a good example, pursuing growth where they can find it. They can either sell directly to those large cloud players if they can find a sustainable business model and product that can sell them, or they can look at how the cloud is affecting other markets, areas like security, areas like SD-WAN, areas like analytics and visibility. These are areas where companies can go to find growth, and you'll notice that almost all those areas, in fact, unanimously, the software becomes a key differentiator and basically a value proposition in those places. Brad, it's interesting. I think we talked about this last year. It used to be, it was like the knock on Juniper was, they weren't as strong as the enterprises they were in the service provider. And like, well, okay, that's actually now a strength because we've said Juniper has found a way to be some way in many of the cloud providers. It's not that they necessarily have hardware everywhere, but they've got a lot of software. And service riders, they seem to do pretty well. So, is the market moved to where Juniper is and where are they getting some of those wins? Well, right, I think you're right about their service provider installed base, which is, of course, a significant part of their business, is definitely looking to Juniper to leverage a lot of what the company provides, like you look at Junos and you look at Contrail and you look at what they're trying to help them with on the NFV front. I think in those areas, they're aligned perfectly with where the service providers want to go. The enterprise is an interesting story because there you're either looking at private cloud or you're looking at security and you're looking at how you can continue to support the existing workloads in the data centers. And then, of course, you've got the large cloud players and Juniper still wants to have a presence there if they can in switching and routing and data center interconnect and other areas as well. So the market sizing has always been the thing. It used to be speeds and feeds, the ports and market share. Obviously, the shifting, you mentioned the telco opportunity and that growth areas in VMworld, Stu and I were observing like, okay, they failed on the cloud, now they got the vCloud Air network, which has got 4,000, basically telcos in there, service providers. So this is where the, so you can almost see the writing on the wall. Is this an indicator of what you were just saying that the people who can't have pure cloud are going to say, hey, I'll be an arms dealer or an orchestrator or a broker? Right, absolutely. And I think that they're looking at what's happening with, for instance, the enterprises and the CSPs, the service providers, and they're saying, what are they going to need in this world that's mediated and defined by the large cloud players, increasingly defined by the large cloud players? How are they going to look to differentiate themselves and then they're looking at the solutions they can provide to enable that? And I think this is a challenge for all these vendors, no question. Brad, we spent a bunch of years talking about SDN and it seems we had a little bit of a split. There's a lot of action in the service provider space with like NFV, and then security has popped up. So is NFV and the SDSN taking over what used to be the discussion of SDN? Yeah, I think the interesting thing about SDN is we used to talk about it in a data center context primarily and we used to talk about it and we'd say what's happening in the enterprise. I think if you think about the hyperskillers, they've done their own SDN largely speaking and that's done. So there's a lot of SDN out there but it's not necessarily in the enterprise. The enterprise is a growing market but it's not growing quite as fast as perhaps many of us have thought it would. Mainly because they've been dependent upon traditional suppliers. I think so. I'd sell them gear, essentially. You're right and the other factor is a lot of the newer applications, they're looking at public cloud, right? And they're doing SaaS and that's taken away from the need. If applications really drive the network, the network exists to support applications. If you're not doing anything new that diverges from a requirement standpoint from what you've done before, then why do you need to go down that road? And then of course the other issue within the enterprise is the skills gap. You've got a significant skills gap around automation, around SDN, around that full stack engineer that's so hard to find. Well the developers that were in, let's say the Facebooks and the web scales, the hyperscales, we wouldn't call them, they built their own SDN because they had to. Exactly. Apps were specifically tied, the Aka workload, was tied directly to the network, so essentially a custom built network layer, if you will, down to oversimplifying that, but that worked for them. Now you take that to the mainstream, those apps are now consumerized apps on the network, so they want the benefit of custom built, but yet they need off the shelf. Is that what Juniper's trying to say when they say we're software defined? I think they are. I think what they're trying to say is we can take a lot of those great innovations that have come from the large cloud players and we can package them for you and make them consumable and make them usable in your environment. And I think that's exactly what they're trying to do. They're trying to position themselves for that opportunity. What's your take on the announcements that Juniper made? I think it was really interesting to, you know, see the morning keynotes and see how the company was positioning for security. We all know that security's been a challenge for the company and now they're repositioning to, and they really see, and we see it too, the convergence of network insecurity, right? I think that at some point in the not too distant future, security will have to be pervasive throughout the network and the two will become less apart and more together. We're going to talk about them as the same concept and Juniper's clearly in tune with that and they're trying to position themselves as this new player in security around cloud requirements, around what the enterprise is going to require as they move to cloud, as they, you know, build out their private clouds, as they leverage public cloud, as they look to basically provision their branch offices. I think that's exactly what they're trying to do. Security is front and center and I think, you know, they touched on it. We're going to hear a lot more from them and it will be tied to their security, I think around analytics, around machine learning. I know a lot of vendors are talking about that so I think Juniper's going to try to have a very differentiated message in that area. So talk about the competition in clouds. So cloud's interesting, so let's do an eye game with our VM world, Oracle Open World. We're going to be at re-invent a couple of weeks next month and so you have the battle, Azure, we see what they're doing and their stack hasn't come out yet. So you have the big cloud players in Google Cloud now with Diane Greene. The interesting perspective, how they're saying we're end to end. Oracle in particular is starting to see the chip, encryption on the chip to the app. Who can compete with that? I mean, so how does a service provider compete with end to end? So is that the Juniper opportunity? And how do you make sense of that as an analyst? Was there a winning formula in your mind? I don't think, one of the CSPs, I think their opportunity now is in network as a service and security as a service and I think that's why you saw security as being such a strong emphasis. I don't think they can, I think the infrastructure as a service and platform as a service train has left the station and we have the leaders and they're probably going to consolidate. There's still room for CSPs to provide a lot of value in a cloud context around things like SD-WAN, around things like security services and network services and I think that's where Juniper wants to be able to be a key supplier to those. And IoT is right around the corner too. And that's going to be another area, yeah. All right, any new forecasts or data that you'd like to share from IDC that will help tease out the landscape and as networking evolves? Well, you know, we've talked about SD-WAN being a 2020, six billion dollar market. That includes not just product revenues but also service revenues. So from the service providers. That's an area where the service providers, if they can see the big picture and realize that there's a lot of security revenue, there's a lot of network services revenue that could be bundled in with managing of the WAN. If they can see that opportunity and not get too concerned about possible erosion of their MPLS revenue, I think there's a significant role for them to play but they have to be aggressive because there's also DIY solutions that vendors are providing and there will also be cloud management solutions that MSPs and vendors will be providing. You know, Sue and I always joke about how the horizontally scalable nature of cloud has certainly changed the landscape and some people go by the magic quadrant of this company's leader but you know, the future is there's no magic quadrant and you can pick on garden for a second. To talk about it, the successful company that could be a little bit of a leader here but comprehensively as a winner, that's changing the landscape. And so my point is big data is a big part of the data center now, always has been, but more now with analytics in the security paradigm. I just came back from the .conf conference and they're like, hey, the exhaust from the log files, aka events, connecting the dots here, network has events. The two worlds are coming together in a cyber defense system. I think you're absolutely right and that's going to be a tremendous area of competition over the next little while. We're going to see competition and it's going to be difficult to categorize because you're going to see people who aren't traditional competitors playing against each other in that space. The cloud providers, vendors, major network vendors like Juniper and others are going to be active in that space. Even the ADC vendors are going to look at what they can do from an analytics standpoint. It's going to be very competitive. It's going to be a bloodbath. Brad, you brought up some interesting points there. Just competition from non-traditional players. I'm curious if you have any takes on the companies that are creating their own FPGAs. Big guys like Microsoft and Google now own some of their own hardware themselves. Yeah, absolutely. I think it's very interesting to see how they've progressed from designing their own servers to designing their own switches in many cases to now designing their own chips. You can see that they're very concerned for their own application environments, which are their businesses. It's how they make their money. It's how they make their profits. They're looking at how they can create a very programmable stack. And I suppose, in their own way, that's what Oracle's trying to do as well. Oh, Google announcement today, Google. Made by Google. That was actually the headline of the event. I mean. Yeah, programmable though. It's actually, I'm surprised it's the first time I've heard that mentioned today. And when I think about Juniper for the last 10, 15 years, programmable is one of the reasons that service providers loved Juniper. Rami Nisquino this morning talked about automation. And you know, it's been something we've been struggling with for a long time. Do you think Juniper has a good position here? Do they have a right to be, you know, a partner of choice for customers as they move forward in this digital transformation? I think certainly as they look at their markets, right? You look at the telcos and the way they've been a key customer for Juniper. I think that they are very aggressively articulating and promoting their strategy around automation. I think you're going to see it become an increasing focus for them. And analytics plan to automation as well as security. I think you're going to see them really amp up the visibility standpoint too. So I do think that it's definitely going to, you know, it's going to be something you're going to hear a lot more about from Juniper. And by the same token, I think you're definitely going to hear more on the disaggregation front. We didn't hear a lot about it here, but I think, you know, as we roll forward, you're going to hear more about that as well. Software value. Yeah, any gaps, anything you didn't hear that you were hoping to hear? As we said, we talked about disaggregation last year. We didn't have any, you know, proof points, no customers, you know, coming out and saying, hey, I'm buying Juno's software everywhere or, you know, doing anything like that. What's missing from the show? I think, you know, it's always a challenge, right? Because they want to have a key theme. And, you know, we heard security as a very prominent theme, you know, at this event. I think it leaves questions, which I'm sure the company will answer regarding what they're doing as the next step in disaggregation. We're going to hear more about their, about their analytics and visibility as we go forward. You know, I think we're going to hear more about, you know, their strategy around how they're continuing to advance on the SD-WAN front. I think they've got a lot of stories to tell and only so much time in an event like this. Brad, you know, you've got a good viewpoint on some of the financial side. Does Wall Street have any idea about this transformation of kind of hardware to software and the services mix that's going on? Do they understand how to track a company like what Juniper's doing? I think the Wall Street, you know, the analysts on Wall Street, we have them as clients as well as, you know, they're some of our clients. And we talk with them quite a bit and I do know that they're very concerned about, and this is industry-wide, they're very focused on what are the ramifications and consequences of public cloud and the major players on the industry as it stands today. And it's been a big focus of their questions and they're looking to find out how the vendors are responding to that. You know, as this shift occurs, how are the vendors recalibrating their product portfolios and their strategies to take advantage of where the growth is going to reside? And I think it's a big focus for Wall Street right now. They're paying a lot of attention to how each of these companies is articulating and pursuing strategies related to cloud opportunities. And certainly the networking side, I see Cisco as the other person or group and people in this list of competitors, they're big, they're pivoting, or I shouldn't say pivoting, transforming, hard to say they're pivoting, they're still in networking business. What's their prospects? Do you see what's their challenges that they're facing? I think they're facing a lot of challenges that are endemic right across the networking industry for OEMs. For Cisco, the challenge is again, these public cloud players, if you don't sell directly to them, you've got to look at how you create value elsewhere in the cloud continuum, right? In terms of what enterprises are trying to get out of the cloud, in terms of what service providers are trying to get out of the cloud, in terms of how you basically, and we haven't really talked about it, wasn't really talked about it here, how you remake your channel to be able to support a software-based sales model and business model. It's a significant challenge. It's different skill sets, different buyer, different criteria. Absolutely, and I think all of these companies are in the midst of pursuing that transformation. Just as the classic box mover, kind of positioning, some people say box mover, selling boxes, to integrated, moving up the stack, little bit different, NFV kind of takes that kind of look and feel. Is that kind of what you're seeing? It is, and we're seeing it right across the board. I mean, it was very interesting. You go to events now and networking events, and it was true at Cisco Live, it was true here. We came today, and we really didn't hear, in the keynote, anything about switching, right? I mean, switching is still, what these guys do is still what Cisco does. And you're bread and butter. Yeah, and you're hearing less and less about that and more and more about the software that rides on top and orchestrates all this stuff. It's definitely a software driven world, no doubt about it. Thanks so much, Brad, for taking the time, sharing your insight. Great to get the IDC perspective, getting laying out the horses on the track, talking about the dynamics. Thanks for sharing. This is theCUBE, I'm John Furrier, Stu Miniman, live in Silicon Valley, it's theCUBE. We'll be right back with more after this short break. I remember when I had such a...