Other Free Encyclopedias » Company History » Computers & Electronics

Juniper Networks, Inc. Business Information, Profile, and History

juniperus company cisco market

1194 North Mathilda Ave.
Sunnyvale, California 94089
U.S.A.

Company Perspectives:

Juniper Networks, our partners and resellers, listen to you, our customers, to deliver the highest quality, industry-leading Internet routing products, services, and solutions that exceed your expectations and earn your trust.

History of Juniper Networks, Inc.

Juniper Networks, Inc. is a leading supplier of scalable, high-performance Internet Protocol (IP) platforms for the public fiber-optic infrastructure. The company has been rated one of the world's best-managed, fastest-growing companies. Sunnyvale, California-based Juniper introduced the first IP router that was quick enough to clear data congestion on the exponentially growing Internet. The company designs and sells high-end equipment that routes traffic across the largest Internet backbones: giant phone companies and Internet service providers that shoulder the majority of Internet traffic. The company also makes network traffic management software (JUNOS) and offers training, support, and implementation services. Juniper sells directly and indirectly through manufacturers to Internet and telecommunications service providers. In just five years, Juniper has captured one third of the router market, with products geared toward telecommunications service providers, which spend about $70 billion on capital equipment. The company has sustained significant growth where prominent competitor Cisco Systems thwarts most challengers. Having established itself as a niche player, Juniper has more recently expanded its markets from its original focus on the core backbone, with more recent efforts on the network's edge and the emerging mobile IP market. The five-year-old company had one of the most successful initial public offerings in history.

1996 to 1998: Laying the Foundation

Juniper Networks was the creation of computer scientist Pradeep Sindhu, once principal scientist of Xerox's renowned Palo Alto Research Center (PARC), who in 1995 left for a vacation and returned with a concept for a new company that would build reliable, high-performance routers to support the quickly emerging Internet. Sindhu knew that information would soon overtake voice traffic on telephone networks, and the networks would have to keep pace with bandwidth demand. By breaking up data and removing a need for dedicated circuits, routers allowed more traffic and lower costs than switches used by traditional phone networks. Sindhu saw a niche in the $10 billion router market dominated by giant Cisco Systems, which developed routers for phone companies and Internet service providers (ISPs), based on the technology it had used in the corporate market. Sindhu chose the company's name to symbolize the root system of the Juniper tree—quite complex and strikingly strong.

Juniper promised to defeat bottlenecks on the Internet with a product that would move data up to 100 times faster than competing routers. Sindhu started the company in February 1996 with $200,000 in seed money from powerful venture-capital firm Kleiner, Perkins, Caufield & Byers. He hired two other engineers, Bjorn Liencres from Sun Microsystems and Dennis Ferguson from MCI. For business expertise, Sindhu recruited Scott Kriens, co-founder of StrataCom, a leading supplier of switching equipment sold in July 1996 to Cisco for $4.67 billion. The management team included former employees from Bay Networks, Cisco Systems, Silicon Graphics, and 3Com. Sindhu ran the company for the first seven months. Scott Kriens joined Juniper in September as chief executive officer; Sindhu was designated chief technology officer and vice chairman.

The new company received support from Kleiner, Perkins, Caufield & Byers, which invested $2.7 million for a 22 percent stake in the company. To raise money while the company had no products to sell, in September 1996, Juniper sold stakes in the business to potential customers, a cluster of Cisco competitors that included Ericsson, 3Com, Lucent Technologies, and Nortel Networks. The networking and telecom equipment makers invested $40 million, for a 25 percent stake in the startup.

To best connect billions of potential Internet users, Sindhu wanted to start with new hardware from the ground up. Juniper had a strategy that was unusual for network equipment makers: It outsourced all its manufacturing operations to better use assets, lower production costs, and accelerate time to market-critical for the fast-changing Internet. And the startup harnessed the efficiency of the Internet to streamline operations. From the beginning, Juniper collaborated on designs, linked with outsourcers, and managed inventory via the Web. Juniper established a technology relationship in July 1996 with IBM, to produce all the application-specific integrated circuits (ASICs) designed by Juniper for its Internet platforms. Juniper also partnered with Solectron and Celestica, which manufactured products from the prototype stage to production, and performed material procurement, final assembly, testing, control, and shipment to customers.

In December 1997, Juniper introduced JUNOS, the industry's first operating system designed specifically for the routing and operational needs of the fastest-growing Internet backbone networks. (A backbone is a set of paths that regional networks connect to for long-distance interconnection.) After in-depth testing of JUNOS, in September 1998, Juniper shipped its much-anticipated first product, the M40 router, designed to provide faster, more reliable Internet access and packet delivery. The M40 was capable of forwarding 40 million packets per second, and Juniper promised that this terabit router would deliver traffic up to 10 times quicker than other existing products. The M40 won industry recognition for the best new product, including PC Magazine UK's 1999 Technology Innovation Award. In December, Juniper saw its first quarter of revenue, with sales of $3.8 million. In 1998, Cisco had more than 90 percent market share in the multibillion-dollar core router market, which was growing at light speed. Juniper would start chipping away at Cisco's slice of the market.

1999: Going Global, Going Public

In the bull market of 1999, the heady days of white-hot IPOs, the industry had great expectations for the B-to-B Juniper. New-economy publications called the "buzzworthy" start-up a company to watch. During this "fast company" year, while the M40 tackled Cisco's market share, Juniper's customer base broadened to more than 50 worldwide. Although the company only had one major product, Juniper was a darling of the telecom-equipment industry since it began. Juniper won accounts with Britain's Cable & Wireless, and MCI WorldCom's UUNet division, becoming a main supplier.

Juniper widened global support though worldwide distributors, including Alcatel of France and Ericsson. It teamed up with Ericsson for a series of strategic agreements to develop and distribute Juniper's IP network technology. Alcatel and Juniper signed an 18-month, $30 million distribution agreement appointing the telecommunications equipment supplier as a reseller.

Meanwhile, Juniper established its European headquarters with an office in the UK. Two months later, the company opened a subsidiary, Juniper Networks K.K., in Japan, the second-largest networking market worldwide. The Tokyo office also supported the sales efforts of Juniper's Japanese distribution partners. In November, Juniper continued its lightning-speed expansion in Asia with the opening of its new regional headquarters in Hong Kong. During this time, M40 routers formed the backbone of a pan-European IP network being built by Iaxis, Inc.

On June 25, 1999, in the heat of the "dot-com summer," Juniper went public. The price per share was $34.00, and 4.8 million shares were offered on the Nasdaq National Market under the trading symbol JNPR. The company had one of the most successful initial public offerings in history. By the end of the first day as a publicly traded company, Juniper's stock rose to $98.88, a 190 percent single-day jump that increased the company's market capitalization to just below $4.9 billion, the highest first-day valuation for a technology company, according to Securities Data Corp. Plus, unlike other new issues, the stock sustained its energy, coasting above $100 for months.

Juniper acquired privately held Layer Five of Palo Alto, California, for $19 million. Founded in 1997, Layer Five was a group of advanced developers of network hardware architectures and related software. Its employees became part of Juniper's engineering organization. Separately, Juniper Networks took a minority investment in New Access Communications of San Jose, California, whose optical distribution technology targeted network service providers. Pradeep Sindhu joined the New Access Communications board of directors.

Juniper announced a three-for-one stock split on November 16, 1999, entitling each stockholder at the close of business on December 31, 1999 to receive two additional shares for every outstanding share of common stock held on the record date. At this time, annual revenue exceeded $100 million, and Juniper reported its first quarter of profitability.

At the end of the year, Juniper launched and began shipping the M20 router, a new class of router for the network's edge. (An edge router is a device that moves formatted information between one or more local area networks [LANs] and a backbone network, using switching technology called ATM (or, asynchronous transfer mode). Englewood, Colorado-based Verio, a high-profile Web-hosting and Internet services company formerly served by Cisco, ordered $7 million of the new routers for its national network, to expand capacity in smaller cities such as Spokane, Washington, and Rochester, New York. The router delivered core-like performance for regional networks and large ISPs faced with the challenge of expanding their networks at the same rate of growth as the Internet core. The new router shared common software, services, and ASIC technology with its predecessor, to serve applications including high-speed access, peering, and hosting.

By the end of fiscal 1999, Juniper's revenue was $102.6 million, up from $3.8 million in 1998. Market share rose from 2.8 percent in 1998 to 14.8 percent in 1999, in spite of fierce competition. The M20 ratcheted up the potential for a second market niche. To keep customers on technology's cutting edge, Juniper delivered four releases of JUNOS throughout the year. At this point, the Internet was changing—it was becoming a multi-service network carrying voice, video, and corporate information, as well as e-mail and e-commerce services. For the next year, Juniper's strategy was to keep investing in research and development, to build a competitive advantage in the Internet infrastructure space, and to expand into the $250 billion optical networking segment.

2000: Whoever Grows the Fastest, Wins

Juniper kicked off the millennium with an acquisition of the Hong Kong-based marketing and sales firm Pacific Advantage (PAL), which bolstered Juniper's sales force and services in Asia. Revving up for the year, Juniper implemented a compensation management package for the company's sales force.

Then, on March 28 came the release of Juniper's long-awaited new router, the M160. "The M160 is four times faster than the previous product we shipped, which was already faster than anything on the market," Kriens told CNNfn. "In some ways, it's almost staggering, four million phone calls simultaneously supported in one system, three feet tall." High-profile customers including UUNet and Cable Wireless purchased the router to upgrade their networks. By a twist of fate, the M160's release date coincided with the news that Cisco, Juniper's primary competitor, surpassed Microsoft to become the most valuable company in the world, with a momentary market capitalization of $560 billion.

Juniper executives disputed an industry notion that the rookie existed primarily as a David to Cisco's Goliath. In The Industry Standard, Sindhu emphasized Juniper's niche as the only provider of a router built expressly for the Internet. Through voracious acquisitions, Cisco had evolved as a "soup-to-nuts" data-routing generalist, powering everything from B-to-B ISPs to consumer home-networking products. Kriens told CNNfn that Juniper had multiplied equipment capacity by a factor of four without acquisition, and did not plan to grow that way.

On the financial front, a message came loud and clear: At this moment, Internet infrastructure was the hot investment sector. Juniper's stock soared 272 percent this year, Business Week reported in its October 2, 2000 issue, even in a shark-infested market. In the second quarter, Juniper nabbed 22 percent of the market for the most powerful routers, while Cisco's piece of the pie dropped to 75 percent, its lowest level in two years, according to market researcher, the Dell'Oro Group. On April 13, 2000, Juniper announced a two-for-one stock split. In "The Silicon Valley 150," The Mercury News found in its mid-year review: Juniper made the biggest jump on the list, moving up 54 spots from the previous year to land at number 87. In addition, Juniper's revenues soared 540 percent for the first six months of 2000 compared with the same period in 1999. And the three-year-old company's market capitalization of $50.4 billion was the tenth-highest in the Valley, bested only by behemoths such as Intel, Oracle, and HP (and not surprisingly, Cisco, in the No. 1 spot). In August, Juniper became a component of the Nasdaq 100 Index.

Juniper was also heralded as one of Forbes magazine's 20 "Ramp Champs," a list of the world's best-managed, fastest-growing technology companies. Writer Clint Willis noted in the April 3, 2000 publication, "The firm didn't have a single customer a year and a half ago but since then has seized 13 percent of the high-end router market, which includes many firms thrilled that someone's finally cutting into Cisco's pricing power." Kriens and Sindhu received kudos, which continued when Kriens was named Ernst & Young Entrepreneur of the Year.

Previously located in Mountain View, California, Juniper established a new 144,000-square foot corporate headquarters in Sunnyvale, California, which allowed it to consolidate Bay Area locations. The summer also saw a new office open in New Delhi.

In September 2000, Juniper launched the M5 and M10 platforms, a suite that enabled fast bandwidth build-out at the edges of service provider networks, where space and power were limited. The M5 router extended Juniper's core technology to the network's edge, connecting businesses to service providers at high speeds. The M10 delivered routing for service providers in small metropolitan areas. The metropolitan Internet edge routing market was estimated at $1.2 billion in 2000. With Internet traffic doubling every four to six months, a Juniper executive said, the company received a warm reception from large phone companies. Supporting this new product development were 650 Juniper employees, up from 260 in 1999.

At this point, Juniper's routers were four times faster than Cisco's quickest but required only about two-thirds of the electrical power. According to John Shinal in the September 11, 2000 issue of Business Week, "Even though Juniper's biggest machine costs $400,000 on average—twice the price of Cisco's—customers can't get enough of them. That's a rude awakening for Cisco, which didn't need the fastest routers when it was zeroing in on just the corporate market."

Despite the high barrier to entry, a dozen newcomers promising to revolutionize optical-networking equipment were entering the fray. Where once pundits were describing Juniper as Cisco Junior, now they were wondering which "newbie" would become the next Juniper. According to industry lore, one Juniper IP-routing guru used a baseball bat to nail his Cisco resignation to his manager's door. But now he jumped ship, leaving millions in unvested stock options at both companies, to go to Procket, a San Jose startup. In December 2000, Juniper added talent to its team by acquiring Micro Magic, Inc. (MMI), an integrated circuit solutions company, for $260 million. Founded in 1995, MMI had expertise in the tools, methods, and design techniques required to build high-performance circuits. The employees were absorbed into Juniper's engineering organization, to contribute to silicon design.

The worldwide core IP router market was estimated at $2.6 billion during 2000, according to Infonetics Research. Juniper surpassed the industry growth rate to breathtaking extent, with estimated net revenue of $674 million, up 556 percent from 1999. The company's stock gained 122 percent, even as the Nasdaq dropped 39 percent. And a joint venture with Ericsson had Juniper positioning itself in the emerging mobile IP market. Meanwhile, Business Week attributed huge efficiencies to Juniper's innovative use of the Internet. In its May 14, 2001 issue, the magazine reported that in 2000, Juniper cashed in a stunning $1.02 million in revenue per employee, vs. $703,529 for Cisco and about $400,000 on average for the communications equipment industry. The magazine forewarned that Juniper would need to lean on the streamlining amid a cooling tech sector. A Juniper executive said in the fall that Juniper controlled 24 percent of the market, while Cisco held about 70 percent. "But Juniper is fast gaining ground—at the expense of Cisco," Salomon Smith Barney analyst Alex Henderson said in Business Week's October 2, 2000 issue. Looking ahead, the analyst was bullish on Juniper, predicting that the company would continue to gain market share into 2001.

2001 and Beyond: Staying Focused

The first quarter saw a battleground between Cisco and Juniper, with a horse race among the high-speed router vendors vying to serve the big carrier networks. Juniper kicked off the year by announcing Q4 net earnings of $60.3 million, or 17 cents per share, beating Wall Street's expectations in spades. On Jan. 31, Cisco introduced a line of products aimed at quelling Juniper's inroads into a longstanding Cisco market. Meanwhile, Juniper and the Optical Networks division of ECI Telecom Ltd. announced that they jointly installed and tested China's first optical Internet using Juniper's routers in Guangdong Province, which planned to invest more than U.S. $400 million in Internet networking over the next five years. Also during this time, Juniper launched a technical certification program for ISP professionals, which was developed in collaboration with customers. At the end of Q1, Juniper had 1,162 employees worldwide.

The economic slowdown that was first perceived as a correction of overvalued technology stocks turned out to be the worst downturn in industry history. During the second quarter, Juniper faced a landscape in which telecommunications customers were investing less in equipment. There were rumors of a price war with Cisco. Also, upstart competitors such as Avici Systems were garnering market share. In April, despite robust earnings, Juniper announced that its 2001 earnings and revenues would fall below Wall Street's expectations. For the full year, Juniper predicted earnings of $.090 to $1.00 per share, below analysts' estimate of $1.05. The next month, Cisco posted its first loss in years and took a $3 billion charge against its own earnings. Pundits pondered Cisco's potentially overextended portfolio.

At a spring industry conference, keynote speaker Kriens predicted consolidation in the telecommunications industry but said that savvy, focused network equipment makers could still profit during the economic lull. Describing this critical juncture in the industry's history, Kriens invoked Winston Churchill: "This is not the beginning of the end, but the end of the beginning."

Principal Subsidiaries:Juniper Networks K.K. (Japan); Juniper Networks B.V. (Netherlands); Juniper Networks International Limited (Cayman Islands); Juniper Networks FSC Inc. (Barbados); Juniper Networks U.K. Ltd. (United Kingdom); Juniper Networks GmbH (Germany); Juniper Networks France Sarl (France); Juniper Networks Australia Ltd. (Australia); Juniper Networks Hong Kong Ltd. (Hong Kong); Juniper Networks South Asia Ltd. (Hong Kong); Juniper Networks China Ltd. (Hong Kong); Juniper Networks Canada Inc. (Canada); Juniper Acquisition Corporation; Juniper Networks International, Inc.

Principal Competitors: Cisco Systems.

Chronology

  • Key Dates:
  • 1996: Juniper Networks founded by Pradeep Sindhu. The company receives investment capital from Kleiner, Perkins, Caufield & Byers. IBM technology partnership formed.
  • 1997: Management team put in place. The company raises $46 million during corporate investment round. JUNOS operating system ships to customers.
  • 1998: Company ships first product, the M40 Internet backbone router. First quarter revenue is $3.8 million.
  • 1999: Company secures Ericsson investment and OEM agreement. Initial public stock offering generates $63 million. Alcatel signs global distribution agreement. Company announces three-for-one stock split. Iaxis selects M40 router for Pan-European backbone. Hong Kong office opens. Annual revenue exceeds $100 million. Company achieves its first quarter of profitability.
  • 2000: Juniper Networks ships full-performance M160 router. M5 and M10 product platforms launched. Company acquires Micro Magic, Inc.
Kemet Corp. Business Information, Profile, and History [next] [back] Johnson Worldwide Associates, Inc. Business Information, Profile, and History

User Comments

Your email address will be altered so spam harvesting bots can't read it easily.
Hide my email completely instead?

Cancel or


This web site and associated pages are not associated with, endorsed by, or sponsored by Juniper Networks, Inc. and has no official or unofficial affiliation with Juniper Networks, Inc..