UPDATE 2-Juniper partners with Dell as Cisco rivalry grows

Tue Oct 27, 2009 2:48pm EDT

Related Topics

* Dell to sell Juniper MX routers, EX switches, JUNOS

* Deal helps Juniper expand sales, Dell broaden products (Adds byline, analyst comments, details on Thursday event)

By Ritsuko Ando

NEW YORK, Oct 27 (Reuters) - Dell Inc DELL.O plans to sell Juniper Networks Inc's JNPR.O networking products to businesses in a partnership aimed at challenging industry leader Cisco Systems Inc (CSCO.O).

Juniper, which traditionally sells routers, switches and other network equipment to phone service providers such as AT&T Inc (T.N), has been expanding partnerships with large technology vendors to step up sales to business customers.

The deal follows similar moves by Dell and IBM to sell products of network equipment makers in an effort to become a one-stop shop for companies installing a complicated array of storage, server and networking devices in their data centers.

Under the partnership, Dell will market, resell and support Juniper's equipment to business customers, the companies said.

While well-known as a PC maker, Dell also competes with Hewlett-Packard Co (HPQ.N) and International Business Machines Corp (IBM.N) in selling servers and storage devices to businesses.

"This is an additional route to the market for us," said David Helfer, Juniper's vice president of OEM (original equipment manufacturing).

The products under the partnership include Juniper's MX series routers, EX switching products, and Juniper's "JUNOS" operating system.

Some of them compete with those that Dell already sells through a partnership with Brocade Communications Systems Inc (BRCD.O). Praveen Asthana, Dell's vice president of storage and networking, said it wants to give customers choice.

"When we talk to customers, they tell us proprietary solutions that lock them in don't work at all. They want the promise of efficiency but they also want openness and choice," Asthana said.

William Blair & Co analyst Jason Ader said the deal underscored how partnerships have become a key element of Juniper's business strategy.

"Juniper has clearly made the strategic decision that it needs to secure OEM deals with major server vendors for its enterprise networking portfolio," he said.

Analysts have said Juniper's multi-partnership approach is different from that of Cisco, which aims to be an "end to end" provider of its own broad range of equipment.

Cisco does have some partners, but its entry into the server market earlier this year was widely seen as a challenge to its resale partners including IBM and triggered a series of competitor deals seen as retaliatory.

In July, Juniper stepped up its partnership with IBM. It also agreed to a joint venture with Nokia Siemens Networks, a 50-50 venture between Nokia (NOK1V.HE) and Siemens (SIEGn.DE).

Cisco isn't likely to give up its leading market share to Juniper. While Juniper has emphasized partnerships and in-house development as its strategy, Cisco has been stepping up acquisitions.

Many analysts say Cisco's recently announced $2.9 billion deal to buy Starent, which specializes in advanced wireless technology such as LTE, may put Juniper at a disadvantage in the wireless equipment market.

While most analysts said the deal was a good move for Juniper, its shares fell 2.14 percent to $25.66 in afternoon trade, as a decline following its quarterly earnings announcement last week continued.

The shares have fallen around 6 percent since last Thursday -- even though Juniper's results and outlook exceeded Wall Street estimates -- as analysts cited worries about the company's long-term strategy amid a flurry of industry M&A deals including Cisco's Starent deal.

Juniper may provide more details on its strategy later this week. The company has invited analysts and media to an event on Thursday and a source familiar with the matter said it would announce a revamp of products as well as a new company logo.

Dell shares eased 0.33 percent to $15.32. Brocade fell 0.91 percent to $8.73 while Cisco fell 0.84 percent to $23.50. (Reporting by Ritsuko Ando; Editing by Derek Caney and Steve Orlofsky)

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