INTERVIEW-Juniper says telco gear market at bottom

* Data growth seen driving network gear spending in 2010

* Partnership concerns a factor in acquisition strategy

* Juniper sees significant chance in sales to enterprise

(Adds comments on mobile and enterprise, shares, background) By Georgina Prodhan

LONDON, Dec 16 (Reuters) - The depressed market for telecom network gear is set to improve as carriers face significant growth in 2010 in high-definition video and other data sent over telecoms networks, a Juniper Networks JNPR.N executive said.

“We strongly feel that the service-provider market has reached the bottom,” Gert-Jan Schenk, head of Juniper’s operations in Europe, the Middle East and Asia, told Reuters in an interview on Wednesday.

Telecoms carriers, grappling with saturated markets in many regions and consequent pressure to keep prices low, have sharply cut back on capital expenditure during the recession, hurting equipment vendors such as Juniper.

“Customers are looking to 2010 and how they’re going to cope with the increased volume of high-definition videos coming from YouTube, but also the increased usage of mobile data usage. That is growing very, very significantly,” Schenk said.

Juniper, which made 2008 sales of $3.6 billion, competes with industry leader Cisco CSCO.O to sell routers, switches and other network equipment to phone service providers such as AT&T T.N or Deutsche Telekom DTEGn.DE.

It makes about 30 percent of its revenues in Europe. Juniper is also trying to expand its smaller business of selling to large enterprise customers like banks and stock exchanges, and recently agreed a resale and marketing deal with Dell DELL.O to increase its access to such customers.

Schenk said Juniper saw an opportunity to gain market share from Cisco partners disgruntled at Cisco’s entry into the server market this year that turned some of them into rivals.

Juniper's business model depends on strong partnerships with companies including IBM IBM.N, Ericsson ERICb.ST, Nokia Siemens Networks [NSN.UL] and now Dell. "Partnering is really in our DNA. It has helped us to scale," Schenk said.


Some analysts fear Juniper will be left behind if it does not participate in a wave of acquisitions, particularly in mobile, that has recently included Cisco’s buying wireless gear maker Starent for $2.9 billion.

Network gear makers Brocade BRCD.O and Riverbed Technology RVBD.O have been mooted as potential targets.

When asked whether Juniper was holding back for fear of upsetting its partners, Schenk answered: “Are we not acquiring because we don’t want to disrupt our partnerships? No. Are we conscious of it? Absolutely.”

Schenk said Juniper had no pressing need to acquire wireless technology companies. “We look at wireless as aggregation. It’s just access,” he said. “We definitely care about it. We’ve got close relationships with partners in the wireless space.”

He added, however: “I can’t say what will happen in the future with acquisitions.”

Juniper is well regarded by the market for its strong position to capitalise on next-generation datacentres, which will help enterprises cope with an explosion in the scale of data they have to deal with and cut power consumption.

Goldman Sachs recently added Juniper to its conviction buy list for that reason, [nBNG301627] and Polar Capital Technology Trust PCT.L also said on Wednesday Juniper would come out a winner. [nLDE5BG1DU]

Schenk said: “The market opportunity for Juniper overall is very significant in the enterprise.”

“We believe that a lot of the enterprise customers are moving more and more towards a decision that the network is really the heartbeat of their business.”

(Editing by Rupert Winchester)

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