Partners: Juniper Networks Needs To Up Its Security Game – And Fast

Juniper Networks partners say the networking vendor needs to step up its game in security after reporting a 29 percent drop in security revenue for its third fiscal quarter ended Sept. 30.

Although partners recognize that Juniper's bread-and-butter networking products are gaining some steam, security needs a serious shot in the arm sooner rather than later, they say.

"They've been shrinking in the security space, so it's a real concern to us," said Dominic Grillo, executive vice president of Atrion Communications, a Branchburg, N.J.-based solution provider and longtime Juniper partner.

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Grillo said he wants to see Juniper push harder to demonstrate its security capabilities in the market and inside customers' environments.

"That's the big thing that they've really got to work toward -- building out reference architectures. Being able to demonstrate their capabilities live in customer environments or in evaluation labs. They need more of that -- that technical showcase for the customer," said Grillo.

The Sunnyvale, Calif.-based company Tuesday beat Wall Street estimates, reporting third-quarter revenue of $1.28 billion, up 3 percent year over year. Wall Street had expected third-quarter revenue of $1.25 billion. Switching revenue, meanwhile, increased 3 percent to $620 million compared with the same period a year ago, while routing sales jumped 10 percent to $222 million compared with the same period a year ago.

Juniper's security revenue for the quarter, however, totaled $86 million, down 29 percent year over year from $120 million. For the first three quarters of fiscal year 2016, Juniper reported total security sales of $237 million -- a significant drop compared to its first three quarters of fiscal year 2015 when it achieved $320 million in security revenue.

During the third-quarter earnings call, Juniper CEO Rami Rahim said the company's security woes aren't going to continue.

"Security continues to be a business that is in transition for us," said Rahim. "We have undertaken at the beginning of this year some very large, somewhat tricky, product transitions where we're replacing older security products with newer ones. And we're seeing good ramp-up in growth in the newer technologies that we've introduced in the market. So as I think about security, the opportunity is there. I think our vision of a software-defined secure network is the right one."

Rahim pointed at Juniper's launch this month of new security offerings including firewalls and a policy enforcer, as well as the company's cloud-based security push, as future revenue drivers for the company.

"We're also investing in our virtual security products like the virtual SRX where we're seeing actually good momentum now offered off of the Amazon Web Services marketplace as well as our advanced threat prevention Sky ATP Service that's offered from the cloud," said Rahim. "So these are indicative of investments today that we think will pay off in the second horizon of security, which is all around the cloud."

One executive from a solution provider that partners with Juniper said the company's brand and marketing push around security in the sales field is not visible.

"Somebody looking for firewall refreshes or things like that, Juniper is not someone they're thinking about. We have to bring it up to the customer to get them thinking about it," said the executive, who declined to be named.

The executive said overall Juniper sales at his company were up double digits year over year, but security is still an uphill battle.

"On the switching and routing side of things, we've been doing great – they've been developing excellent technology there … but security has been a struggle, which is what you saw in their results," said the executive.

Juniper's stock has climbed 10 percent to $26.15 per share since reporting its earnings Tuesday.