Tech Giants Unite: Juniper and NetScreen Merge in $4 Billion Deal, Cisco Allies with IBM

Strategic Insights -

Analysts say the mergers could lead to increased competition in the network equipment market and enhance security components in technology projects. The alliance between Juniper Networks and NetScreen Technologies, totaling $4 billion, is set to close in the second quarter. Meanwhile, Cisco Systems has partnered with IBM to integrate products and build a more automated approach to security.

Key Takeaways:

  • Juniper Networks and NetScreen Technologies have agreed to merge via a stock-for-stock transaction worth $4 billion, enabling Juniper to compete more effectively against market leader Cisco Systems.
  • The deal is expected to close in the second quarter, pending regulatory approval.
  • Juniper has agreed to pay a premium of 57% to acquire network security appliance vendor NetScreen, reflecting the high value the market places on security solutions.
  • The combination of Juniper and NetScreen is expected to give the company credibility and strong sales delivery channels in both the service provider and enterprise markets.
  • Cisco Systems has partnered with IBM to integrate products and build a more automated approach to security, aiming to address ineffective security resulting from piecing together multiple security products and services.
  • The partnership will initially deliver integration between Cisco's Secure Access Control Server and IBM's Tivoli Identity Manager software, reducing common security risks such as invalid user accounts.
  • IBM will join the Cisco Network Admission Control (NAC) program, enabling the company to integrate certain Tivoli security management software with Cisco infrastructure products.
  • David Sykes, Asia Pacific senior director for enterprise sales at Symantec, expects more consolidation and alliances in the IT security market in the future.

Statistics:

  • 57%: The premium that Juniper has agreed to pay to acquire NetScreen.
  • 95%: The percentage of Juniper's revenue last year from routing and switching sales to service providers.
  • 70%: The percentage of NetScreen's revenues from enterprise clients.
  • 60%: The estimated percentage of large organizations plagued by invalid user accounts.
  • $4 billion: The value of the merger between Juniper Networks and NetScreen Technologies.

Sources:

  • "Security concerns are now pervasive in every aspect of networking, and the combination of a leading networking provider and a trusted firewall vendor should prove appealing to many enterprises." - Gartner
  • "The premium demonstrates the high value the market places on solutions similar to ours." - Ker Gibbs, Asia-Pacific vice-president at Secure Computing
  • "Forrester said Juniper needed the enterprise market to grow, and buyers needed more vendors to choose from to keep Cisco's prices down." - Forrester Research
  • "We expect more of the same in future." - David Sykes, Asia Pacific senior director for enterprise sales at Symantec