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Juniper Networks CEO speaks on changing of the guard

Outgoing Juniper CEO Scott Kriens explains the change of leadership and what he hopes to see for the company and the channel as Kevin Johnson takes the helm.

Juniper Networks' culture won't change under new leadership -- but the girth of its channel will, outgoing CEO Scott Kriens said in an interview with Thursday evening.

That's because Juniper has Microsoft dreams -- and has recruited incoming CEO Kevin Johnson to scale up the networking company into a mega-player and make its JUNOS operating system an industry standard. It will achieve this by building a third-party developer ecosystem and leveraging the operating system to support a portfolio of hardware, applications and services. Johnson, 47, spent 16 years as president of Microsoft's platforms and services division.

"Microsoft was less than $2 billion when [Johnson] joined," Kriens said, likening the earlier days at the software giant to Juniper's current $3.5 billion worth. Johnson "knows what it looks like" to see a company grow to $60 billion. Kriens is the first to admit he has not seen that up close and personal, and that Johnson's experience would enable him to foster that kind of growth at Juniper.

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There was no one moment that led Juniper to choose Johnson, Kriens explained during the interview. Juniper started talking to Johnson and realized it had a crack at a top-level executive.

"He and I got to know each other and found so much alignment in our values and belief systems." Then, Kriens said, he and the board asked themselves, "How can Kevin make the most impact?" And the ultimate answer was to "give him the reins."

If Johnson hadn't been hired, Kriens said that he would still have eventually moved into his upcoming role as chairman of the board, but the company would have hired someone at a lower level and helped them grow into the CEO position over time.

One thing is for sure: Johnson is walking into fertile ground. Juniper blew past analyst expectations, reporting a 40% boost in profits and 32% growth in sales over last year. During its second quarter earnings call Thursday, the company posted a profit of $156.6 million or 28 cents per share -- one penny above the 27 cents Wall Street was looking for. More notably, Juniper raised its revenue outlook for the full year to between $3.59 and $3.63 billion from between $3.4 to $3.55 billion. That's astounding, considering even major tech companies that have fared well in the rough economy have given a gloomy outlook for 2009 -- including Juniper rival Cisco Systems.

Kriens said the growth is related to Juniper's strong telecom service provider business, but is also largely due to the expansion of the enterprise practice. Enterprise growth is largely linked to this year's release of the EX-series Ethernet switches. Juniper saw $10 million in Ethernet switching revenue with units shipped to 100 customers worldwide, Kriens reported during the call.

But with company growth comes channel growth, Kriens said.

"It will grow as fast, or faster, than the company itself," he said. That will be necessary since 100% percent of Juniper's revenue comes via channel partners.

Some partners have expressed concern about the Juniper partner program eventually resembling Microsoft's unwieldy channel. The criticism there is that Microsoft's volume sales focus means its products are overdistributed -- and consequently too many partners compete with each other, driving down margins. One Juniper partner said he reads all the time about how Microsoft partners are unhappy and hoped that wouldn't happen at Juniper after Johnson's arrival. But Kriens seemed sure that the growth would be managed well and the channel would remain satisfied.

"There is a similarity of outlook and what's important as a person, as a culture and as a community," Kriens said about Johnson and his approach to the business. In addition, Kriens said that current channel executives will continue making decisions the way they do now. He also noted the recent addition of John Morris as executive vice president of worldwide field operations. Morris spent more than 20 years at IBM and brings the kind of experience necessary for this growth, he said. Morris joins Frank Vitagliano, Juniper's worldwide channels chief and former IBM veteran.

More importantly, Kriens said partners will appreciate what he believes Johnson can do for Juniper's technology and its role in the industry. Having been at Microsoft all those years, Johnson "knows a little something about operating system strategy," Kriens joked. Juniper has worked hard over the years to promote its JUNOS operating system, and it has moved most of its networking components onto the system.

And Juniper is different from Cisco in that its operating system is open to third-party developers and their multitude of potential applications.

"Kevin and Microsoft have been practiced at building a developer community," Kriens said, adding that Johnson knows how to build an ecosystem to leverage an operating system. That's what will "turbo-charge" Juniper's current holdings, Kriens said. Juniper will spend three-quarters of its budget on research and development this year, and "all of that is built on the strategy of leveraging the operating system," he added.

As to how Brocade's recent acquisition of Foundry Networks would affect Juniper, Kriens said it's not even on the radar. When Brocade acquired Foundry, it became one of only two companies that could provide equipment for all parts of the network from data center and storage to local and wide area networks. It even reaches into Juniper's and Cisco's core business of carrier networks.

But Kriens said the companies are "apples and oranges." In his view, Brocade is a point product player, and he stressed again that Juniper is focusing on a portfolio approach. Asked whether Juniper felt pressure to get into storage since both Cisco and Brocade play there, Kriens said, "The storage marketplace is not one that we see the need to be in the middle of. We're in the networking infrastructure market." Juniper has partnerships with storage companies to fill that need, he said.

Meanwhile, as the changing of the guard takes place, Kriens won't be any less of a presence at Juniper.

"This is not really about there being less time here for me or more time elsewhere. It's about using my time differently," Kriens said. Now he'll be focusing on his "passion," which is developing leadership and strategy.

Kriens has been the CEO of Juniper since its inception in 1996. When Juniper launched, Cisco was already in full swing. Kriens is credited with pushing Juniper into the market and building it to its current $11.85 billion market capitalization.

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