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How Did Juniper’s Data Center Growth Drive Switching Revenue?

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Revenues rise 5% YoY

Juniper Networks (JNPR) generated $176 million from its Switching business segment. This represented a rise of 5% YoY (year-over-year) and a decrease of 17% QoQ (quarter-over-quarter). Data center growth in Juniper’s QFX switching products drove revenues in fiscal 1Q16. With the introduction of Juniper’s QFX 10008 spine switch, customers get a complete and compelling solution for the cloud.

Juniper’s CEO (chief executive officer) Rami Rahim stated, “I am pleased with our performance in switching, where we saw year-over-year revenue growth, driven by the cloud data center use case, which continues to be a key focus area for us. We believe that we have a good pipeline for the QFX10000 switches, including the newest QFX10008 spine switch, which has already achieved design [wins] with a number of telecom and cloud provider customers.”

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According to Rahim, data center growth provides a tremendous opportunity for Juniper Networks. Although Juniper’s share in the Ethernet switching market is rising YoY, it still stands at 3.8% as of the end of 4Q15. This provides an opportunity for Juniper to penetrate data centers with switching products. It will also be able to penetrate the data center interconnect as well as some packet optical architectures.

Major players in the switching market

According to IDC (International Data Corporation), Cisco (CSCO) continues to lead the Ethernet switching market with a share of more than 59% in 4Q15. Juniper competes with technology companies such as Hewlett-Packard Enterprise (HPE), Arista Networks (ANET), and China’s (FXI) Huawei with market shares of 9.3%, 3.4%, and 6.1%, respectively.

Switches contain ports that connect various network segments. They’re are similar to hubs[1. a networking device that connects multiple devices to the network using cables] and offer high performance. When a network contains a substantial number of devices, switches are used instead of hubs to ensure the communication between devices doesn’t slow down.

Next, let’s look at the impact of enterprise and cloud providers on Juniper’s security revenue.

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