Eight months on from finishing his $14 billion takeover of Juniper Networks, HPE boss Antonio Neri can really feel a way of vindication. Massive mergers don’t usually go easily. Some analysts fretted about awkward overlaps within the product portfolio. Telecom followers of Juniper feared the merged firm may connect much less significance to serving telcos. And when Neri dropped into Catalonia for MWC 2025, the US Division of Justice (DoJ) was nonetheless making an attempt to dam the deal on doubtful grounds. One yr later, Neri was again in Barcelona on the helm of a a lot larger enterprise, wielding some proof that the doubters had been primarily incorrect.
After an embarrassing DoJ climbdown, Neri right now presides over a enlarged networks enterprise that’s way more worthwhile than his conventional IT one. That units up HPE for a stronger assault on the territory of Cisco, its chief US rival, and provides it the muscle to combat Huawei in international locations the place the Chinese language firm remains to be allowed to function, Neri advised Mild Studying. “One of many advantages of Juniper and HPE collectively is having the ability to present a full stack to compete with Huawei,” he stated.
Growth into that networks market has already fattened margins, regardless of price strain elsewhere. Outcomes out this week present HPE’s pre-tax working margin was kissing 14% for the lately ended first quarter, in contrast with lower than 11% the yr earlier than. Buoyed by the takeover, revenues had been up 18% in contrast with the year-earlier quarter, to $9.3 billion, whereas pre-tax earnings soared 58%, to almost $1.3 billion. HPE Networking, which mixes HPE’s Aruba enterprise with the Juniper property, accounts for 30% of gross sales and half of these earnings.
“Structurally, the margins are very completely different within the networking enterprise than the remainder of the portfolio, and in order that must be a pure development,” stated Neri. Eliminating what overlap exists ought to assist, together with funding in AI to “modernize the processes,” as he places it. When he spoke at MWC, HPE had simply completed combining gross sales groups. All that may help the corporate’s mission to be as lean as attainable. HPE and Juniper had a mixed headcount of precisely 72,271 staff after they final reported figures pre-merger. By October final yr, simply 4 months after the takeover was finalized, there have been 67,000 left on HPE’s books.
‘Considerably much less overlap than individuals suppose’
Earlier than the merger was introduced, HPE was primarily often called a maker of servers, competing there towards the likes of Dell and Supermicro. It had, however, began its growth into cloud computing with the launch of its GreenLake platform in late 2017. Juniper’s status, in the meantime, was constructed on difficult Cisco available in the market for Web routers and switches. Throughout these numerous actions, there was little if any duplication.
Each firms, nonetheless, had sizeable Wi-Fi-based networking companies – Aruba, which HPE had acquired for $2.7 billion in 2015, and Mist, purchased by Juniper in a $405 million deal about 4 years later. It was the proposed mixture of those property that riled individuals on the DoJ, who appeared to suppose Cisco’s dominance in enterprise Wi-Fi was a justifiable motive to dam consolidation involving different, smaller gamers. But it surely apprehensive analysts, too. How HPE anticipated to combine these items whereas avoiding any disruption was their huge concern.
However HPE appears to be managing that job effectively. “I argue there may be considerably much less overlap than individuals suppose, as a result of on the infrastructure stage we’ll have one widespread set of merchandise,” stated Neri. In Wi-Fi 7, the most recent model of the know-how, this implies HPE will have the ability to hyperlink Aruba Central and Mist to the identical product. Elsewhere, furthermore, Neri highlights some main variations.
“The fact is that Juniper Mist is a cloud-only deployment mannequin, and Aruba Central has a digital non-public cloud and an on-premises resolution,” he stated. “And, due to this fact, relying on the place the shopper desires to go, we lead with one or the opposite. If you’d like a cloud-only deployment, we’ll lead with Juniper Mist. If you’d like an on-premises or digital non-public cloud due to sovereignty or compliance causes, we’ll lead with Aruba Central. The infrastructure beneath is precisely the identical.”
In time, Neri expects to see a “pure convergence” of the separate Aruba Central and Mist platforms towards a standard person interface, underpinned by AI. Consoles will sit inside GreenLake, and clients will have the ability to specify their deployment preferences and be assigned Aruba or Mist relying on what they select. Marvis, a sort of Juniper-developed chatbot for community operations, has already been chosen because the “AIOps engine” for the entire of HPE Networking, stated Rami Rahim, the division’s president (and former CEO of Juniper), at a press convention final month.
Routers and robots
All that may hopefully please enterprise clients. However in Barcelona, HPE’s voluminous sales space at one finish of the robot-stalked Corridor 3, and Neri’s presence on the present, supplied proof the corporate nonetheless sees telcos as a precedence. Neri arrived in Spain armed with numerous routers and switches, together with the PTX12000, a brand new 1.6-terabit-per-second router that he claims is technically forward of something his rivals now supply. “Clearly, the main target is about AI visitors and having the ability to deal with that visitors in a really cost-efficient means,” he stated.
He isn’t persuaded, nonetheless, by the “AI-RAN” pitch encouraging telcos to spend money on Nvidia’s graphics processing items (GPUs) to allow them to help AI inferencing within the cell community. “If you consider telephones, these gadgets can do 40, 50 billion parameters – you do not want an incremental infrastructure overhead to do it,” he stated. “And lots of the infrastructure will really be sitting within the manufacturing flooring, not in a cell tower.” Neri’s foremost recommendation to operators is to keep up their give attention to connectivity.
Whereas HPE won’t have any function in smartphones, a GPU-as-a-service supply does characteristic in its portfolio. Neri, after all, is unlikely to welcome any contemporary competitors in that already busy market from his personal telco clients. However he’s not the one government to voice reservations about AI-RAN. Many telcos sound equally unconvinced by the rationale.
It doesn’t seem to have weakened their urge for food for AI in all its different flavors, and Nvidia’s final set of outcomes reveals there may be nonetheless rampant demand from information middle firms for its chips. Neri thinks it might be a “few million” GPUs away from satisfying present expectations. “If each gigawatt, give or take, is one million GPUs, you might be a number of million GPUs away,” he stated, referring to the most recent gigawatt commitments by information middle buyers.
“That is why our focus is usually round networking, as a result of networking is a core basis to have the ability to join these massive information facilities,” stated Neri. Maybe the most important alternative for HPE proper now remains to be in offering the Ethernet cloth to attach these information middle GPU clusters. Publish-acquisition, it is a market the place HPE competes towards Cisco, its longtime rival, in addition to the likes of Arista and Nokia.
Nonetheless, Neri insists HPE has been way more energetic than Juniper’s outdated nemesis within the growth of agentic AI applied sciences and so-called massive expertise fashions, supposedly able to extra reasoning than the better-known massive language fashions. “We have been constructing brokers since June 2024 after which, with Juniper Mist, we carry massive expertise fashions complementary to that,” he stated. “That is why we imagine these AIOps, or name it self-driving networks, are going to be key differentiators for us to realize market share.”
Discuss of AI brokers and self-driving networks has inevitably triggered apocalyptic fears about widespread job losses, as machines and software program supplant a human workforce. However regardless of the latest employees reductions at HPE, Neri resists the doom-laden AI narrative. “Clearly, jobs are going to vary, together with my job, for that matter,” he stated. “What earlier than it took perhaps ten people to do may want two, however then the opposite eight can add worth elsewhere within the firm.”
The primary-quarter outcomes revealed this week have prompted Neri to lift full-year steerage. At HPE Networking – whose revenues soared 151.5% year-over-year, to about $2.7 billion, following the Juniper deal – it expects gross sales development of between 68% and 73% this yr. But amid considerations concerning the sluggish efficiency of different items, and the elevated costs of reminiscence chips, HPE’s share worth fell 3% when these outcomes got here out.
It has, although, gained 38% prior to now yr and 69% since a low level in April, when HPE lowered revenue expectations for the yr. If it doesn’t fairly belong in the identical firm as Nvidia, up 74% within the final yr, an HPE with out Aruba or Juniper would certainly not have carried out as effectively. At MWC 2025, some observers puzzled if the deal might be salvaged within the face of DoJ hostility, whereas others apprehensive about execution threat. Such voices are not heard.