5:50 PM -- I've heard the official talk about them still being friends, but it's hard to believe that Cisco Systems Inc. (Nasdaq: CSCO) and VMware Inc. (NYSE: VMW) aren't at least a little bit awkward as allies, now that VMware is showing aspirations in networking. I think of them like a divorced couple, assigned to sit next to each other at a wedding.
If this were a tabletop game like Risk, it might be time for EMC Corp. (NYSE: EMC) -- VMware's parent company -- to just amass its armies and invade. And what better move to make than to acquire Juniper Networks Inc. (NYSE: JNPR)?
Of course, Risk isn't real life. (How many crucial battles really get fought in Greenland?) But EMC/Juniper sure would be an excellent fit, according to analyst Brian Marshall of ISI Group Inc. He's heard zero talk of such a deal, but in a report Thursday, he outlined why it would help EMC.
EMC is on its way to being a full-blown, all-in-one enterprise supplier. Marshall uses a four-legged stool as his metaphor for this. The legs are computing (servers), storage, networking and security, and they're capped with software and IT services as the seat. (Try not to draw too many analogies about that part.)
EMC has three of those pieces, but the server and networking legs of the stool are provided by Cisco, through the VCE partnership with EMC and VMware. Wisely, EMC has enlisted backup partners Brocade Communications Systems Inc. (Nasdaq: BRCD) and Lenovo Group Ltd. (Hong Kong: 992), just in case.
But what if it wants something in-house? Juniper would be a quick answer. "As 'all roads lead to Hopkinton' [EMC's headquarters] in an enterprise world ... the same holds true that 'all roads lead to North Mathilda Avenue' [Juniper's HQ] in a service provider world as JNPR is “the network innovator” solving the SP quagmire," Marshall writes.
Juniper has shown it can go toe-to-toe with Cisco, and more importantly, it comes with a sizable installed base. Arista Networks Inc. , while probably cheaper than Juniper, would force EMC would to work at building a networking empire.
The main reason this won't happen is because VMware isn't avidly battling Cisco yet -- the Nicira acquisition is still brand new. And EMC is coming off a growth phase that puts it in a position of power. I think EMC can coast (relatively speaking) off of its partnerships for a while.
On top of that, I'm not sure all roads do lead to Juniper, given that the company is in a rough patch. But the strategy sure is fun to think about.
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