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What the Numbers Say

The announcement that HPE plans to acquire Juniper Networks for almost $14 B surprised the industry. HPE has declared it wants to be a networking company. In the enterprise market, this means one thing – challenging Cisco – and according to HPE CEO Antonio Neri, he does business like he plays soccer. If he can’t be first, he’ll start a fight.

An analysis of the total enterprise market, defined as a sum of the Infrastructure Security, Enterprise Routing, WLAN, Campus Switch, and Enterprise Data Center Switch sales, reveals that a simple combination of Juniper’s and HPE’s Enterprise market share will not make much headway in taking on the market behemoth.

Source: Dell’Oro Group 3Q23 Reports


In addition, it is legitimate to question whether the acquisition would result in a straightforward addition of HPE’s and Juniper’s enterprise revenues. Given the overlap in product portfolios, the results of a combined entity will more likely be a complex algebraic formulation of the separate pieces. Whether the result is accretive depends on the strategy that the company leaders will take in each of the enterprise market segments, considering the strength of the two companies’ portfolios and market presence.

Market Share Ranking – Additive Scenario

Breaking down the total market into its five distinct pieces demonstrates Cisco’s dominance. Huawei makes multiple appearances on the leaderboard, but in North America is virtually absent.

Source: Dell’Oro Group 3Q23 Reports*


HPE is a significant player in the Wireless LAN (WLAN) and Campus Switch markets, whereas Juniper is not prominent in any of the five markets. However, just looking at the top three in each market does not reveal that Juniper outperforms HPE in revenue share of both the Network Security (Infrastructure Security) and Enterprise Data Center Switch markets.  In these areas, Juniper can offer HPE an expanded customer base and a more diverse range of products. At the end of this blog, we highlight recently published blogs that delve into the effects of the merger within the realms of the WLAN, Data Center Switch and Network Security markets.

Considering Juniper’s Enterprise Routing and Campus Switch revenues in the first three quarters of 2023, the combination with HPE’s results would have propelled the joint company to a higher share rank in both markets. In Campus Switch, a segment in which both companies have a strong showing, the combined revenues would have narrowly edged out Huawei for second place.

In the other enterprise markets, the substantial revenue advantage held by the top vendors means that the merging of Juniper and HPE wouldn’t have affected the combined company’s overall revenue ranking over the first three quarters of 2023.

Source: Dell’Oro Group 3Q23 Reports*


Product Overlaps – Worst Case

The most significant overlaps in enterprise portfolios between HPE and Juniper are in the WLAN, Campus Switch, and SD-WAN domains.

Where there is a clear overlap in product portfolio, gains may still be possible if the companies serve different market segments or geographies. HPE’s core strength is in the mid-market, whereas Juniper has made inroads with higher-end enterprises. Juniper’s Mist solution is managed from a vendor cloud, while HPE’s strength is with on-premises managed equipment.

However, both companies obtain significant revenue from the Higher Education and Retail verticals, increasing the risk of cannibalization. On a regional basis, Juniper is heavily weighted towards North America and would benefit enormously from expanding its reach to the rest of the world.

Our analysis of the two companies reveals that the maximum overlap in revenues in the first three quarters of 2023 was 24% of their combined revenues. The cost-cutting targets announced by Neri could compensate for the associated reduction in net income if this range of overlapping revenues were to evaporate once the acquisition occurs.

Source: Dell’Oro Group 3Q23 Reports*


Opportunities for future growth

The data shows that, in the total enterprise market, this acquisition is less about HPE purchasing market share and more about investing in future technological capabilities. The main question is whether the combined company will be able to capitalize on respective portfolio strengths and market segment differences to go beyond what each company could achieve individually.

HPE stands to gain AI assets and strong branding by purchasing Mist. In domains where Juniper’s technology is considered superior, it will benefit from HPE’s scale in go-to-market organizations, especially outside North America. However, once the acquisition is complete, judicious choices must be made, portfolio by portfolio, to ensure that one plus one does not equal less than two.

Despite the minimal impact the acquisition will have on short-term market share, buying into AI-driven technology is a smart move for HPE.  Juniper’s Mist brand for enterprises has been gaining steam and has been lauded publicly by CIOs evangelizing about the dramatic simplifications Mist’s AIOps has brought to their network operations. In North America, larger companies are coming around to adopting public cloud-based management of their networking equipment, opening the door to Mist.

Meanwhile, most incumbent vendors are turning their development efforts and marketing messages to AI. In addition, a new startup in the networking market, Nile, has been spawned by ex-Cisco executives and is positioning fully automated, AI-based networking technology. Any vendor not using AI in their offers will be left behind. This highlights a key risk HPE must now navigate. The acquisition announcement heavily emphasizing ‘Artificial Intelligence’ implies that the primary risk to customer confidence lies with the Aruba portfolio, which lacks AI flair.

Until the acquisition is complete, the two companies will continue to compete head-to-head. Because of the overlap of Juniper and HPE’s enterprise portfolios, customers can be forgiven for being concerned about the longevity of either company’s technology. Competitors such as Cisco, CommScope Ruckus, Huawei, Extreme, Fortinet, Palo Alto, and Nile will try to capitalize on customer confusion while HPE awaits regulatory approvals.

To read more on the HPE’s acquisition of Juniper, consult the following Dell’Oro blogs:

*data presented in this blog has been extracted from the following Dell’Oro Group reports:  Ethernet Switch – Campus 3Q23 Quarterly, Ethernet Switch – Data Center 3Q23 Quarterly, Network Security 3Q23 Quarterly, SASE & SD-WAN 3Q23 Quarterly, Wireless LAN 3Q23 Quarterly.


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Greetings! Prior to delving into an evaluation of our data center predictions for 2024, allow me to first revisit some of the prominent trends I emphasized in the 2023 predictions blog.

    • Data center capex growth in 2023 has decelerated noticeably, as projected after a surge of spending growth in 2022. The top 4 US cloud service providers (SPs) in aggregate slowed their capex significantly in 2023, with Amazon and Meta undergoing a digestion cycle, while Microsoft and Google are on track to increase their greenfield spending on accelerated computing deployments and data centers. The China Cloud SP market remains depressed as cloud demand remains soft from macroeconomic and regulatory headwinds, although there are signs of a turnaround in second-half 2023 from AI-related investments. The enterprise server and storage system market performed worse than expected, as most of the OEMs are on track to experience a double-digit decline in revenue growth in 2023 from a combination of inventory correction, and lower end-demand given the economic uncertainties. However, network and physical infrastructure OEMs have fared better in 2023 because strong backlog shipments fulfilled in the first half of 2023 which lifted revenue growth.
    • We underestimated the impact of accelerated computing investments to enable AI applications in 2023. During that year, we saw a pronounced shift in spending from general-purpose computing to accelerated computing and complementary equipment for network and physical infrastructure. AI training models have become larger and more sophisticated, demanding the latest advances in accelerators such as GPUs and network connectivity. The high cost of AI-related infrastructure that was deployed helped to offset the sharp decline in the general-purpose computing market. However, supplies on accelerators have remained tight, given strong demand from new hyperscale.
    • General-purpose computing has taken a backseat to accelerated computing in 2023, despite significant CPU refreshes from Intel and AMD with their fourth-generation processors. These new server platforms feature the latest in server interconnect technology, such as PCIe 5, DDR5, and more importantly CXL. CXL has the ability to aggregate memory usage across servers, improving overall utilization. However, general-purpose server demand has been soft, and the transition to the fourth-generation CPU platforms has been slower than expected (although AMD made significant progress in 3Q23). Furthermore, CXL adoption is limited to the hyperscale market, with limited use cases.
    • Server connectivity is advancing faster than what we had expected a year ago. In particular, accelerated computing is on a speed transition cycle at least a generation ahead of the mainstream market. Currently, accelerated servers with NVIDIA H100 GPUs feature network adapters at up 400 Gbps with 112 Gbps SerDes, and bandwidth will double in the next generation of GPUs a year from now. Furthermore, Smart NIC adoption continues to gain adoption, though, mostly limited to the hyperscale market. According to our Ethernet Adapter and Smart NIC report, Smart NIC revenues increased by more than 50% in 2023.
    • The edge computing market has been slow to materialize, and we reduced our forecast in the recent Telecom Server report, given that the ecosystem and more compelling use cases need to be developed, and that additional adopters beyond the early adopters have been limited.

According to our Data Center IT Capex report, we project data center capex to return to double-digit growth in 2024 as market conditions normalize. Accelerated computing will remain at the forefront of capex plans for the hyperscalers and enterprise market to enable AI-related and other domain specific workloads. Given the high cost of accelerated servers and their specialized networking and infrastructure requirements, the end-users will need to be more selective in their capex priorities. While deployments of general-purpose servers are expected to rebound in 2024, we believe greater emphasis will be made to increase server efficiency and utilization, while curtailing cost increases.

Below, we highlight key trends that can enhance the optimization of the overall server footprint and decrease the total cost of ownership for end-users:

Accelerated Computing Maintains Momentum

We estimate that 11% of the server unit shipments are accelerated in 2023, and are forecast to grow at a five-year compound annual growth rate approaching 30%. Accelerated Servers contain accelerators such as GPUs, FPGAs, or custom ASICs, and are more efficient than general-purpose servers when matched to domain-specific workloads. GPUs will likely remain as the primary choice for training large AI models, as well as running inference applications. While NVIDIA currently has a dominant share in the GPU market, we anticipate that other vendors such as AMD and Intel will gain some share over time as customers seek greater vendor diversity. Greater choices in the supply chain could translate to much-needed supply availability and cost reduction to enable sustainable growth of accelerated computing. Refer to our Data Center IT Semiconductors & Components report for more insights on the accelerator and server component market.

Advancements in Next-Generation Server Platform

General-purpose servers have been increasing in compute density, as evolution in the CPUs is enabling servers with more processor cores per CPU, memory, and bandwidth. Ampere Computing Altra Max, AMD’s Bergamo are offered with up to 128 cores per processor, and Intel’s Granite Rapids (available later this year), will have a similar number of cores per processor. Less than seven years ago, Intel’s Skylake CPUs were offered with a maximum of 28 cores. The latest generation of CPUs also contains onboard accelerators that are optimized for AI inference workloads.

Lengthening of the Server Replacement Cycle

The hyperscale cloud SPs have lengthened the replacement cycle of general-purpose servers. This measure has the impact of reducing the replacement cost of general-purpose servers over time, enabling more capex to be allocated to accelerated systems.

Disaggregation of Compute, Memory, and Storage

Compute and storage have been disaggregated in recent years to improve server and storage system utilization. We believe that next-generation rack-scale architectures based on CXL will enable a greater degree of disaggregation, benefiting the utilization of compute cores, memory, and storage.

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As we enter the new year, it’s a great opportunity to reflect on 2023 and assess what’s in store for 2024.

Looking back at our 2023 DCPI predictions, we anticipated that macroeconomic uncertainty would not lead to a DCPI recession in 2023. We also foresaw that power availability would challenge data centers to rethink energy storage and on-site power generation. Both proved to be true.

Through 3Q23, DCPI revenues have grown at double-digit rates, surpassing our expectation for 2023. Power availability also became a widespread topic of conversation, with battery energy storage systems (BESS), fuel cells, and small modular reactors (SMRs) all increasingly viewed as options to address future power availability challenges.

We also predicted a 10MW immersion cooling deployment from a top cloud service provider; however, this did not happen. Smaller scale deployments and proof of concepts occurred, but larger scale deployments require continued growth in ecosystem support, new environmentally friendly immersion fluids, and increased end-user operational readiness.

Yet, the most impactful and exciting development of 2023 in the data center industry should come as no surprise at this point, the proliferation of generative AI. This has set the stage for a profound transformation in the DCPI market. The impact will be felt for years to come, and we expect to see the following three trends this year:

  1. Normalizing order cycle to lead to slow start for DCPI market in 2024

After back-to-back years of double-digit growth, which has not been the norm over the past decade, DCPI revenue growth is forecast to moderate in 2024, pronounced in the first half of the year. This moderation is attributed to supply chain constraints that delayed unit shipments in 2022, creating unseasonably strong growth in the first half of 2023. Not only does this create tough year-over-year comparisons for 1H24, but abated supply chain constraints mean end-users’ ordering patterns are normalizing, shifting towards the second half of the year.

Additionally, while DCPI vendor backlogs haven’t meaningfully declined, the contents of those backlogs have changed. Order associated with traditional computing workloads have returned to more normal levels, while backlogs for AI-related DCPI deployments are growing. However, these AI-related DCPI deployments need additional time to materialize.

  1. Purpose-built AI facilities will begin to materialize in 2H24

After a slow first half of the year, growth is forecast to accelerate during the second half of 2024. We anticipate that this growth will be driven by new facilities purpose-built for AI workloads, starting to materialize from the top cloud service providers. These facilities are expected to demand 100s of MWs each, pushing rack power densities from 10 – 15 kW/rack today to 80 – 100 kW/rack to support power hungry accelerated servers.

This requires significant investments in higher ampacity power distribution and thermal management, specifically liquid cooling. We expect the majority of this liquid cooling to materialize in the form of Direct Liquid Cooling and air-assisted Rear Door Heat Exchangers (RDHx). This is due to the familiarity of end-users deploying IT infrastructure in the vertical rack form factor and existing ecosystem support, alongside the performance and sustainability benefits. We plan to provide more detail on liquid cooling in our upcoming Advanced Research Report, Data Center Liquid Cooling,’ scheduled to publish in 2Q24.

  1. Changes in GHG Protocol accounting will add pressure to data center sustainability

The data center industry is on a rapid growth trajectory, a trend further accelerated by the growth of AI workloads. However, this surge has raised concern about a potential for alarming growth in greenhouse gas (GHG) emissions. This has attracted attention to the data center industry, to which the industry has responded with commitments to grow sustainably.

To help measure and assess progress here, many within the data center ecosystem report on carbon emissions following the GHG Protocol Corporate Accounting and Reporting Standard. GHG Protocol recently began working on updates to the standards that may significantly impact data center Scope 2 emissions, or indirect emissions generated from the purchase of electricity. Historically, data center owners and operators have been able to limit these emissions through power purchase agreements (PPAs) and renewable energy certificates (RECs) offsets. However, these offsets no longer have the shiny appeal they once did. That’s because the burden a data center has on its local power grid and community may not align with the benefits from the offsets.

We expect the updates from GHG Protocol to address this issue, and become introduce more granularity and stringency in Scope 2 emissions accounting. This may make sustainability claims related to Scope 2 emissions more difficult to make, but much more meaningful. A draft version of these updates is expected in 2024, with the final standards slated for release in 2025. These changes will set the stage for the sustainability claims the data center industry can make in the second half of this decade.

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Happy New Year! As usual, we’re excited to start the year by reflecting on the developments in the Ethernet data center switch market throughout 2023 and exploring the anticipated trends for 2024.

First, looking back at 2023, the market performed largely in line with our expectations as outlined in our 2023 prediction blog published in January of last year. As of January 2024, data center switch sales are set to achieve double-digit growth in 2023, based on the data collected up to the 3Q23 period. Shipments of 200/400 Gbps nearly doubled in 2023. While Google, Amazon, Microsoft, and Meta continue to dominate deployments, we observed a notable increase in 200/400 Gbps port shipments destined toward Tier 2/3 Cloud Service Providers (SPs) and large enterprises. In the meantime, 800 Gbps deployments remained sluggish throughout 2023, with expectations for acceleration in 2024. Unforgettably, 2023 marked a transformative moment in the history of AI with the emergence of generative AI applications, propelling meaningful impact and changes on modern data center networks.

Now as we look into 2024, below are our top 3 predictions for the year:

1. The Data Center Switch market to slow down in 2024

Following three consecutive years of double-digit growth, the Ethernet data center switch market is expected to slow down in 2024 and grow at less than half the rate of 2023. We expect 2024 sales performance to be suppressed by normalization of backlog, digestion of existing capacity, and optimization of spending caused either by macroeconomic conditions or a shift in focus to AI and budgets diverted away from traditional front-end networks used to connect general-purpose servers.

2. The 800 Gbps adoption to significantly accelerate in 2024

We predict 2024 to be a tremendous year for 800 Gbps deployments, as we expect a swift adoption of a second wave of 800 Gbps (based on 51.2 Tbps chips) from a couple of large Cloud SPs. The first wave of 800 Gbps (based on 25.6 Tbps chips) started back in 2022/2023 but has been slow as it has been adopted only by one Cloud SP. In the meantime, we expect 400 Gbps port shipments to continue to grow as 51.2 Tbps chips will also enable another wave of 400 Gbps adoption. We expect 400 Gbps/800 Gbps speeds to achieve more than 40% penetration by 2027 in terms of port volume.

3. AI workloads to drive new network requirements and to expand the market opportunity for both Ethernet and InfiniBand

The enormous appetite for AI is reshaping the data center switch market.  Emerging generative AI applications deal with trillions of parameters that drive the need for thousands or even hundreds of thousands of accelerated nodes. To connect these accelerated nodes, there is a need for a new fabric, called the AI back-end network, which is different from the traditional front-end network mostly used to connect general-purpose servers. Currently, InfiniBand is dominating the AI back-end networks but Ethernet is expected to gain significant share over the next five years. We provide more details about the AI back-end network market in our recently published Advanced Research Report: ‘AI Networks for AI Workloads.’ Among many other requirements, AI back-end networks will accelerate the migration to high speeds. As noted in the chart below, the majority of switch ports in AI back-end networks are expected to be 800 Gbps by 2025 and 1600 Gbps by 2027.

Migration to High-speeds in AI Clusters (AI Back-end Networks)

For more detailed views and insights on the Ethernet Switch—Data Center report or the AI Networks for AI Workloads report, please contact us at

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I would like to share some initial thoughts about the groundbreaking announcement that HPE has entered into a definitive agreement to acquire Juniper for $14 B. My thoughts are mostly around the switch business of both firms. The WLAN and security aspects of the acquisition are covered by our WLAN analyst Sian Morgan and security analyst Mauricio Sanchez.

My initial key takeaways and thoughts on the potential upside and downside impact of the acquisition are:


  • In the combined data center and campus switch market, Cisco has consistently dominated as the major incumbent vendor, with a 46% revenue share in 2022. HPE held the fourth position with approximately 5%, and Juniper secured the fifth spot with around 3%. A consolidated HPE/Juniper entity would climb to the fourth position, capturing 8% market share, trailing closely behind Huawei and Arista.
  • Juniper’s standout performer is undeniably their Mist portfolio, recognized as the most cutting-edge AI-driven platform in the industry. As AI capabilities increasingly define the competitive landscape for networking vendors, HPE stands to gain significantly from its access to the Mist platform. We believe that Mist played a pivotal role in motivating HPE to offer a premium of about 30% for the acquisition of Juniper. In other words, Juniper brings better “AI technology for networking” to the table.
  • In the data center space, HPE has predominantly focused on the compute side, with a relatively modest presence in the Data Center switch business (HPE Data Center switch sales amounted to approximately $150 M in 2022, in contrast to Juniper’s sales that exceeded $650 M). Consequently, we anticipate that HPE stands to gain significantly from Juniper’s data center portfolio. Nonetheless, a notable contribution from HPE lies in their Slingshot Fabric, which serves as a compelling alternative to InfiniBand for connecting large GPU clusters. In other words, HPE brings better “Networking technology for AI” to the table.
  • Juniper would definitely benefit from HPE’s extensive channels and go-to-market strategy (about 95% of HPE’s business goes through channels). Additionally, HPE has made great progress driving their as-a-service GreenLake solution. However, GreenLake has been so far mostly dominated by compute. With the Juniper acquisition, we expect to see more networking components pushed through GreenLake.
  • In campus and with the Mist acquisition in particular, Juniper has been focusing mostly on high-end enterprises whereas HPE has been playing mainly in commercial and mid-market. Therefore, from that standpoint, there should be a little overlap in the customer base and more of cross-selling opportunities.


  • Undoubtedly, a significant challenge arises from the substantial product overlap, evident across various domains such as data center switching, campus switching, WLAN, and security. Observing how HPE navigates the convergence of these diverse product lines will be intriguing. Ideally, the merged product portfolio should synergize to bolster the market share of the consolidated entities. Regrettably, history has shown that not all product integration and consolidation meet that desired outcome.