The Department of Justice’s (DOJ) move to block Hewlett Packard Enterprise’s (HPE) $14 billion purchase of Juniper Networks throws a wrench into that year-long gestating deal and opens questions as to what’s next.

Both HPE and Juniper quickly put out statements condemning the DOJ’s decision making, with HPE this week filing a detailed response to the move. The gist of those comments are that the DOJ is focused too much on how it thinks a combined HPE-Juniper will impact the wireless LAN space, sentiment echoed by many analysts.

One of those is Moor Insights & Strategy Principal Analyst Will Townsend, who told SDxCentral in an interview that he was surprised by the DOJ action and that the government agency’s reasoning behind the move did not align with market realities.

“What the DOJ’s lawsuit is arguing is that they believe that this deal will be anti-competitive when you look at the wireless LAN market,” Townsend said. “And from my perspective, this statement clearly demonstrates their fundamental lack of understanding on that market.”

The DOJ claims that a consolidation of the ecosystem’s No. 2 and No. 3 vendors would hurt market choice and innovation. It added that Juniper’s standalone market innovations have forced larger rival HPE to cut pricing and invest in its own innovations.

Townsend pointed to a robust wireless LAN competitive environment, noting vendors like Cisco, Arista, Extreme, and Fortinet. Townsend also added that many of those firms – Cisco specifically – have gained their prominent competitive position in the wireless LAN space from acquisitions.

That Cisco angle has been a focus point for this deal as the DOJ noted the combined market share of Cisco and a combined HPE-Juniper would near 70%.

Siân Morgan, research director at Dell’Oro Group, in a blog post on the decision pointed to flawed DOJ analysis of the market, writing, “apparently [eight] companies with greater than [$18 million] each of WLAN revenue in a [$4 billion] North American market is too few.”

Morgan noted that this market fragmentation is only hindered by one dominate player in the space.

“In actual fact, the WLAN market is highly fragmented, with one large elephant in the room: Cisco,” Morgan wrote. “By developing a highly sophisticated global channel, a comprehensive suite of high-end networking products, and by means of a relentless sequence of acquisitions, Cisco is first – by a long stretch – in four out of five of the enterprise network segments we track. In the fifth segment, network security, Cisco is [No. 2].”

Morgan, who had previously extoled potential benefits of the HPE-Juniper combination, pointed to flawed DOJ reasoning that lumped all three of those players into a single argument.

“The Justice Department has indicated that the merger should be blocked because Cisco, HPE, and Juniper’s WLAN market share in North America is over 70%. The logic trap here is that 50 points of that 70% share are held by Cisco,” Morgan wrote. “Apparently, the Justice Department feels that Cisco is too big to allow HPE to acquire another WLAN vendor in order to compete with Cisco. If the courts buy into this is shampoo bottle logic (‘rather, rinse, repeat, lather, rinse, repeat …’), the WLAN market in North America is likely to be trapped in the status quo for several years to come.”

Is this the right move for Juniper?

Others are a bit more cautious on the need and eventual positives of the proposed deal.

André Kindness, principal analyst at Forrester Research, in an interview with SDxCentral pointed to the broader trend of large-scaler M&A actions rarely resulting in a positive outcome. “Mergers in general don’t do very well,” Kindness said, adding, “and in general you don’t see it come out well especially across networking companies.”

Kindness in a blog post further explained that large M&A deals are often weighed down by their own financial baggage, which result in limited innovation gains.

“Every major public technology company struggles to fund revolutionary innovation when there are shareholders to satisfy,” Kindness wrote. “Realistically, efficiencies gained from a combined portfolio/organization largely go to shareholders, not to fund new organic innovation. And it’s far easier to justify innovation via one-time acquisition costs rather than an ongoing stream of unrealized innovation.”

Kindness also questioned the Cisco argument, pointing to that vendor’s dwindling market share over the past several years.

“Over the last 10 years, Cisco has been losing market share,” Kindness explained. “How is explaining that you have to be on par with Cisco’s market share or product wise if they've been losing share for 10 years? The whole bigger, better thing to compete against Cisco doesn't equate to what the numbers are showing.”

HPE’s own defense filing did peg Cisco’s market-share dominance over a 10-year period, while its own claims of market share for HPE and Juniper separately are over a three-year period.

This pressure could also ramp should Juniper remain independent. Kindness noted that Juniper’s ongoing innovation around its artificial intelligence (AI)-driven Mist and Marvis network platforms have placed it in an enviable competitive position.

“The company can expand on its networking platform by seamlessly integrating security services, with Marvis as its foundation to automate the secure networking platform,” Kindness wrote. “At this stage, Juniper would just be running up against Extreme’s networking platform, its version of a secure business-wide networking fabric. Cisco, Huawei, and others would be hard-pressed to match Extreme’s and Juniper’s platforms.”

Juniper CEO Rami Rahim told SDxCentral in an interview that he thinks that innovation opportunity will accelerate under HPE, a move Rahim would oversee as head of HPE's networking business.

“We will have the ability to combine innovation across compute, storage, and networking, the software layers that make it all easy for our customers,” Rahim said. “And add to that the worldwide presence and scale that HPE would give Juniper to basically get in front of more customers to have more at bats.”

Despite the current chaos, Townsend said he still thinks this deal will be approved, though it might take a bit longer than originally anticipated.

“I do think this deal will get done,” Townsend said, adding, “It's obviously going to have a longer tail to it.”

HPE and Juniper had been touting plans to close the deal by the end of the first quarter of this year. They have so far not updated that expectation.