Cisco CFO Scott Herren claims that Hewlett Packard Enterprise’s pending $14 billion purchase of Juniper Networks is causing “uncertainty” in the enterprise WLAN market that could be benefiting Cisco, though Cisco’s own efforts in that space could themselves cause some customer concern.

Herren told an audience at this week’s Goldman Sachs Communacopia+Technology Conference that HPE’s acquisition is reverberating across the segment.

“I think for sure that's created just a degree of uncertainty and a question of, hey, should I consider if I was previously a vendor or a customer of either of those, now is the time to kind of open up and look at other opportunities,” Herren said. “And we've seen our wireless business, our orders greater than $1 million grew more than 20% in the fourth quarter.”

HPE and Juniper management have attempted to downplay any product overlap or ongoing continuity concerns that might impact enterprise decision making.

“And on that point, let me be clear: our goal in embarking on this acquisition is not to eliminate products, but to offer enhanced choice and more innovation for all of our service provider, cloud provider and enterprise customers,” Juniper Networks CEO Rami Rahim wrote in a blog post shortly after the deal was announced.

However, analysts have pointed to potential concerns.

Forrester Research Principal Analyst Andre Kindness wrote in a research note when the deal was announced that “the journey ahead will be rife with obstacles for Juniper and HPE/Aruba customers alike.” Kindness explained that one important move for HPE would be to “rationalize/optimize the portfolio, the products and the solutions.”

“HPE will try to reassure you that nothing will change; it doesn’t make sense to keep everything, especially the multiple AP [access point] product lines (Instant On, Mist, and Aruba Aps), all the routing and switching operating systems (Juno, AOS-CX, and ArubaOS) and both management systems (Central and Mist),” Kindness wrote. “Though not immediately, products will need to go and the hardware that stays will need to be changed to accommodate cloud-based management, monitoring and AI.”

Kindness added that “this happened at Cisco with its routing, switching, and wireless product lines after the company acquired Viptela and Meraki. My bet? I believe that Aruba Central will be phased out for Mist. This will take a few years to happen. If HPE stops adding features to Aruba Central, then take that as a sign that Mist is taking over here.”

HPE for its part remains steadfast behind the Juniper acquisition, with management repeatedly stating that the deal remains on track to close by the end of this year or early next, and that it will prove to be a networking accelerant for the server vendor.

“In itself, that transaction is going to have a significant impact on both gross and operating margins,” HPE CFO Marie Myers said during the vendor’s most recent earnings call. “And we expect that more than 50% of the company's operating profit will come from networking.”

Juniper’s most recent financial results showed a 17% drop in revenues during the second quarter of this year compared to last year. That drop was fully on the back of equipment sales, with Juniper’s service revenues posting a year-over-year gain.

Juniper was able to trim expenses enough and benefit from some past investments to grow net income nearly 40% during the quarter. However, revenues and net income for the first six months of the year were down significantly compared to the first half of 2023.

Rahim in a statement spun the numbers positively, pointing to ongoing demand for the vendor’s artificial intelligence (AI)-powered products.

“We experienced better than expected demand during the June quarter, with orders growing double-digits sequentially and year-over-year,” Rahim wrote. “We saw particularly robust orders from our cloud customers, many of which have digested prior purchases and are investing to support AI initiatives. We also experienced better than expected enterprise demand due to continued momentum in our Mist-led campus and branch business and strong demand for our enterprise data center offerings.”

HPE’s management also remains unconcerned, with CEO Antonio Neri telling investor’s during the company’s earnings call earlier this year that “we have not lost one single deal that I can point to, neither because of the slowdown or customers deferring, not because of the announcement of the acquisition of Juniper.”

Cisco, HPE, Juniper part of surging WLAN space This potential market uncertainty comes at a critical time for the WLAN market.

A new IDC report found that worldwide enterprise WLAN revenues surged more than 12% sequentially between the first and second quarters of this year, though the Q2 numbers were down nearly 23% year over year. The research firm tagged that sequential uptick to a normalization of product backlogs that built up during the COVID-19 pandemic.

Cisco continues to be the market heavyweight, with IDC stating the vendor controlled 39.6% of the market at the end of Q2. HPE/Aruba was a distant No. 2 with 14.8% of the market, while Juniper Networks had 5.1% market share.

A separate Dell’Oro Group report did note that Juniper’s Mist WLAN portfolio sales rocketed the vendor past some of its rivals in overall market revenues and that the pending HPE acquisition “does not appear to be dampening sales of Juniper Mist WLAN.”

Cisco’s shifting networking focus Herren during the investor conference also further backed Cisco’s move last month to de-emphasize its legacy networking business in favor of a greater focus on growth segments in artificial intelligence (AI), cloud, and cybersecurity. That decision included a corporate restructuring that saw long-time networking chief Jonathan Davidson leave the vendor and plans to cut up to 7% of Cisco’s workforce.

“We're seeing scale in that wireless space. We're also pulling together our Catalyst and Meraki lines under a single cloud platform, a back-end plane to drive that,” Herren said of that move. “We're seeing pretty significant opportunities there in the wireless space. Some of it could be generated by the M&A that's in the background. I think that's opened a lot of people's eyes. It's also generated by some of the innovation that we've built into that space.”

Analysts applauded the move, noting that Cisco was making a sound financial pivot.

“It always struck me that security business group was at odds with the networking business group,” Sanchez said. “When it came to the intersection between networking and security, there was overlap, there was replication, there was product positioning that was getting messy because you had Catalyst on one side and you had the firewall and Meraki on the other. It was starting to get confusing to me. Hopefully that will start leading to some greater amount of product reconciliation and position reconciliation, which hopefully will make life easier for Cisco.”

Sanchez added that Cisco’s deemphasizing of the networking space is just a case of following the money.

“Those are your cash cows that will continue to pay dividends and keep the lights on, but they’re not growth markets,” Sanchez said of the overall networking space. “Are you happy just going after that single-digit growth, or do you need to show how you’re playing in the new landscapes that are growing fast and ultimately may become tomorrow’s big cash cow?”