Sin-Yaw @ Juniper

When I started this job in July, Juniper did not have an active blogging community. That changed drastically since, and I am part of that transformation. I found myself questioning the purpose of this one.

If Juniper employees will read my internal blogs, who read my external ones? Why don’t they just go to Loud Thoughts? I cannot come up with a compelling reason. In fact, my lack of activity here answered that question.

So, readers, I am retiring this blog. If you are Juniper employees, click Core Dump to read my recent posts (I share this blog with Mike Bushong and others). Juniper employee or not, you are always welcome in Loud Thoughts.

This Internet thing is good at satiating curiosity. I started a pursuit this weekend to get a grip on the industry, defined as: Cisco, Alcatel, Juniper, HuaWei, F5, Extreme, RiverBed, and Arris Group. (Foundry and Nortel are kind of hard to get these days.) I am interested only in their financial performance, so I dug up their latest federal reports, or whatever their websites will give.

Relative to each others, Cisco dominates with 51% market share. Alcatel follows with 25.7%, HuaWei 15.5%, Juniper 4.7%, and the rest combined is 3.1%. Interesting that each major sales region has a dominant player: US, Europe, and Asia Pacific. The numbers show Juniper is winning share, but I can be biased.

If economy of scale plays in this industry, smaller ones — Arris, F5, Extreme, and Riverbed — will face consolidation pressure. Since this is high-tech, I am not very sure economy of scale really play.

Among the “big 4″ (Cisco, Alcatel, HuaWei, Juniper), Juniper has the best gross margin (67.5% of total revenue) and HuaWei least (33.9%). This is not surprising that Juniper is at the “high performance” segment and HuaWei competes on costs. (Alcatel is 34%, just a hair better than HuaWei.) Juniper spends the most on R&D at 20.7% and HuaWei the least at 11.4%. HuaWei has the lowest OPEX (27%) and Alcatel highest (54.5%). Cisco makes the most money with 20% net income and Alcatel lost at -20.2%.

Alcatel deserves some attention with low gross margin and high OPEX. Not a good combination: products cost too much to make, company is not efficient. Over the other end, Riverbed has a whopping 73.5% gross margin and equally high OPEX of 74.8%. On the surface, this means they make and spend money both quickly.

Juniper’s and Huawei’s numbers make sense. One invested on R&D and the other kept the corporate overhead low. Extreme is interestingly pretty much on average in every areas. Mediocracy can be difficult to rid.

There is a simple and classic strategy to maximize the chances of winning: spread the opponent’s resources wide and pierce his weak point with concentration of your strength.

Why would Cisco start a server business? I guess that someone in Cisco found out that routers are really the same, from manufacturing’s and engineering’s points of view, as servers. If they make good routers, they should be able to make reasonable servers too.

But server and router businesses are quite different. The components of servers are mostly commodity these days. To differentiate, Dell claims the cost leadership, IBM and HP built armies of service personnel and a vast array of system software. Sun has Java and Solaris.

It will take years and billions of dollars for Cisco to build up this business and compete with IBM, HP, and Dell. All of them very good at raging attrition wars against smaller players. It does not make Kevin Johnson happier when John Chamber make enemies with Mark Hurd, Samuel Palmisano, and Michael Dell at the same time.

Cisco did not announce a sofware strategy, they simply mentioned vmware. The implication is that OS is up to the customer and run on top of the virtualization layer. We all knew that Cisco is not very good at producing a strong operating system (most of the variations of IOS are not full-feature OS). This seems like a good spot for Juniper to poke.

2009 should be a good year for Juniper.

Gartner, a market analyst, publishes its Magic Quadrant reports for various industries periodically. Earlier, it released the one for enterprise firewall. I was very pleased to see that Juniper is at the leaders quadrant. We have the right vision and can execute to secure future wins.

By the way, I met the co-author John Pescatore several years ago to discuss some security topics. This man has lots of gems to offer to anyone seeking his wisdom.

The cautionary notes confirmed my decision, in previous life, to discontinue an enterprise firewall product. Only the strong can play in this tough market. All network infrastructure vendors, however, must offer network security solutions. Juniper, therefore, is a “pure-play” vendor here. I am glad to see our favorable position against Cisco, our competitor since the company inception.

How do you find out what are truly valued in an organization? Everyone who has been with the organization knew its values implicitly, but rarely can anyone articulate them.

I decided to stack rank my organization several months ago. I, however, did not know how to. Should I rank them by their IQ, EQ, or the average of them? What about leadership, teamwork, communication, or other soft skills? Does Juniper value engineering prowess above all else? Or, like some companies, verbal eloquence?

I asked a team to decide the categories of evaluating individuals. I also asked them to weigh each category. Four of them worked 2 months on this assignment. They talked to many in my organization and discussed the topic at length.

Drum roll…

35% productivity, 15% creativity, 25% people skills, and 25% dependability.

Ella, the team lead, showed the similarity to the Juniper Way. High-Quality results come from productivity. Agreement is strongly linked to people skills. The dependability is the cornerstone for relationship. In addition, engineers always value creativity.

We then ask every managers to score their employees according to this system. There were intensive discussions on the differences of each other’s scoring style, but almost none on the categories, or the weights.

Now I have a consistent performance model across my entire organization and a common language to communicate. This system will reward people for their productivity, people skills, dependability, and creativities. More importantly, it rewards those who are most balanced across all 4 categories, instead of those who are unproportionally strong in one, but weak in others.

I emphasized that the system is designed to be 85% accurate in assessing employee performance. It is a non-goal to be more accurate; doing so risk replacing judgment with processes. This process met two objectives: I now have a concrete value-system that is consistent with the Juniper Way; I also have a consistent and quick methodology to identify the best talents in my org.

I anticipate this process to evolve as managers work on it. For the 1st time deployment at Juniper, it surpassed my expectation.

Thank you. Ella & team.

Companies all have their cadence. After several years, the managers got the hang of it and gained efficiency: ops review, focal, recruiting, budgeting, repeat. Corporate America all have reporting obligations and have long been tuned to the same quarterly rhythm. What amuses an observer is how each company does it differently.

Ostensibly, the budgeting exercise allocates resources for the optimal return. The managerial principles are well-studied: rank all projects according to their NPV (Net Present Value, a conceptual value that represent how much the project is worth today) and fund as many positive ones. In reality, no company does it this way. No method computes NPV accurately; a good manager can always present his/her projects in good light.

The budget cycle, then, becomes an exercise to synchronize the value: a daunting task for any company of decent size. Compared to others, Juniper does it quite well. In few short intense weeks, the list quickly settled. The ripple, of course, has its normal jittering effects. From my vantage point, I don’t see standard bad behaviors: keeping sleuth funds, hoarding resources for political gains, hide projects into skunkworks, using high-priority ones to pad organization, etc. Instead, people got the list, internalized them, and simply moved on to do the works.

Very cool.

Like many companies with a dispersed campus, Juniper provide shuttle services that transport employees from building to building. Hey, losing that hard fought parking space in the early morning is not cool.

This shuttle service also make it possible for me to attend meetings on those days I took the bus to work. I wouldn’t need to beg for rides, just hop onto the shuttle.

So I did. Surprise! A bumper sticker right there. Make my day.

For the most part of my professional career, networking ends with a NIC card. The software stack on top includes a device driver, a chain of software, usually in kernel, that sends packets up and down, and a collection of daemons (programs that belong to no-one and never die) that do their things: ftp, ssh, nfs, etc. I am vaguely aware of one daemon, routed, that figure out which ways to send packets. I really do not care much, since I am more concerned with packets for or from myself. Routing deals with, mostly, packets for others.

When I came to Juniper, networking changed completely. The classic router architecture has three main components: forwarding, routing, and OS.

Forwarding shoves packets from one end to the other as quickly as possible. Juniper’s gears can handle a very impressive amount: probably the fastest in this industry. Huge amount of packets arrive at the interface, each one must be categorized, inspected, and possibly forwarded to the right destination. The machinery operates based on FIB (forwarding information base), a data-structure dynamically updated by the routing intelligence.

Routing is the art of figuring out what the net looks like by what the neighbors said. It generate RIB (routing information base, used to be called routing table) that is the foundation of FIB. When wrongly computed, the net melts down or critically disrupted. If done right, companies can deliver more services without spending more: a key competitive advantage for many enterprises these days.

The OS manages the machinery and all those sophisticated software. It provisions resources for payloads and provides a stable platform for innovations. In my book, it serves the most important function: allowing routing and forwarding to innovate independently.

Ostensibly, the box looks the same as a standard data-center server. There is power-supply, lots of fans blowing air around, a chasis that connects boards, called blades these days, that plug into it. Off the back of the box, many cables run off to a far-away corner. I walk into a networking lab thinking how similar it is to a data-center.

This is probably why an OS guy like me feels so at home in a networking company.

People asked why do I come to Juniper. “Because the way I watch TV now.”

Just a few months ago, I routinely fired up BitTorrent at night to download episodes of my favorite programs (House, Heroes, Grey’s Anatomy). I had no choice. Those programs are not aired in China. When I moved back to the US, I don’t wait anymore. I watch those programs from the official web sites: fox.com, nbc.com, etc. I will hook up my laptop to the new 52″ 1080p HDTV. Many programs play in full-screen mode (Fox is better) and I will soon forget that’s not live TV. I laughed so hard on Tina Fey’s SNL performance on my laptop, displayed on my TV set, Sunday afternoon — no need to stay up Saturday night.

Internet never busted. Many Internet companies went under, but the net kept on growing. Billions of people around the world are waiting to get online. Internet these days are several times larger than the bubble days and sees no sign of slowing down.

And which companies are to ride the wave? The one that produce the biggest, meanest, and fastest routers for the mass. There are other players, but Juniper is at the center of this stage.

Juniper is large enough to make a difference and small enough to experience explosive growth. Juniper’s executives are all on-board for this vision. Everyone focuses on the customers, the market, the revenue, the products: not on internal politics.

When I watched SNL, I noticed the page said more than a million viewings and counting. This is main-street behavior now. It takes lots of networking to deliver millions of viewings.

Can’t think of another company that is readier.

Inspired by Mike Bushong, who authored JUNOS for Dummies and also provided excellent sources for plagiarization.

How do you compete with Cisco? Alcatel-Lucent and Nortel are not doing so well. HuaWei chose to be the low-price leader: a strategy based on its inherent strength. Juniper Networks wins with its JUNOS operating systems.

Since almost all Juniper’s gears are based on the same architecture and work the same way, Juniper lowers the costs for customers. They would enjoy “train once, apply many times” efficiency. For Juniper’s internal operations, a single effort benefits all products. This gives Juniper a time-to-market edge: new product group focuses only on the differentiators and leverage from the same core functionalities.

It is easy to copy Cisco’s formula: create autonomous business units, give them free rein on hardware, software, marketing, and business infra-structure, hold the exec accountable, and sit back to enjoy the success. But this approach tries to beat Cisco in the game defined by Cisco. History shows this path littered with corpses of companies who tried. Juniper defined a different game: JUNOS vs. IOS. It does not try to fight against Cisco’s product portfolio, marketing army, R&D dollars, or acquisition spigot. It chose to fight on Cisco’s soft spot: software. In a battle against a giant, compete where size matter less seems like the right idea.

In this game, it is JUNOS against many smaller Ciscoes, each having an OS and a smaller OS development team. This is quite Sun-Tze: divide the larger enemy into smaller sub-units and attack with all strengths focused at a laser-sharp point. There will be no enemy too big and no battle not winnable.

As long as Juniper stays with this strategy.