Juniper Networks Inc. (JNPR) announced that online video game provider, OnLive has selected its network infrastructure for an undisclosed amount. OnLive intends to upgrade its data center infrastructure with Juniper’s routing, switching and security solutions.
OnLive pioneered the cloud gaming platform where games are synchronized, rendered and stored on remote servers, and thereafter delivered via the Internet. The service is available on OnLive Game System on any PC and Apple Inc.’s (AAPL) MAC.
The online video game provider picked up Juniper’s EX4200 Ethernet Switches with Virtual Chassis fabric technology, MX960 3D Universal Edge Routers and SRX3400 Series Services Gateway. Leveraging Juniper’s network architecture, OnLive will be able to deliver greater bandwidth, speeding up the information transmission process. Apart from this, OnLive might also opt for Juniper’s QFabric solution to achieve exponential improvements in data center speed, scale and efficiency.
In another recent development, Juniper’s MX Series 3D Universal Edge Routers was selected by fiber optic network services provider FiberLight LLC. This switch will offer FiberLight customers steady and secure network services, helping them meet new requirements without coughing up huge amounts.
Juniper’s networking architecture runs on the Junos operating software, a single-window operating system, and simplifies networking operations while reducing the cost of ownership. Moreover, the platform provides room for capability improvement, without additional capital. We can consider these as the key factors for both firms to single out the Juniper offering.
We remain encouraged by the rapid deployment of Juniper’s networking products and services by organizations and governments. We find the company’s acquisitions a good strategy for enriching its product portfolio.
However, Juniper’s underperformance in the second quarter keeps us on the sidelines. We believe that competition from large companies, such as Cisco Systems Inc. (CSCO) and Hewlett-Packard Company’s (HPQ) networking businesses could pressure gross margins, forcing Juniper to lower its price in order to gain or maintain market share. Moreover, management’s decision to continue investments in research and development could also pressure margins.
Juniper’s European exposure and federal dependency are also concerns, contributing to recent estimate cuts.
Currently, Juniper has a Zacks #4 Rank, implying a short-term Sell recommendation.
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