Johnson brings a new set of CEO skills from Microsoft to Juniper. Analysts say Juniper needs to be more aggressive in expanding its reach and growing its business. Johnson's Microsoft background matches those needs.
Much of the debate about Kevin Johnson has been focused on his
departure from Microsoft, a key part of the software giant's latest
reorganization as it tries to figure out how to compete against Google.
could be a huge gain for networking hardware maker Juniper Networks,
where Johnson will land as its new CEO.
When he takes the reins in September, Johnson will adopt a $3 billion
company that analysts say has been stuck in neutral for a while trying to
figure out how to make the jump to the next level in its competition against
much larger rival Cisco Systems.
For customers and partners, that will mean a Juniper that is more aggressive
in gaining technology through acquisitions, more willing to listen to
suggestions from its talented engineering staff and more serious about adopting
the idea that the network is becoming a platform.
Johnson will take over for Scott Kriens, the current chairman and CEO
who has been with the 6,000-employee company for 12 years, Juniper announced
July 24. Kriens will remain as chairman. Silicon Alley Insider's Henry Blodget
said the two
in the move were Microsoft CEO
Steve Ballmer's insistence on splitting up the company's online business and
Johnson's desire to be a CEO.
During a conference call with analysts July 24 to review quarterly earnings,
Kriens said Juniper was looking for a C-level executive, particularly since the
loss of Chief Operating Officer Stephen Elop, who left in January for Microsoft
to replace Jeff Raikes as head of that company's Office software business. The
initial idea was to find an executive who could be groomed to become CEO.
Kriens said Johnson's abilities to take over immediately quickly became
"Kevin is a world-class executive," Kriens said,
citing Johnson's experience in various business areas, including sales and
engineering. "Kevin will enhance this company in many ways."
Kriens said Juniper's goal is to rapidly grow well beyond the $3
billion in annual revenues it makes now. He pointed out that Johnson joined
Microsoft when it had 6,000 employees and $2 billion in revenue, even smaller
than Juniper is now, and he stayed with Microsoft through its rapid growth as
it became the dominant software company it is today.
"He's seen both side[s] and beyond of what we're trying to do here,"
Kriens said. "When [having Johnson as CEO]
became possible, it was simply obvious."
Analysts earlier in the day said Juniper needed new management.
"There comes a time in every company's history when they need new
leadership," said Zeus Kerravala, an analyst with Yankee Group. "That
time is now for Juniper."
Kriens did a good job steering Juniper through the 1990s and building it to
the point it's at today, Kerravala and other analysts said. However, he didn't
have the right set of skills to take the next step to grow the company and
expand its reach beyond the networking hardware business.
"To some extent, [Kriens] held Juniper back," IDC
analyst Eve Griliches said. "He's been M&A [mergers and acquisitions]-shy,
too conservative. He's been cautious and stuck with what he knows."
The result has been a somewhat stagnant company in a dynamic sector of the
Johnson comes to the company with a different set of skills built during his
15 years at Microsoft, where he was most recently the president of the company's
Platforms and Services unit. That experience included helping Microsoft acquire
companies and integrating them into the business, and helping Microsoft expand
its reach and build ecosystems around its products.
That platform experience will be key, Yankee Group's Kerravala said.
"If it's true [that the network is becoming a platform], then you need
the skill sets around how to become a platform," he said.
Platform companies-like Microsoft-build a strong ecosystem around their
products and let that ecosystem lead them, Kerravala said. "You support,
they lead," he said. By contrast, Juniper is still a product company whose
partners build technologies to support Juniper's offerings.
The M&A experience also will be important. Juniper did a good job of
integrating NetScreen technologies after buying the company in 2004 (as
illustrated in Juniper's NetScreen-Security Manager offering), but more recent
acquisitions such as the 2007 purchases of Peribit Networks and Redline
Networks have been less successful. The company needs to develop a better track
record in its acquisitions.
"If Juniper's going to grow ... there's only so much it can do
organically," Kerravala said.
To adequately compete against Cisco, Juniper needs to adopt the platform
mentality that its rival has already embraced.
Kriens' approach has to been to focus on what the company already did well,
at the expense of seeing other areas where Juniper could expand, such as the
optical space and WLANs, IDC's Griliches
To grow, a company needs its CEO to not
only look externally at what companies it could buy, but also to actively
listen to those inside the company who might have good ideas.
"This will really open up a more positive
atmosphere internally," Griliches said. "[The change in CEOs] would
have been nice if it had happened a year ago or two years ago."