ACG HotSeat: Juniper Networks Michael Bushong discuss the SP/Cloud/Hyperscaler space

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0:11 and Tech this is the deep edge podcast

0:16 hello hello and welcome to another

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0:29 today we're very honored to have Mike

0:31 Bouchon who's group vice president for

0:34 cloud ready data centers at Juniper

0:35 Networks Mike thanks for joining the

0:37 podcast

0:38 absolutely my pleasure it's good to

0:41 spend time together again yeah exciting

0:42 that you were able to get me during

0:44 baseball season just when the playoffs

0:46 are about to start so good timing

0:48 it is my team is in the playoffs that's

0:51 right both our teams are in the playoffs

0:53 so I guess we're all in a good mood now

0:54 Mike maybe before we get started could

0:57 you tell us a little bit about your

0:59 journey and how you got to your current

1:00 role at Juniper

1:02 uh sure I mean the the short story is

1:05 started uh designing uh jet engines in

1:09 college became a tech writer I mentioned

1:12 that because it's kind of an awkward

1:13 origin story went through the years at

1:16 like Silicon design companies moved into

1:18 networking found out I'm pretty good at

1:20 strategy uh bounced around tried to make

1:23 my fame and riches in sdn and then

1:25 ultimately ended up back here at Juniper

1:27 where I lead our data center business

1:28 all up which covers off you know

1:30 certainly hardware and software and then

1:32 obviously the space we'll talk about

1:33 today

1:34 this is excellent I I know you for all

1:37 these years and I didn't know that part

1:39 of your background so that's uh thanks

1:41 for sharing that well maybe we'll just

1:43 start off with what what are you hearing

1:45 from the SPs

1:47 so we focus a lot on the Telco Cloud

1:49 space

1:50 um they're looking obviously at how they

1:52 roll out new services and you know it's

1:54 hard to to talk about anything in the

1:56 cloud space without mentioning the

1:58 hyperscalers

1:59 um I mean there's real questions right

2:00 our hyperscalers are they partners are

2:04 they competition and so what everyone's

2:06 trying to figure out is you know what's

2:08 the extent to which you cooperate or

2:10 that you compete with these types of

2:12 companies

2:13 um you know how do you structure your

2:15 strategy so that you can control your

2:16 business what are the routes to Market

2:18 going to be what are the products and

2:20 and you know underlying service

2:22 implications and then ultimately how

2:23 does that kind of break out into the to

2:25 the business where you start looking at

2:26 the division of profit pools I mean that

2:28 was really kind of the Crux of the

2:30 conversation

2:31 yeah no I mean I think that's that's

2:33 been a Hot Topic uh for a while then I

2:36 think some of that is from a

2:38 hyperscaler's point of view uh doing a

2:40 better job of having to show the

2:41 visibility and their plan on how to

2:43 better partner and in some cases it

2:45 might be a coopetition type strategy who

2:48 knows right so it's it's interesting

2:50 here but what what did they specifically

2:52 say the direction about you know their

2:56 relationship with these hyperscalers

2:57 moving forward do they do they feel

2:59 there's uh an important role in what was

3:02 the driver for that

3:04 if you if you essentially concede your

3:07 business to the hyperscalers and put

3:09 everything in the hyperscale space you

3:11 lose control right you lose

3:13 um ownership of the accounts

3:14 um there's actually service and

3:16 performance implications if you're just

3:18 using you know hyperscale points of

3:20 presence

3:21 um if you look at where the data centers

3:23 are things like performance still matter

3:24 and so you know how do you meet you know

3:26 individual customer requirements if

3:29 you're beholden to somebody else to

3:31 create the the data centers that surface

3:33 those those applications

3:35 um the big question though is like who

3:37 whose business thrives in that model and

3:39 who maintains control some some people

3:41 have like you know very very firm ideas

3:44 of what strategically they're going to

3:45 go and other folks are probably earlier

3:47 in their journey in their Discovery

3:48 process and it's interesting to see like

3:51 just how how different people are and

3:54 and how they're looking at the problem

3:55 space and it leads to kind of wildly

3:58 different perspectives on I mean we

4:00 really are like kind of in this this

4:02 phase where it's you know what are the

4:03 right decisions to make you know how do

4:05 we navigate you know the current

4:07 economic climate you know especially in

4:09 Europe by the way where things like the

4:10 US dollar trading at you know all-time

4:12 highs against local currencies you know

4:15 what does that mean for for capex

4:18 yeah no I think that's uh that's a Hot

4:20 Topic from that perspective and one of

4:23 the things you mentioned is about

4:24 different angles uh from that regarding

4:27 type of latency requirements I mean when

4:30 you look at the whole thing about you

4:32 know private Cloud right is there are

4:35 some potential advantages there and how

4:37 are SPS navigating to plan that we hear

4:40 this whole discussion about creating

4:42 some type of vertical or horizontal

4:44 offering yeah so the I guess generally

4:47 if they look at the overall Services

4:48 there's two models right you could have

4:49 a vertical vertically oriented or

4:51 vertically integrated stack or you could

4:53 have a horizontal stack where you look

4:55 at like a traditional platform play and

4:57 I think there's a little bit nervousness

4:58 in the big vertical Stacks primarily

5:00 because you lose

5:01 um economic leverage if you are bought

5:04 into like a single stack then they own

5:06 you know that that vendor that supplier

5:08 owns end to end and if that's the case

5:10 then the challenge is that the pricing

5:12 that you enjoy in year one is not the

5:13 same as the pricing you enjoy in year

5:15 five and if the transitions are

5:17 operational it's not merely deploying

5:19 new equipment I mean you're talking

5:20 about retooling you know entire

5:22 processes you know re-qualifying

5:23 Services which is typically a multi-year

5:26 Endeavor and so if you lose pricing

5:27 leverage there's actually no easy exit

5:29 and so there's a lot of discussion I

5:31 would say actually rough consensus that

5:33 that if they can create

5:36 um you know freedom from a you know

5:37 using a horizontal platform and then you

5:39 can use either best of read or at least

5:42 create a little bit of competition in

5:43 the individual service components that

5:45 that gives you kind of economic control

5:47 over your fate which you know obviously

5:49 if you're staring at uh you know margin

5:51 pressure generally as a at a business

5:53 level if you're looking at macroeconomic

5:55 headwinds maintaining some control over

5:57 your fate seem to be

5:59 um again a pretty widely popular opinion

6:03 on in terms of where to start

6:05 yeah I mean I I think this this is great

6:07 because I think you know there's a lot

6:10 of discussions about certain

6:11 architecture but not enough discussion

6:13 about the impact on the business right

6:16 um uh side of it what what do you feel

6:18 that SP should do about their whole

6:21 distribution of the The Profit polls

6:23 there

6:25 um I think you have to understand or at

6:28 least develop an opinion about how you

6:29 think the profit pools will be divided

6:31 between you and the partners I think

6:34 there's probably three dominant models

6:35 uh one and you can presume that the

6:38 service providers maintain control of

6:40 the account and that the essentially the

6:42 the hyperscale part the cloud part of it

6:44 is is merely part of this the service

6:46 that obviously gives the SPs control

6:48 over the account it gives them control

6:50 over the service

6:51 um it gives them the ability to decide

6:54 how the profit pools are divided up the

6:56 other model is that you know it's like a

6:57 meet in the market what they're going to

6:59 do is you know Enterprises will

7:01 essentially use cloud they'll use

7:03 connectivity services from the SP side

7:06 and in that model the idea generally is

7:09 you know people purchase what they

7:10 purchase and the

7:13 um and the pricing will kind of dictate

7:15 how the profit pools are divided I think

7:17 that's actually a pretty dangerous

7:18 position to take right if the thing that

7:20 they're looking for the Enterprises are

7:22 looking for is to move a workload to

7:24 Cloud then the the dynamic that'll

7:27 dominate pricing and really the

7:28 distribution of the profit pools will be

7:30 how the cloud is priced so if there's a

7:32 hundred fictional dollars to spend and

7:35 the cloud in that in that situation

7:36 let's say the hyperscale charge is 80

7:38 for their service the SPs can't go back

7:41 and say well my service is worth 50

7:42 they're going to get whatever's left

7:43 over so even in the meet in the market

7:45 model where it's the kind of friendly

7:47 coopetition if you will

7:49 um they actually lose control in that in

7:51 that particular model then of course

7:53 there's the the cloud model which says

7:55 that you know the connectivity service

7:57 is merely a part of the cloud service in

7:59 which case the the pricing is fully

8:01 dictated by you know the cloud the

8:03 hyperscalers who own uh the relationship

8:05 with the customer so obviously in that

8:07 model that's a that's even more dire the

8:09 point of all of this though is that even

8:11 that middle one which is kind of where

8:12 people they tend to think of that as

8:14 safe neutral ground I don't think that's

8:16 actually going to be safe in neutral

8:18 ground which means that the service

8:19 providers need to be thinking today how

8:22 do they construct their services so they

8:24 can send actually you know maintain the

8:26 the billing relationship with the

8:29 customer because that gives them control

8:30 over how that the dollars are going to

8:33 be distributed and if that's the case

8:35 then what's the value that they have to

8:37 provide in order to make that that

8:38 relationship stick and it's not just

8:40 providing connectivity I think you have

8:42 to think through a little bit like

8:43 what's the role of the service provider

8:45 there

8:46 um and then there's certain competitive

8:48 advantages that the service providers

8:49 need to lean into certainly if you look

8:51 at the the hyperscalers they've got um

8:54 you know data centers but it turns out

8:56 like as you mentioned are things like

8:57 performance matter things like latency

8:59 matter

9:00 things like the location of your data

9:02 center actually matter and so if you've

9:04 got all of this real estate how do you

9:06 leverage that to go and dictate the

9:08 terms under which you're going to

9:09 partner with the hyperscalers I think

9:11 there's elements of that that can be you

9:13 know really transformative in how you

9:14 forge those Partnerships yeah no I think

9:17 this is great you did a good job

9:18 breaking it down into the different

9:20 components maybe we can close with a

9:23 little bit about you know from a juniper

9:25 point of view I mean what is uh Juniper

9:28 strategy and position regarding this

9:31 uh so you know obviously we call the the

9:34 largest service providers customers you

9:36 know they are all using and have been

9:38 using Juniper stuff for a long time

9:41 um we provide horizontal platforms we

9:43 believe in choice and flexibility

9:44 fundamentally we believe that unlocks

9:46 some economics and performance things

9:48 that need to that need to play into this

9:51 so I think we generally want to help you

9:53 know the service providers maintain

9:54 control we also obviously have you know

9:57 great Partnerships with the hyperscalers

9:58 we do a lot of business with all of the

10:00 cloud companies and so you know the the

10:02 question is what are the technologies

10:04 that have to bridge between these and we

10:05 think that we can provide those

10:06 Technologies the thing that I would say

10:08 strategically though right what we want

10:10 to do is

10:12 um help folks navigate the overall

10:14 transition yeah I don't think this is a

10:16 pure technology transition I think

10:18 people that look at this as you know an

10:20 Opex or capex exercise that look at this

10:22 as a protocol or a technology and they

10:25 reduce it to just execution I think

10:27 they're they're missing the bigger game

10:28 here and I think the role that Juniper

10:30 ultimately will play is that we're in

10:32 this unique position to see kind of all

10:34 sides of the problem space which allows

10:36 us to act a little bit like a consultant

10:37 in the space and talk a bit about what

10:39 are the things you should consider I

10:41 won't say that we always have the right

10:42 answers for everybody indeed you want

10:44 companies to to own their strategy

10:46 themselves because they have to arrive

10:48 at those decisions but we are in a

10:49 unique position to help surface the

10:51 right questions and then those questions

10:53 and certainly the answers to those

10:54 questions have implications on the

10:56 underlying technology I think if you can

10:58 Plumb that through then you can get

10:59 clear line of sight which should give

11:01 service providers what's missing is the

11:04 confidence to move forward deliberately

11:05 in a particular direction if we can help

11:08 convey that confidence then I think we

11:10 put people in a better position to

11:11 execute yeah no this is excellent I'm

11:13 going to give you a round of applause

11:16 for my audience there but Mike uh thanks

11:19 for joining the podcast hopefully you'll

11:21 join us again and give us an update in a

11:22 few months

11:24 of course well with Mike this is Ray

11:27 motor thanks for joining this edition of

11:28 the deep edge podcast

11:32 thanks for joining us for this episode

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