A well-known communications technology company is bucking the trend of reduced sales to government and the defense sector. Its leadership sees the advent of new technologies and capabilities creating a boom market for government organizations looking to tap that innovation wellspring.
Juniper Networks is well-known throughout the high-technology world as a key supplier of high-performance networking gear and related products for companies that provide online and wireless services. But that focus on supporting the bandwidth and security needs of Internet providers, corporate networks and data centers obscures a key fact about this Silicon Valley giant—the federal government ranks as its next largest customer by far.
Not only that, but defense and intelligence agencies account for the bulk of its federal sales. Last year, federal revenue grew faster than the company’s overall sales.
In a wide-ranging interview with SIGNAL, Juniper Chief Executive Officer (CEO) Kevin Johnson notes that his company has nearly doubled sales in the past five years, jumping from $2.3 billion to $4.5 billion. Though Johnson declines to say what proportion of those sales come from the defense market, he does say defense and intelligence agencies at least kept pace with Juniper’s overall expansion since 2007.
“In many ways the same market trends that we see broadly around the world are very applicable to federal,” Johnson says. “I would argue in fact that they are more applicable to federal because of the scale at which the federal government is required to operate.
“And that sort of connects to the value proposition and the focus we have at Juniper. We are a company that is a pure play in high-performance networking,” he states.
“We were founded 16 years ago on the premise that we can innovate and invest the silicon, the systems and the software that basically powers the Internet and handles the world’s most complicated high-performance, high-scale networking needs,” Johnson relates. “In many ways, that has been very applicable within federal government.”
Juniper’s relationship with the U.S. Defense Department and the intelligence community began nearly a decade ago when it supplied critical routing platforms for the military’s Defense Information Systems Network (DISN). This integrated network is configured and centrally managed to provide long-haul information transfer services for all Defense Department activities. Among other items, DISN serves as an information transfer utility designed to provide dedicated point-to-point, switched voice and data, imagery and video.
As Johnson see it, the nation’s defense network will remain a steady growth field for at least the next few years for several reasons. The Defense Department’s emphasis on net-centric warfare remains at the top of the list.
Then again, the department’s overarching vision is that every warfighter will double as an information node. With the advent of real-time video and electronic identification tags for a wide range of military equipment, the military’s need for speed keeps increasing.
“Networks are becoming more and more relevant to the world we live in,” Johnson explains. “You think about the number of people and the number of government agencies, the number of businesses and the amount of traffic now that’s flowing over these networks, and networks just continue to grow and evolve.
“Certainly when you look at federal IT [information technology] needs, the market trend of mobile Internet and cloud computing are applicable and relevant and things that federal IT is embracing.
“There are more mobile workers accessing data and applications from large data centers, whether it’s private clouds or public clouds,” he continues. “Within those data centers, the ability to connect thousands of servers and storage devices together to enable solutions for big data or the applications that are relevant for federal—and certainly the ability to secure that data and secure the access to information—is very relevant.”
Johnson comes across as a leader who has deep knowledge of the entire high-tech supply chain and a passion for its products. The 51-year-old began his career at IBM, and he joined Juniper Networks in September 2008 after logging more than 16 years at Microsoft Corporation. While at Microsoft, he held a wide range of executive assignments. This included serving as president of the Platforms and Services Division, the company's largest unit and one that is responsible for the Windows operating system and online services.
He holds a bachelor's degree in business administration from New Mexico State University and has served on the boards of nonprofits focused on technology and women's career advancement. President George W. Bush appointed Johnson to serve on the National Security Telecommunications Advisory Committee (NSTAC), and he has remained there under the Obama administration.
Johnson also is also a board member of Starbucks Coffee Company. He says he joined the Starbucks board at the request of Howard Schultz, founder and CEO—and a former salesman for Xerox—whom he had known for years. Johnson says the board stint gives him a fresh perspective and is a refreshing change of pace.
“I think Starbucks is a phenomenal company and one that has a very strong consumer brand,” he offers. “Certainly that’s an area that’s fun and interesting to me and an area that I can bring some value in terms of how technology in general and networking in particular can play a role in helping Starbucks as it evolves and grows its business. It’s something that is fun for me to do, and it gives me a little balance for the things I do at Juniper.”
Johnson describes his family as his major hobby. When his adult sons were younger, the family would go skiing and hiking together. Along the way, he learned a lot about heavy lifting—serving as a caddy for a son who took up golf and playing the role of “roadie” for one who played guitar in bands.
These days, Juniper Networks clearly commands a great deal of his time as it struggles to grow the business in a challenging economic environment. Juniper’s stock has come under pressure the past several months as the firm said it would not meet the previous estimates it had given for revenue and profits. At deadline, the stock was down more than 25 percent so far this year. That compares with a gain of about 10 percent for the technology-centric NASDAQ index. Under Johnson, the company has moved aggressively to support its shareholders by announcing a roughly $1 billion program to buy back Juniper shares.
Meanwhile, Johnson remains upbeat about the company’s prospects for overall growth but particularly in serving the nation’s defense and intelligence networks. He sees three key drivers.
“Network traffic is going to continue to grow exponentially,” he declares. “There are more end-point devices that are accessing more data and more applications in these big data centers.
“It’s also driven by video,” he continues. “You know, more and more there’s video teleconferencing and the use of video whether it’s for educational purposes or information sharing. Those things all just drive network traffic growth.
“The second driver is cloud computing. That is a key area that certainly we have a lot of technology and value to add. And, the federal government and defense look at how they can benefit from the economics that come from centralizing servers and storage devices.
“Then the third I would say is the area of security,” he concludes. “Certainly cybersecurity is a topic and a domain that I think will continue to be a significant focal area—something that’s top of mind and something that we’re driving innovation around.
“I think every large organization, whether it’s public sector or private sector, will find ways to leverage the maximum amount of data that is now available about their business, their operation, their infrastructure, their mission,” Johnson states. “And certainly, federal government—whether it’s defense or civilian—has to be a huge opportunity … a huge opportunity.”