4/3/2005 -- For some time now, Juniper Networks has been gaining ground on Cisco Systems Inc. in several key markets, especially in the carrier space.

With the acquisition last week of Kagoor Networks for $67 million and change, Juniper gains some much-needed expertise in the session border controller (SBC) market. Officials say the proposed transaction will enhance Juniper’s ability to provide secure and assured networking solutions to its carrier and enterprise customers. Kagoor’s VoiceFlow SBC products are installed in over 100 networks around the world.

The upshot, says Joe McGarvey, a senior analyst for carrier infrastructure with consultancy Current Analysis Inc., is a highly complementary pairing of multi-billion dollar networking giant and scrappy start-up. “[T]he transaction will provide Juniper with technology that is complementary to its Layer 2 and Layer 3 data switching/routing equipment and fortify its router portfolio with the ability to assure the delivery of real-time voice and multimedia traffic,” McGarvey writes. The transaction is also positive for Kagoor, as the not-yet-profitable startup now has the backing of a billion-dollar equipment manufacturer.”

According to McGarvey, the Kagoor acquisition amounts to a branching out of sorts for Juniper, which has more or less made its reputation as a purveyor of routing and security solutions. “Though the transaction will certainly not make or break Juniper, which remains predominately a routing and security company, the technology and products acquired with the purchase of Kagoor have an immediate value in their present form, as well as future value as enhancements to Juniper’s router products and enterprise security products,” he says.

The move helps to redress a competitive shortcoming for Juniper, adds McGarvey, because Cisco, Nortel and other competitors have already either acquired or built session. “The only real concern that the acquisition raises for Juniper is that the company is entering the voice signaling market for the first time,” McGarvey writes. “While the majority of its competitors, including Cisco, Nortel, and Alcatel, have extensive portfolios of softswitches, media gateways, and even SBC technology, Juniper has largely been a Layer 3 routing and security company for its entire existence.”

According to McGarvey, Kagoor was almost tailor-made for Juniper. “While Kagoor is among the leaders in the still-emerging SBC space in terms of scalability ... the overlap between Juniper’s and Kagoor’s customer base is close to 100 percent,” he says. “In addition, Kagoor is partners with three of Juniper’s most prominent partners—Siemens, Lucent, and NEC.”

So will Juniper’s acquisition lead to an acquisition explosion of sorts in the SBC market? McGarvey says this may already be happening. “Kagoor is actually the second SBC maker to be acquired. Alcatel, back before SBCs were called SBCs, acquired the assets of Aravox Technologies,” he points out. “Juniper may actually want to heed the example set by Alcatel, which has struggled to integrate that technology into its product portfolio. Juniper would be wise to continue to sell the VoiceFlow technology as a standalone device before tearing it apart and attempting to repurpose it in other equipment.” -Stephen Swoyer