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VMware plans to acquire SD-WAN vendor VeloCloud Networks, a move that would turn the branch office into a battleground for the virtualization provider and Cisco.
The VeloCloud-VMware acquisition, announced this week, would be carried out in early February. With VeloCloud, VMware would go head-to-head against Cisco's Viptela, IWAN and Meraki brands. SD-WAN, in general, intelligently routes branch traffic across multiple links, such as broadband, MPLS and LTE.
"This is the first time that Cisco and VMware will directly compete in the networking world," said Shamus McGillicuddy, an analyst at Enterprise Management Associates, based in Boulder, Colo.
Before, the closest Cisco and VMware came to competing in networking was with their software-defined networking platforms ACI and NSX, respectively. The products, however, serve mostly different purposes in the data center. NSX provisions network services within VMware's virtualized computing environments while ACI distributes application-centric policies to Cisco switches.
VMware SDN marches to the branch
The VeloCloud-VMware acquisition, however, marks the start of taking NSX to the branch, where Cisco is already offering ACI. Both vendors are also working on extending their respective SDN platforms to enterprise software running on public clouds.
In the branch, VMware plans to provide SD-WAN, security, routing and other services on an NSX-based network overlay that's hardware agnostic. Rather than supply branch appliances for VeloCloud software, VMware wants customers to buy certified hardware from different vendors.
Shamus McGillicuddyanalyst, Enterprise Management Associates
"That is certainly our longer-term vision for this. That it will be a pure software play," said Rajiv Ramaswami, COO of cloud services at VMware, during a conference call with reporters and analysts.
In the short term, VMware would support appliances sold by VeloCloud, Ramaswami said. VMware's parent company, Dell EMC, also sells hardware for VeloCloud software.
While VMware shies away from hardware, Cisco has delivered centralized software that provisions network services to the branch through a new line of routers, called the Catalyst 9000s. In the future, Cisco could also provide a software-only option through the Enterprise Network Functions Virtualization platform (ENFV) the company introduced last year. ENFV would run on Cisco servers or third-party certified hardware.
"Cisco is making multiple bets in SD-WAN," McGillicuddy said.
Cloud orchestration a key piece of VeloCloud-VMware acquisition
VMware is banking on VeloCloud's cloud-based network orchestration tools to evolve into a significant differentiator from Cisco and other WAN infrastructure providers. VMware could eventually use the technology to orchestrate network services in the branch and the cloud, Ramaswami said.
VMware's ambitions do not alter the fact that it has a difficult road ahead battling Cisco. The latter company dominates the networking market with more than 150,000 paying customers for its WAN products, according to Gartner. VMware is the largest supplier of data center virtualization, but is a newbie in networking.
VeloCloud's roughly 1,000 customers include service providers, as well as enterprises. AT&T, Deutsche Telekom, Sprint, Vonage and Windstream are examples of carriers that offer the company's SD-WAN product as a service.
VMware sells network virtualization software to service providers and expects VeloCloud to help grow that relatively small business. "VeloCloud and their deep relationship with the service provider community is a huge route to a market accelerator," said Peder Ulander, a vice president of strategy at VMware.
VMware did not release financial details of the acquisition.
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