VMware’s VeloCloud Acquisition: What’s Ahead for SD-WAN

**Editor’s Note: Please click here for a recap of the biggest channel-impacting merger and acquisition news from August.**

VMware’s acquisition of VeloCloud Networks fits its strategy to compete with Cisco and could mark a watershed moment for SD-WAN.

The recently announced deal brings VeloCloud into the VMware fold as an enhancement to VMware’s NSX network virtualization platform. VMware also says VeloCloud will help it chart a “software-defined” future with increased security, automation and visibility. Technology analyst Kurt Marko says VMware wants VeloCloud to help move the NSX virtual networking stack “beyond the data center to the branch office and other remote enterprise locations.”

Kurt Marko

“It’s a solid strategy; however, fully integrating VeloCloud’s technology into a cohesive NSX suite will take time, with unifying the management consoles and security policies seeming to be the likely short-term goal,” Marko said. “Longer term, the VeloCloud acquisition underscores VMware’s commitment to seriously contending for enterprise network budgets as organizations continue on the path to fully virtualized, aka software-defined, infrastructure.”

VeloCloud has existed since 2012 and has been one of the most publicized SD-WAN vendors over the past year. The company has struck numerous deals with service providers, thanks to its unique set of capabilities. VeloCloud’s platform aggregates traffic into a cloud-based hub rather than driving it from the edge, notes David Hughes, CEO of rival Silver Peak Systems.

“That gave them an affinity for service providers, and particularly for service providers that were offering broadband voice over internet,” Hughes said.

New York-based MetTel partners with VeloCloud and says it increased its SD-WAN deployments by triple digits in the last year.

“No one can deny any longer that we’re moving to a software-defined, virtual enterprise environment,” said Ed Fox, MetTel’s vice president of network services. “Combined with the power of VMware NSX, the dream of a networking solution that is flexible, robust and secure is coming to life.”

C3’s Matthew Toth

Matthew Toth, founder of C3, says VMware was attracted to the service-provider angle for its many benefits.

“One of the reasons why VMware bought VeloCloud is, it buys them relationships,” Toth said. “This buys them not only relationship with big telcos, but along with those relationships with telcos come those VAR relationships, and that’s them kind of getting into a market that they’re not in. With that acquisition they buy technology; they buy a small customer list — but honestly, a negligible customer list. They buy relationships with telcos and they buy relationships with new VARs.”

Jason Gintert of VeloCloud partner WAN Dynamics praised the opportunity partners will have with VMware. For WAN Dynamics, which is a member of VeloCloud’s VAR program, the company can use more data-center resources for its professional-services portfolio.

“We are anxiously anticipating integrations with VMware products like NSX to allow for centralization of uniform network policy across the data center, cloud and wide area network. Long term, we also see a huge opportunity for …