VMWare acquires VeloCloud – what will this mean for SD-WAN?

VMWare announced on November 2 that it intends to acquire VeloCloud Networks. The value of the proposed acquisition has not yet been announced, and VMWare expects it to close in Q4 of its FY18 which ends on February 2, 2018.

This acquisition appears to be receiving a more positive message overall in the market than Cisco’s acquisition of Viptela earlier this year. In Viptela’s case, being acquired by Cisco immediately raised questions about where this product would fit alongside the existing IWAN and Meraki products, its impact on the ecosystem of IWAN-related products (Glue Networks, LiveAction, etc.) and what the final product mix would look like. Many of these questions have subsequently been answered, but the immediate reaction was one of uncertainty and concern.

In this case, there is less concern about stepping on the toes of an existing product. VMWare has a very credible foothold in data center networking in its NSX product line, but the VeloCloud product would extend its capabilities towards the WAN, and provide a router alternative at the edge of the network. The lack of overlap is important, and the timing appears to be good as more enterprises look at virtualizing the network edge.

A further step away from dedicated SD-WAN hardware at the edge

One of the big promises of SD-WAN has always been that many of the products can run on generic x86 hardware. However, almost all SD-WAN vendors have made hardware a key part of their solution as it’s easier for the enterprises that are already familiar with using appliances at the edge. This can be a huge challenge for enterprises operating in many geographies – the SD-WAN vendors have had to start from scratch on hardware certification, global distribution, break-fix maintenance agreements and all of the other challenges that come with new hardware. Established vendors like Cisco and Riverbed have a big head start in this area.

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