VMware to Buy SD-WAN Company VeloCloud

November 02, 2017

By Paula Bernier, Executive Editor, TMC

VMware this morning revealed plans to purchase SD-WAN outfit VeloCloud Networks. Terms of the deal were not disclosed. The deal is expected to close in VMware’s fiscal fourth quarter 2018.

News that one of the many SD-WAN solutions providers is being acquired is not surprising. SD-WAN is a hot area right now – and not just in terms of mindshare. This technology already has seen rapid adoption. And there is a large crowd of suppliers delivering SD-WAN solutions.

Various sources indicate the SD-WAN space will reach $3.2 billion by 2018, $12.1 billion by 2019, and $7.5 billion by 2020. And IDC (News - Alert) expects it to see CAGR of 69.6 percent and exceed $8 billion in 2021.

In addition to VeloCloud, SD-WAN suppliers include Cisco, Citrix, CloudGenix, FatPipe Networks, Glue Networks, Ipanema (News - Alert) technologies, Nuage Networks (now part of Nokia), Ocedo, Riverbed, Silver Peak, SimpleWAN, Talari, Versa Networks, and Viptela.

VeloCloud’s SD-WAN solution creates a network overlay that aggregates all underlying WAN services. And it simplifies the WAN by delivering virtualized services from the cloud to branch offices and mobile users. It also allows for application access control, application performance, dynamic path selection, network overlay control, network and application visibility, and secure network segmentation.

For VMware, the addition of an SD-WAN solution allows it to extend its NSX approach of automated, secure, and infrastructure-independent networking to the WAN, explains CEO Pat Gelsinger. "At the heart of VMware's networking strategy is the belief in delivering pervasive connectivity with embedded security that connects users to applications wherever they may be,” he adds.

VMware also gets a long list of SD-WAN customers as part of the deal. VeloCloud’s SD-WAN solutions are used by more than 1,000 customers. That includes service providers AT&T, DT, Macquarie Telecom, MetTel, Mitel (News - Alert), Sprint, TelePacific, Telstra, Vonage, and Windstream. It also includes such businesses as Bay Club, Brooks Brothers, Devcon, NCR, Redmond, Saber Healthcare Group, and Triton Management Services.

"SD-WAN is not a solution in search of a problem," IDC analyst Rohit Mehra recently commented. "Traditional WANs were not architected for the cloud and are also poorly suited to the security requirements associated with distributed and cloud-based applications. And, while hybrid WAN emerged to meet some of these next-generation connectivity challenges, SD-WAN builds on hybrid WAN to offer a more complete solution." 

VMware also noted its relationship with Dell EMC (News - Alert) in announcing the VeloCloud deal. And it pointed out that Dell EMC recently announced a partnership with VeloCloud that involves coordination with product roadmaps, coordinated sales and marketing, joint product validation, and simplified ordering.

"Dell EMC and VMware are committed to digitally transforming branches, the wide-area network and the cloud edge," said Tom Burns, senior vice president, Networking, Enterprise Infrastructure and Service Provider Solutions, Dell EMC.

"We look forward to continuing this SD-WAN partnership with VMware upon closing to offer mutual customers best-in-class intelligent edge appliances," he added.

VeloCloud has been named a Gartner (News - Alert) Cool Vendor in Enterprise Networking. It’s the recipient of Frost & Sullivan’s Award for Product Leadership in SD-WAN. It has been presented with the Best of VMworld 2016 in Networking & Virtualization award. It garnered the 2016 SDN Technology of the Year award from the MEF. At Mobile World Congress last year it received the IOPN Best Service or Solution Award. And TMC has presented VeloCloud with the Cloud Computing Product of the Year Award.

A true SD-WAN ought to be architected for cloud and service provider deployments, deliver automation with simple, flexible deployments and virtual services delivery, and offer true multi tenancy,”  CEO and co-founder, Sanjay Uppal blogged earlier this year. “A true SD-WAN is not just a technology innovation but a business transformation…available as a service, to grow or shrink per the demands of an agile business.”

Edited by Maurice Nagle