VMware Buys Networking Specialist VeloCloud
VMware has moved deeper into the networking sector with its deal to acquire a startup focused on wide-area networks used to connect datacenters.
The company (NYSE: VMW) confirmed Thursday (Nov. 2) it is acquiring VeloCloud Networks, a provider of cloud-based, software-defined network technology to enterprises and telecommunications service providers. Terms of the deal were not disclosed.
VMware said VeloCloud's networking capability would complement its NSX network virtualization platform. "What NSX does for datacenter networking, VeloCloud does to the wide-area network and edge environments—all in software," Shekar Ayyar, general manager of VMware's Telco NFV Group, noted in a blog post announcing the deal.
Observers noted that the deal for VeloCloud, Mountain View, Calif. represents a challenge to networking leader Cisco Systems (NASDAQ: CSCO). Cisco Investments was an early backer of VeloCloud.
Ayyer noted that the deal would extend VMware's efforts to accelerate the deployment of software-defined networks from datacenters to the network edge. As high-capacity 5G networks are deployed, the company said the VeloCloud deal would expand its software-defined networking portfolio to help service providers deploy cloud infrastructure supported by network functions virtualization (NFV).
Software-defined wide-area networking "is a natural extension of our networking strategy, and a perfect complement to NSX in the datacenter," Ayyer asserted.
According to the investment tracker web site Crunchbase, VeloCloud has raised $84 million since it was founded in 2012. The startup recently launched a partnership with Dell EMC (NYSE: DVMT), a majority stakeholder in VMware.
MetTel, a telecommunications service provider and an early VeloCloud partner, said it has seen a large shift toward software-defined wide-area networks over the last year. Service providers are steadily replacing switches, routers and circuits with virtual images of VeloCloud services on their networks. The company predicted those deployments would accelerate when combined with VMware's NFV capabilities.
"No one can deny any longer that we’re moving to a software-defined, virtual enterprise environment," asserted Ed Fox, vice president of network services at MelTel, Washington, D.C.
VMware's acquisition of VeloCloud is expected to close early next year.