Partners: VMware's VeloCloud Acquisition Could Put Cisco In 'Panic Mode'

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With an agreement to acquire software-defined wide area network provider VeloCloud, VMware has opened a new front in its battle with networking giant Cisco Systems, and partners say the deal could give the virtualization kingpin a marked advantage in the cross-cloud market.

Acquiring VeloCloud brings VMware and its growing NSX network virtualization platform aggressively into SD-WAN, which seeks to connect large enterprise networks using software rather than expensive proprietary hardware.

The acquisition deepens the hybrid-cloud competition between VMware and Cisco, which last week introduced a solution that competes directly with VMware Cloud on AWS. Cisco moved into the SD-WAN market with its $610 million acquisition of Viptela last May, but solution providers said a solution that combines VMware NSX and VeloCloud would have Cisco running scared.

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"Cisco is in panic-mode," said Gary Gluzman, executive director of product development for communications solution provider MetTel, a longtime VeloCloud partner. "They are realizing their hardware business is diminishing, but they currently have about three SD-WAN products, where on the other hand, VMWare is expanding their networking product portfolio into SD-WAN with this acquisition," he explained.

Cisco's Viptela acquisition was a defensive move, Gluzman said, while the VeloCloud buy is a clear expansion of VMware's capabilities.

VMware's focus on NFV and its new SD-WAN play will help the vendor go head-to-head with Cisco in the networking space, said Ed Fox, vice president of network services for New York City-based MetTel.

Fox said that VMware's move to buy VeloCloud would "supercharge" the SD-WAN market by legitimizing the solution for more enterprise customers.

"VeloCloud has been good in the small to midsized companies with branch offices, and this will give them the extra fuel to take on global fortune 500 networks," he said. "I think this legitimizes one vision and will help partners and service providers move up the food chain."

Many carriers rely on VeloCloud's SD-WAN technology today, including AT&T, Vonage and Windstream. MetTel has baked VeloCloud's technology within its own SD-WAN offering for its business customers.

Fox believes that by joining VMware, VeloCloud will benefit from increased research and development funding and the ability to get new features to the market faster.

"VMware is forward-thinking, and they're out there disrupting. They don't sit back and milk what they've been doing," Fox said. "Compared to some of the other companies that could have acquired VeloCloud, this is by far the best option because of their NFV focus," he said.

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