Here's One Big Challenge For VMware On Its Road To SDN Riches

VMware made a big, bold bet when it outbid networking market leader Cisco Systems to acquire software-defined networking startup Nicira in 2012 for $1.2 billion. That deal has netted some decent returns so far, and NSX, the VMware product based on Nicira, just might reshape the balance of power in the data center.

But many partners and industry insiders believe VMware's biggest challenge with NSX will be training its core sales force to sell a technology that's very different from what they're used to selling. Some feel VMware didn't realize just how big a cultural shift it was to integrate Nicira into its sales operations.

While the software-defined networking market is still nascent, VMware will need to move quickly, these people said, to get a leg up on its longtime partner -- and now bitter rival -- Cisco, which is pushing its own SDN technology called Application Centric Infrastructure (ACI).

CRN interviewed more than a dozen VMware partners who've had firsthand experience working with the Palo Alto, Calif.-based vendor's sales force during the process of bringing NSX into the field.

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The consensus: VMware underestimated how difficult it would be for its virtualization-savvy sales force to talk about the transformation NSX can make possible. As a result, CIOs and CEOs eyeing both NSX and ACI are still very much up in the air as to which technology is the best fit for their organizations.

"It's proven difficult for VMware to retrain their sales force to talk about networking," one longtime VMware partner told CRN. "Networking is pretty complex -- you still have a topology and need to understand it to be able to talk intelligently about it."

"There are two parts to the sales challenge. First, do the core VMware salespeople have relationships with the types of customers that would buy NSX? Typically, they don't," said another source with knowledge of the situation.

"VMware core sales are kind of like Microsoft sales reps: They're used to having an incumbent position in a company and positioning enterprise licensing agreements. How do you get people like that to position networking?" the source said.

Even now, two years and three months after the Nicira acquisition was finalized, VMware's core sales team is still having trouble getting up to speed on networking, sources with knowledge of the matter told CRN.

"The SDN sale has to be with the networking people. I don't see any large companies saying we're going all in on NSX," an executive from one VMware and Cisco partner told CRN.

In fact, some partners think Cisco has a significant advantage because it doesn't have to retrain its sales force to sell its version of SDN, even though it requires customers to also buy new hardware.

"Cisco has the footprint and those salespeople have a pretty good understanding of what [SDN] is all about," one partner said. "I think if the products were equal, Cisco would crush them, because of its sales force and the go-to-market strategy with the channel."

VMware certainly realizes the magnitude of the challenge. It recently poached 14-year Cisco veteran Dominick Delfino, a key player in Cisco's Unified Computing System and ACI sales efforts, anointing him vice president of worldwide systems engineering. Cisco was said to be none too pleased about losing Delfino -- a popular figure in its channel -- to its SDN rival.

Martin Casado, Nicira co-founder and senior vice president of VMware's networking and security business unit, said in an interview with CRN last month that Delfino was hired to help scale VMware's NSX sales.

Partners told CRN that with Delfino on board, VMware will have a better chance of swaying large service providers to choose NSX over Cisco ACI.

VMware also brought in Guido Appenzeller, co-founder and former CEO of SDN startup Big Switch Networks, as chief technology strategy officer of its networking and security business unit. That post was previously held by Casado.


VMware's culture was software licensing sales-oriented when it acquired Nicira, and early on, that caused some friction, sources familiar with the matter told CRN.

As an open-source startup, Nicira had contributed much of the code for the networking layer of OpenStack -- known as Quantum -- when VMware acquired it. Nicira's culture was very different from VMware's, and that created problems, said the sources.

"VMware had pretty much no OpenStack strategy at the time and mainly sold Microsoft-style licenses for vSphere. Nicira was very open-source and very OpenStack-oriented, so there were multiple challenges there," said one source close to both vendors.

Since OpenStack was founded in part to counter VMware's dominance of the data center, Nicira customers were concerned about the implications of the deal, even after VMware joined the OpenStack Foundation a couple of months later, sources familiar with the matter told CRN.

"The VMware sales force didn't know OpenStack at all, so the go-to-market was all screwed up. Nicira was expected to assimilate into VMware as opposed to the other way around," said the source.

VMware's salespeople have done well selling into the mature market of server virtualization, but with such a readily apparent return on investment, that technology almost sells itself. NSX, as a nascent and relatively unproven technology, represents a new type of sale for VMware salespeople.

Casado described the situation VMware is facing in colorful terms in an interview with tech blog SDN Central in August.

"Now, mature-market sales guys, they're tall, they're good-looking, they have boats -- you know what I'm saying? They're not used to selling on technology. They're used to the customer already being educated. They can talk value, but they need very specific use cases and specific ROI," Casado told SDN Central.


It's still early days in the SDN market, but VMware already has some stats to talk about. It recently claimed it now has 250 paying customers and a $100 million run rate for NSX, which hit the market last November. NSX is catching on in a wide range of industries, market segments and geographical regions, including with the U.S. federal government, VMware said.

The NSX channel rollout has also been remarkably swift. VMware said it now has around 85 partners authorized to sell NSX and expects to have 100 by the end of the year. It has introduced many partners to NSX over the course of the year through intensive technology "boot camps." There's also a global reseller agreement with Dell, unveiled in August, and an NSX technology ecosystem with more than 40 vendors.

What's more, one of NSX's key selling points is that customers can replace their high-end Cisco switches with cheaper, no-frills switches, with software handling the advanced networking functions. But according to VMware partners, very few customers today are running networks with the level of sophistication necessary to take advantage of NSX.

"Sure, I can spin up new logical networks, routers, load balancers and firewalls with a few clicks. But who needs that, except for people that are spinning up servers often -- and in an automated fashion?" said one partner who's been working with NSX for the past several months.

NSX is capable of something called "micro-segmentation," which refers to its ability to secure networks by preventing malware that infects one part of a data center to spread laterally to other parts. Until the market for SDN matures, VMware is getting its salespeople to focus on this aspect of NSX.

"Micro-segmentation is what's getting us in the door in lots of cases," Chris King, vice president of product marketing for security and networking at VMware, said in a recent interview. "That's where customers, even in the sub-enterprise, are saying, 'Yes, I need that.' Whereas in the pure network virtualization conversation, they say I can manage a lot of that with VLANs and my network isn't as dynamic."

In conversations with customers, VMware salespeople are primarily engaging with security people because that's where the NSX value proposition is clearest, according to King. "Attackers, almost without exception, have depended on unfettered lateral movement within the data center, like rodents in a barn. Our goal is to make sure you have that compartmentalization," he said.

While this sounds logical to security people within an organization, it's a tougher sell for networking people, many of whom see NSX as a challenge to their traditional ways of thinking.

King acknowledged this and said VMware is training its core sales force and channel to talk about NSX in the context of the software-defined data center, where a virtualized network is part of a logical progression that began with virtualizing servers.

"The goal was not to make someone who spent their entire career in VMware in the compute silo become an expert in the networking silo," King told CRN. "The goal was [to show customers that] all the benefits you saw with compute you can realize with NSX."

VMware started out earlier this year selling NSX exclusively through a team of about 100 specialist salespeople, but King said that's no longer the case. "The opening and closing of opportunities in the VMware customer base is now done with the core sales force, to a large degree," he said.

Micro-segmentation is helping VMware get some tactical sales wins for NSX. It's an easier, faster type of sale because it lets customers get security benefits without buying hardware, as is the case with Cisco ACI, partners said. However, the micro-segmentation is just a small part of the overall SDN opportunity, said the partners.

By buying Nicira, VMware made it clear that the road to its future growth runs right through Cisco's turf. But once the SDN market matures, there will likely be room for both VMware and Cisco to do well. And whatever SDN market share VMware manages to get will be business it didn't have before.

VMware has made some progress with the integration of Nicira, and it has managed to keep Casado on board even though many startup founders start leaving after hitting the two-year mark with a company. If it can successfully transition its sales team to sell NSX, the Nicira deal will really start taking off.