VMware, Inc. has announced that it has signed a definitive agreement to acquire VeloCloud™ Networks, Inc., provider of industry-leading cloud-delivered software-defined wide-area network (SD-WAN) technology for enterprises and service providers. Once the acquisition closes, VeloCloud will enable VMware to build on the success of its industry-leading network virtualization platform — VMware NSX® — and expand its networking portfolio to address end-to-end automation, application continuity, branch transformation, and security from data center to cloud to edge. This acquisition will also further enable VMware to lead the industry transition to a software-defined future, and help customers bring their businesses into the digital era with networking that is ubiquitous, open, programmable and secure by default.

The transaction is expected to close in VMware's fiscal Q4 2018. There is no change to VMware's previously provided fiscal 2018 guidance due to this transaction.

According to Gartner, "While WAN architectures and technologies tend to evolve at a very slow pace — perhaps a new generation every 10 to 15 years — the disruptions caused by the transformation to digital business models are driving adoption of SD-WAN at a pace that is unheard of in wide-area networking.1

" VeloCloud cloud-delivered SD-WAN technology is deployed globally at-scale by more than 1,000 customers, both directly by enterprises and by Telcos and managed services providers serving enterprise customers. Service provider customers include AT&T, Deutsche Telekom, Macquarie Telecom, MetTel, Mitel, Sprint, TelePacific, Telstra, Vonage and Windstream. Enterprise customers include Bay Club, Brooks Brothers, Devcon, NCR, Redmond, Saber Healthcare Group, and Triton Management Services."

"In the digital era, a new networking approach is required to solve the hyper distribution of applications and data, as we move from a model of data centers to one of centers of data at the edge," said Pat Gelsinger, chief executive officer, VMware. "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. With the addition of VeloCloud's industry-leading SD-WAN technology, we will be able to extend the VMware NSX approach of automated, secure, and infrastructure-independent networking to the WAN."

"Enterprises are transforming how they architect and utilize their infrastructure, with a shift towards a cloud-delivered, software-defined model. This enables organizations to have a globally consistent infrastructure regardless of where it is deployed — from the data center and the cloud to the edge," said Sanjay Uppal, CEO of VeloCloud Networks. "We look forward to helping VMware, the leader in software-defined infrastructure, in the next evolution of the company's networking and NFV strategies."

Leading with Cloud-Delivered SD-WAN
VeloCloud's cloud-delivered SD-WAN combines the economics and flexibility of the hybrid wide-area network (WAN) with the deployment speed and low maintenance of cloud-based services. It dramatically simplifies the WAN by delivering virtualized services from the cloud to branch offices and mobile users everywhere. VeloCloud leverages intelligent x86 edge appliances to aggregate multiple broadband links at the branch office, and using cloud-based orchestration, connects the branch office to any of type of data center: enterprise, cloud, or software-as-a-service.

With VeloCloud, VMware will enable enterprises to support application growth, network agility, and simplified branch implementations while delivering high-performance, secure, reliable branch access to cloud services, private data centers and SaaS-based applications. SD-WAN technology is ideal for businesses looking to make the transition from static, complex, on-premises networking to the cost-effective, dynamic, and scalable cloud-delivered architecture of the digital era. The VeloCloud solution provides flexibility in network connectivity options that can augment MPLS and improves overall total cost of ownership for branch connectivity.

VeloCloud will enable VMware to help service providers increase revenue and service innovation by delivering elastic transport, performance for cloud applications and a software-defined intelligent edge that can orchestrate multiple services to meet customer needs. With SD-WAN becoming the primary function in virtual customer-premise equipment deployments, VMware expects to be able to simplify the deployment of virtual network functions (VNF) for applications such as security by combining the proven VMware vCloud® NFV platform with a cloud-delivered SD-WAN platform.

"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 recently announced a partnership with VeloCloud that includes joint product validation, coordination with product roadmaps, simplified ordering, and coordinated sales and marketing to improve solutions for our mutual customers. We look forward to continuing this SD-WAN partnership with VMware upon closing to offer mutual customers best-in-class intelligent edge appliances."

Guiding Customers to the Software-Defined Future
VMware's software-based approach is delivering the networking and security platform that enables customers to connect, secure and operate an end-to-end architecture to deliver services to the application wherever it may land. Customers choose VMware NSX because it delivers network and security services closest to the application. With VeloCloud, VMware will bring the same properties to the WAN, resulting in visibility, security, automation with performance, and availability for enterprise and cloud applications.

"Digital transformation has brought about a growing dependency on the network as mobility, cloud, and social business erase many of the barriers pertaining to time and place in the enterprise. Advances in IoT are also driving dependency on the network," said Matt Eastwood, senior vice president of IDC's enterprise, data center, cloud infrastructure, and developer research. "The network is becoming more agile, enabled by a new generation of software-based platforms from companies such as VMware and VeloCloud. We see a positive synergy between the two companies, and the opportunity for VMware to build upon the software-based networking strategy the company has been executing on."


1. Forecast: SD-WAN and Its Impact on Traditional Router and MPLS Services Revenue, Worldwide, 2016-2020, Gartner, November 7, 2016, Document: G00317430, https://www.gartner.com/doc/3505022?ref=ddisp