VMware acquires VeloCloud Networks, charts SD-WAN strategy

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VMware has signed a deal to acquire VeloCloud Networks, a move that clearly signals the pending consolidation of the crowded SD-WAN vendor space.

Upon completing the transaction, VMware can build on the brand recognition it created for its VMware NSX virtualization platform while expanding its networking portfolio to address end-to-end automation, application continuity, branch transformation and security.

VMware expects to close the acquisition in its fourth-quarter 2018 reporting period. The company said there’s change to VMware's previously provided fiscal 2018 guidance due to this transaction.

Financial terms of the acquisition were not disclosed.

RELATED: VeloCloud enhances SD-WAN security ecosystem with additional partners, focuses on best-of-breed solutions

But SD-WAN technology is only one positive element of this deal for VMware.

By acquiring VeloCloud, VMware instantly gains a large SD-WAN service provider and enterprise customer base. On the service provider side, it will have engagements with AT&T, Deutsche Telekom, 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.

While SD-WAN is still a relatively nascent concept, more businesses are turning to the concept as part of a broader transition from on-premises platforms to the cloud. Since most businesses aren’t going to do a rip-and-replace to existing infrastructure, VeloCloud’s SD-WAN platform can augment MPLS and improve overall total cost of ownership for branch connectivity.

VMware expects to simplify the deployment of virtual network functions for applications such as security by combining the VMware vCloud NFV platform with a cloud-delivered SD-WAN platform.

From a broader SD-WAN perspective, the deal will likely raise speculation that other vendors will be acquired or merge with one another. Cisco, for one, has been snapping up several SD-WAN providers, including Viptela earlier this year.