VMware acquires VeloCloud as it moves deeper into networking

VMware announced today that it was acquiring VeloCloud, a startup that focuses on cloud-based wide area networks (WAN), those networks that span a broad area across data centers or regions. The companies did not reveal the purchase price.

The news confirms a report that The Information first reported  yesterday.

The company appears to be an excellent fit as one of the primary use cases is delivering virtualized services, VMware’s bread and butter, to branch offices, which may be spread out geographically, and to mobile users accessing those services from outside those offices.

VMware is looking to expand its portfolio of networking products with this acquisition as it appears to be taking direct aim at Cisco. Interestingly, Cisco is moving more towards a cloud-based service business on top of its core networking business. The two companies appear to be on a competitive collision course, and this deal could help push VMware further into Cisco’s networking territory.

While VMware is traded separately and operates independently to a degree, Dell EMC owns a majority stake in the company. Perhaps it’s not a coincidence then that the parent company recently signed a deep partnership agreement with VeloCloud before VMware swooped in and bought it.

“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,” Tom Burns, senior vice president for networking, enterprise infrastructure and service provider solutions at Dell EMC explained in a statement. That sounds like a pretty strong partnership, one which is likely to expand now that it’s part of the Dell EMC family.

With this purchase, VMware gets more than some advanced cloud-based WAN technologies to add to its networking arsenal, it also gets VeloCloud’s 1000 customers, which include global telecommunications and large enterprise companies, which would need this kind of technology. Telecommunication customers include AT&T, Deutsche Telekom Mitel, Sprint, TelePacific, Telstra and Vonage, among others. Enterprise customers include companies like Bay Club, Brooks Brothers, Devcon and NCR, among others.

VeloCloud was founded in 2012 and raised a healthy $84 million before today’s acquisition. The deal is expected to close in VMware’s fiscal Q4 2018, according to the company.