VMware and VeloCloud: A Hedge Against Hyperconvergence?

VMware announced on Thursday that they are buying VeloCloud. This was a big move in the market that immediately set off a huge discussion about the implications. I had originally thought AT&T would buy VeloCloud based on their relationship in the past, but the acquistion of Vyatta from Brocade over the summer should have been a hint that wasn’t going to happen. Instead, VMware swooped in and picked up the company for an undisclosed amount.

The conversations have been going wild so far. Everyone wants to know how this is going to affect the relationship with Cisco, especially given that Cisco put money into VeloCloud in both 2016 and 2017. Given the acquisition of Viptela by Cisco earlier this year it’s easy to see that these two companies might find themselves competing for marketshare in the SD-WAN space. However, I think that this is actually a different play from VMware. One that’s striking back at hyperconverged vendors.

Adding The Value

If you look at the marketing coming out of hyperconvergence vendors right now, you’ll see there’s a lot of discussion around platform. Fast storage, small footprints, and the ability to deploy anywhere. Hyperconverged solutions are also starting to focus on the hot new trends in compute, like containers. Along the way this means that traditional workloads that run on VMware ESX hypervisors aren’t getting the spotlight they once did.

In fact, the leading hyperconvergence vendor Nutanix has been aggressively selling their own hypervisor, Acropolis as a competitor to VMware. They tout new features and easy configuration as the major reason to use Acropolis over ESX. The push by Nutanix is to get their customers off of ESX and on to Acropolis to get a share of the VMware budget that companies are currently paying.

For VMware, it’s a tough sell to keep their customers on ESX. There’s a very big ecosystem of software out there that runs on ESX, but if you can replicate a large portion of it natively like Acropolis and other hypervisors do there’s not much of a reason to stick with ESX. And if the VMware solution is more expensive over time you will find yourself choosing the cheaper alternative when the negotiations come up for renewal.

For VMware NSX, it’s an even harder road. Most of the organizations that I’ve seen deploying hyperconverged solutions are not huge enterprises with massive centralized data centers. Instead, they are the kind small-to-medium businesses that need some functions but are very budget conscious. They’re also very geographically diverse, with smaller branch offices taking the place of a few massive headquarters locations. While NSX has some advantages for these companies, it’s not the best fit for them. NSX works optimally in a data center with high-speed links and a well-built underlay network.

vWAN with VeloCloud

So how is VeloCloud going to play into this? VeloCloud already has a lot of advantages that made them a great complement to VMware’s model. They have built-in multi tenancy. Their service delivery is virtualized. They were already looking to move toward service providers as their primary market, but network services and managed service providers. This sounds like their interests are aligning quite well with VMware already.

The key advantage for VMware with VeloCloud is how it will allow NSX to extend into the branch. Remember how I said that NSX loves an environment with a stable underlay? That’s what VeloCloud can deliver. A stable, encrypted VPN underlay. An underlay that can be managed from one central location, or in the future, perhaps even a vCenter plugin. That gives VeloCloud a huge advantage to build the underlay to get connectivity between branches.

Now, with an underlay built out, NSX can be pushed down into the branch. Branches can now use all the great features of NSX like analytics, some of which will be bolstered by VeloCloud, as well as microsegmentation and other heretofore unseen features in the branch. The large headquarters data center is now available in a smaller remote size for branches. That’s a huge advantage for organizations that need those features in places that don’t have data centers.

And the pitch against using other hypervisors with your hyperconverged solution? NSX works best with ESX. Now, you can argue that there is real value in keeping ESX on your remote branches is not costs or features that you may one day hope to use if your WAN connection gets upgraded to ludicrous speed. Instead, VeloCloud can be deployed between your HQ or main office and your remote site to bring those NSX functions down into your environment over a secure tunnel.

While this does compete a bit with Cisco from a delivery standpoint, it still doesn’t affect them with complete overlap. In this scenario, VeloCloud is a service delivery platform for NSX and not a piece of hardware at the edge. Absent VeloCloud, this kind of setup could still be replicated with a Cisco Viptela box running the underlay and NSX riding on top in the overlay. But I think that the market that VMware is going after is going to be building this from the ground up with VMware solutions from the start.


Tom’s Take

Not every issues is “Us vs. Them”. I get that VMware and Cisco seem to be spending more time moving closer together on the networking side of things. SD-WAN is a technology that was inevitably going to bring Cisco into conflict with someone. The third generation of SD-WAN vendors are really companies that didn’t have a proper offering buying up all the first generation startups. Viptela and VeloCloud are now off the market and they’ll soon be integral parts of their respective parent’s strategies going forward. Whether VeloCloud is focused on enabling cloud connectivity for VMware or retaking the branch from the hyperconverged vendors is going to play out in the next few months. But instead of focusing on conflict with anyone else, VeloCloud should be judged by the value it brings to VMware in the near term.

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Nutanix and Plexxi – An Affinity to Converge

nutanix-logo

Nutanix has been lighting the hyperconverged world on fire as of late. Strong sales led to a big IPO for their stock. They are in a lot of conversations about using their solution in place of large traditional virtualization offerings that include things like blade servers or big boxes. And even coming off the recent Nutanix .NEXT conference there were some big announcements in the networking arena to help them complete their total solution. However, I think Nutanix is missing a big opportunity that’s right in front of them.

I think it’s time for Nutanix to buy Plexxi.

Software Says

If you look at the Nutanix announcements around networking from .NEXT, they look very familiar to anyone in the server space. The highlights include service chaining, microsegmentation, and monitoring all accessible through an API. If this sounds an awful lot like VMware NSX, Cisco ACI, or any one of a number of new networking companies then you are in the right mode of thinking as far as Nutanix is concerned.

SDN in the server space is all about overlay networking. Segmentation of flows and service chaining are the reason why security is so hard to do in the networking space today. Trying to get traffic to behave in a certain way drives networking professionals nuts. Monitoring all of that to ensure that you’re actually doing what you say you’re doing just adds complexity. And the API is the way to do all of that without having to walk down to the data center to console into a switch and learn a new non-Linux CLI command set.

SDN vendors like VMware and Cisco ACI would naturally have jumped onto these complaints and difficulties in the networking world and both have offered solutions for them with their products. For Nutanix to have bundled solutions like this into their networking offering is no accident. They are looking to battle VMware head-to-head and need to offer the kind of feature parity that it’s going to take a make medium to large shops shift their focus away from the VMware ecosystem and take a long look at what Nutanix is offering.

In a way, Nutanix and VMware are starting to reinforce the idea that the network isn’t a magical realm of protocols and tricks that make applications work. Instead, it’s a simple transport layer between locations. For instance, Amazon doesn’t rely on the magic of the interstate system to get your packages from the distribution center to your home. Instead, the interstate system is just a transport layer for their shipping overlays – UPS, FedEX, and so on. The overlay is where the real magic is happening.

Nutanix doesn’t care what your network looks like. They can do almost everything on top of it with their overlay protocols. That would seem to suggest that the focus going forward should be to marginalize or outright ignore the lower layers of the network in favor of something that Nutanix has visibility into and can offer control and monitoring of. That’s where the Plexxi play comes into focus.

Plexxi Logo

Affinity for Awesome

Plexxi has long been a company in search of a way to sell what they do best. When I first saw them years ago, they were touting their Affinities idea as a way to build fast pathways between endpoints to provide better performance for applications that naturally talked to each other. This was a great idea back then. But it quickly got overshadowed by the other SDN solutions out there. It even caused Plexxi to go down a slightly different path for a while looking at other options to compete in a market that they didn’t really have a perfect fit product.

But the Affinities idea is perfect for hyperconverged solutions. Companies like Nutanix are marking their solutions as the way to create application-focused compute nodes on-site without the need to mess with the cloud. It’s a scalable solution that will eventually lead to having multiple nodes in the future as your needs expand. Hyperconverged was designed to be consumable per compute unit as opposed to massively scaling out in leaps and bounds.

Plexxi Affinities is just the tip of the iceberg. Plexxi’s networking connectivity also gives Nutanix the ability to build out a high-speed interconnect network with one advantage – noninterference. I’m speaking about what happens when a customer needs to add more networking ports to support this architecture. They need to make a call to their Networking Vendor of Choice. In the case of Cisco, HPE, or others, that call will often involve a conversation about what they’re doing with the new network followed by a sales pitch for their hyperconverged solution or a partner solution that benefits both companies. Nutanix has a reputation for being the disruptor in traditional IT. The more they can keep their traditional competitors out of the conversation, the more likely they are to keep the business into the future.


Tom’s Take

Plexxi is very much a company with an interesting solution in need of a friend. They aren’t big enough to really partner with hyperconverged solutions, and most of the hyperconverged market at this point is either cozy with someone else or not looking to make big purchases. Nutanix has the rebel mentality. They move fast and strike quickly to get their deals done. They don’t take prisoners. They look to make a splash and get people talking. The best way to keep that up is to bundle a real non-software networking component alongside a solution that will make the application owners happy and keep the conversation focused on a single source. That’s how Cisco did it back and the day and how VMware has climbed to the top of the virtualization market.

If Nutanix were to spend some of that nice IPO money on a Plexxi Christmas present, I think 2017 would be the year that Nutanix stops being discussed in hushed whispers and becomes a real force to be reckoned with up and down the stack.