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Could NSX Be Adding to VMware’s Allure?

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VMware is on Dell’s radar

In the previous part, we discussed what has led to VMware (VMW) stock falling in 2018. It doesn’t seem to be the company’s fundamentals contributing to the fall, but rather Dell’s mulling over strategic options. Currently, Dell is working with Bain & Company to evaluate the synergies and benefits of reverse merging with VMware.
NSX

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NSX’s $1.4 billion run rate

Let’s see how NSX, VMware’s network virtualization business, adds to its attractiveness. NSX was launched in November 2013 after VMware acquired Nicira for $1.3 billion. NSX, a virtual networking and security software platform, is part of VMware’s SDDC (software-defined data center) architecture. As part of the VMware Cloud Foundation and VMware Cloud on Amazon’s (AMZN) Amazon Web Services, it is integral to the company’s cross-cloud architecture.

NSX 6.3, released in 2017, was a major upgrade and attracted a lot of attention as it included a new platform and compliance and security features. It also had operation enhancements, such as a security tagging and an improved troubleshooting dashboard. VMware also released four minor NSX upgrades, NSX 6.3.1, 6.3.4, 6.3.2, and 6.3.3, which were essentially bug-fix releases but also included significant feature improvements.

In 4Q18 and fiscal 2018, NSX’s license bookings grew 24% and 50%, respectively, indicating NSX offerings’ increased traction. Based on NSX’s fiscal 4Q18 total bookings, it currently has a $1.4 billion run rate and now boasts 3,500 customers. Highlighting how NSX is expanding its reach, VMWare said, “NSX use cases continue to expand beyond micro-segmentation, automation and application continuity to cloud and container networking, as well as brand’s transformation and security.”

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