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A Look at VMware’s Strategy to Expand the Reach of NSX

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Networking is the core of VMware’s operations

In VMware’s (VMW) fiscal Q1 2019 earnings release, CEO Pat Gelsinger said, “Long-term, we continue to see the networking opportunity to be as big or bigger than the compute opportunity, so it’s that pervasive.”

NSX provides an enhanced networking security infrastructure that creates a highly secure software-based environment. NSX lowers infrastructure replacement costs as it moves complex functionalities from a physical switch to a software-defined switch, which creates uniformity across the environment and reduces support and maintenance expenses. VMware’s focus on the expansion and enhancement of its NSX offering indicates that networking continues to be an increasingly crucial component for VMware.

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NSX expansion from high-end to mainstream

Despite NSX’s vital role in the uplifting of the SDN (software-defined networking) market, Gelsinger said NSX is “still largely a high-end product.” He added, “We still haven’t really brought it into the mainstream offering.”

In his 2017 VMworld keynote, Gelsinger said, “NSX is becoming the secret sauce behind everything we do. Maybe what vSphere was to the first 20 years of VMware, NSX is to the next decade or two.”

VMware is aiming to make various versions of NSX that are better suited to the mid-market so that they can be presented to its vast vSphere customer base. In the company’s earnings release, Gelsinger said, “So, we do see this as something that’s critical to our future. One example of that would be the VeloCloud or SD-WAN, which already has 2,000 customers for it and it’s a much more consumable simple product with a narrower use case, but a broader market appeal.”

Containers, hybrid cloud, multicloud, and security are some of the use cases where NSX aims to extend its reach. VMware said, “We see this as critical to our future. You will see us creating versions of NSX with more mid-market focus.”

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