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How VMware network virtualization evolved in 2016

In just a one year period, NSX went from losing a top network virtualization executive to VMware declaring it as its next possible core product.

When Nicira founder Martin Casado left VMware, there were a lot of questions about the direction of NSX and VMware network virtualization. Less than a year later, it's clear that NSX will be the centerpiece of the company going forward.

"Casado leaving was big news," said Brad Casemore, a data center networks research director at IDC. "There was a lot of concern back then if the core team would hold together in his absence. They've managed to keep most of that team together, and to their credit, we've seen them bolster it as well in the interim. That was a huge start to the year."

NSX license sales more than doubled in the second quarter of 2016 year over year, and the number of customers using the network virtualization product eclipsed 1,700. VMware CEO Pat Gelsinger also noted in VMware's Q2 2016 earnings call that of the 10 largest deals the company made, eight included NSX.

"I think, in some ways, it was just a case of the company coming up to speed and getting [to] a comfort level with NSX," Casemore said of NSX's growth. "You finally had a bit of a breaking down of the networking old guard. Network operators who were kind of opposed of doing things in new ways, like adopting network virtualization and moving toward more of an automated approach to networking, I think some of that broke down in 2016.

VMware widens NSX integration

VMware network virtualization and NSX continued to gain momentum in the second half of the year, capitalizing on the Q2 momentum.

NSX is central to two of the company's most important initiatives revealed at VMworld 2016: VMware Cloud Foundation and Cross-Cloud Architecture. NSX provides users with consistent networking across on premises and cloud deployments with VMware's Cross-Cloud Architecture and VMware Cloud Foundation wraps vSphere, VSAN and NSX into a single platform.

"NSX is increasingly -- and we saw it at VMworld 2016 -- becoming a core component of not only VMware's product portfolio, but its strategy," Casemore said. " It's becoming a glue that binds policy, consistency, security [and] networking management right across the board, whether it be in a data center, a private cloud environment or tying together public clouds. I think you're going to see NSX extend everywhere VMware goes."

At VMworld 2016, Rajiv Ramaswami, VMware COO of products and cloud services, showed how the company's investments in NSX are driving sales. He said about 40% of NSX sales are driven by security and microsegmentation.

VMware's container initiative, Photon Platform, got a boost in October, adding networking and storage services powered by NSX, and it seems nearly every big 2016 product release included some sort of NSX integration.

"It has been fascinating to watch VMware transform itself into a networking company, albeit not a traditional networking company; they do it through the hypervisor and through software," Casemore said.

In the final days of 2016, the software giant doubled down on its VMware network virtualization platform when it acquired assets and employees from PLUMgrid, a startup focused on software-defined networking. This purchase marked the second time in six months that VMware acquired a company to bolster NSX.

What's next for NSX?

It's clear that NSX will remain a vital piece of VMware's products going forward. We've already seen it integrated with the majority of VMware's top releases in the past year.

The NSX certification track continues to grow as more and more users deploy the product; the same can be said for the NSX vExpert program.

While VMware made a point to integrate all of its major releases in 2016 with NSX, Casemore said there is still room for growth.

"If you think about NSX as a glue that ties together policy and security and consistency in terms of management for workloads that exist within an enterprise data center, private cloud, public cloud, I think we'll see the meat put on the bones of that in 2017," Casemore said. "I would not be surprised to see more of an SD-WAN play from VMware. … I think that's the next foray for NSX."

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