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VMware acquisitions in 2017 signal strategic growth plans

VMware acquisitions and partnerships dominated the company's news in 2017. Combined with technology development, these movements signal a strategic growth strategy going into 2018.

In the interest of growing as a company and deepening its hold on customers, VMware made acquisitions, partnered...

in new areas and phased out products that no longer aligned with its business strategy in 2017. VMware acquisitions, such as Wavefront in April and VeloCloud Networks Inc. in November, pushed the company into competitive positions in both the cloud and networking markets. The vendor also made a concerted effort to build more extensive relationships in the open source community.

VMworld 2017 provided some insight into the company's long-term strategy. Much to the chagrin of some vSphere administrators, VMware revealed plans to retire vCenter Server for Windows in favor of vCenter Server Appliance. Conference attendees got a look at the first major development out of VMware's partnership with Amazon Web Services, VMware Cloud on AWS, and CEO Pat Gelsinger strongly hinted that NSX would have a starring role in the company's plans going forward.

These VMware acquisitions, partnerships and technology developments throughout 2017 show that the company has learned from its struggles in the cloud market, and it appears willing to make difficult decisions to compete better and grow.

Acquisitions create inroads to cloud market

In a move that many saw as a significant strategic departure, VMware acquired Wavefront, a cross-cloud monitoring and metrics vendor, in April 2017. Prior to this acquisition, VMware had a fraught relationship with the cloud: attempts to develop its own public cloud were unsuccessful, and products like vCloud Director and vCloud Air couldn't compete with the likes of Amazon and Microsoft. However, VMware identified points of leverage in the market.

Although other cloud providers offer monitoring tools, they're often dispersed across numerous third-party vendors. These providers advertise portability and workload configuration, but ignore what happens once workloads reach their destinations.

Rather than revamp its own monitoring tools to suit the cloud, VMware bought Wavefront to quickly fill that gap and integrate an already mature tool. Wavefront's technology enables VMware to monitor both private and public clouds. This multi-cloud approach eliminates the disconnect between tools with different owners and interfaces and can help IT teams make better decisions about their cloud implementations.

According to IT architect Brian Kirsch, VMware has avoided direct battle with cloud market leaders and has, instead, found a section of the market that had yet to be claimed.

VMware embraces the open source world

VMware's relationship with open source technologies has also evolved over the past year.

VMware has developed a reputation for taking a proprietary approach to technology, but has recently made more of an effort to welcome open source. Dirk Hohndel, vice president and chief open source officer at VMware, led this transformation and convinced the company to invest in internal and external open source projects. This change is apparent in VMware's updated container strategy, which, as of August 2017, includes Pivotal Container Service, as well as VMware Cloud on AWS.

VMware is still finding its balance between contributing to and creating open source projects. According to Hohndel, every VMware product involves open source projects to some degree and, as VMware finds bugs, it contributes those fixes for others to use.

VMware retires vCenter Server for Windows

Not every change VMware made in 2017 was met with praise. VMware recently unveiled plans to retire vCenter Server for Windows in the next version of vSphere. In its place, VMware will push vCenter Server Appliance (vCSA), which, according to VMware, reduces costs and offers major improvements.

Despite these advantages, the transition to vCSA poses numerous challenges for IT admins. For example, admins will no longer have access to a ready-made Active Directory client when they move from a Windows platform to Linux. VCSA offers Lightweight Directory Access Protocol to connect to any directory service, but, because it uses an open standard, it can be unstable and occasionally dysfunctional.

Other major issues with vCSA include limitations in vCenter's internal database, a general lack of administrative familiarity with Linux, and vCSA being limited to running on virtual hardware. That said, product elimination, though not always popular, is necessary for growth because it opens VMware up to acquisitions in new markets. Ultimately, VMware's user base will decide whether it was the right choice to cut vCenter Server for Windows.

VMware challenges Cisco with VeloCloud acquisition

The list of VMware acquisitions grew yet again in November 2017 when the company revealed it would purchase VeloCloud. This acquisition has enabled VMware to use software-defined WAN (SD-WAN) to provide security, routing and other services on a hardware-agnostic, NSX-based network overlay. This access to SD-WAN puts VMware in direct competition with Cisco Viptela, IWAN and Meraki, and pits NSX against Cisco's Application Centric Infrastructure.

As VMware positions itself in the cloud market, NSX will tie together multiple clouds from VMware, AWS and many other partners.

VMware's place in the SD-WAN market is dependent on its ability to differentiate itself by developing VeloCloud's cloud-based network orchestration tools. Despite this acquisition, the way forward won't be easy because Cisco dominates the market. VMware, however, recognizes that VeloCloud is a potential market accelerator for the network virtualization software it sells to providers. VeloCloud's relationships with service providers can accelerate this developing business.

NSX charts a path for VMware technology development

Earlier this year, VMware CEO Pat Gelsinger referred to NSX as the secret sauce behind everything the company does. The networking software will underpin a number of products and play an important role in the company's long-term strategy. As VMware positions itself in the cloud market, NSX will tie together multiple clouds from VMware, AWS and many other partners.

NSX will also use microsegmentation to extend its capabilities to more apps, including the developing networks of IoT devices. As that market grows, NSX can be a key player in security. VMware's NSX strategy also includes VMware NSX Cloud, which provides consistent networking and security through a single management console and a common API for apps that run across numerous private and public clouds.

These are just a few elements of VMware's plan to use NSX to gain a foothold in a multitude of different companies and technologies. Combined with VMware acquisitions, partnerships and product developments in 2017, this focus on NSX shows how VMware has embraced a growth strategy that leverages its strengths: technology, integration and customer focus.

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