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Will Network Virtualization be the Saving Grace of VMware?

Things haven't been easy around VMware recently, not for investors or employees or customers wondering what the future holds. While some product development is halted or stunted pending new administration (Workstation and Fusion, for example), other products are also up for debate. At the recent VMworld event, VMware CEO Pat Gelsinger spoke about some of the changes, concerns, and where VMware is heading for the future.

NSX and the Dream of the Software Defined Data Center

Network Virtualization

Enterprises are looking for more secure connections between their data centers and the cloud. NSX could be just that solution, providing the high level of encryption and performance to get the job done right.

According to Gelsinger, many of the staple products that have driven the growth and prosperity of VMware in the past have now reached maturity. These products aren't on the cutting board, but neither are they going to be driving forces for revenue streams in the future. VMware has noticeably downgraded investments in their public cloud product, vCloudAir, which will receive less attention and focus moving forward. According to Gelsinger, VMware will refocus on doing what only their company can do that other companies can't or aren't doing.

For example, look at NSX and how it plays into VMware's vision for a Software Defined Data Center. Last year, VMware demonstrated how this network virtualization platform can serve as a connection between the customer's onsite data center and vCloudAir. This coming year, NSX will be expanded to be useful as a connection between the customer's sites and the public cloud, such as Microsoft Azure's cloud or Amazon Web Services.

VMware Believes NSX Can Do More and Do It Better Than Current Solutions

vCloud Air

VMware is backing off projects like the vCloud Air public cloud, as other companies are already providing these services and doing it quite well. VMware plans to focus on the things that their company does better than anyone else.

There are a few ways to achieve these kinds of connections currently, such as through an ordinary Internet connection, via a direct connection, or by using a collocation that connects to the cloud (such as the product by Equinix). But NSX can bring enterprise level encryption to the mix, and provide a much more secure way of achieving these kinds of connections between the cloud and the onsite enterprise data center.

This innovation moves VMware beyond a simple provider of compute virtualization software and into the virtualized network and storage capabilities that are the foundation of the proposed Software Defined Data Center envisioned and touted by VMware. What does NSX have to offer? This product's annual revenue doubled over the past year to surpass $600 million.

Meanwhile, developers who depend on VMware's products are just waiting for answers. As new CFO Zane Rowe takes command on March 1, the picture of the new VMware may become clearer. For now, all that is known for certain is that 800 employees, including parts of the development teams responsible for building and maintaining VMware Workstation and Fusion, are gone and the company is in the midst of a massive restructuring and realignment process.

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