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VMware to Acquire SD-WAN Startup VeloCloud

Craig Matsumoto

UPDATE: VMware has announced the deal to acquire VeloCloud, confirming yesterday's report. Terms were not disclosed, and the deal is expected to close before year's end. Scott Ferguson has the latest on Enterprise Cloud News.

VMware has reportedly agreed to acquire SD-WAN startup VeloCloud, a sign that VMware intends to continue burrowing into the networking world.

The news was reported this afternoon by The Information, which rightly points out that such a move would exacerbate the tension between VMware Inc. (NYSE: VMW) and Cisco Systems Inc. (Nasdaq: CSCO).

Terms of the deal are unknown, assuming the deal exists. The companies didn't immediately return requests for comment.

SD-WAN is a market rife with startups, but surprisingly few have ended up being acquisition candidates. When Cisco acquired Viptela for $610 million in May, it seemed like it could set off an avalanche of SD-WAN deals. Not so. (See Cisco Snaps Up Viptela.)

VeloCloud Networks Inc. seems a likely acquisition target because of the traction it's gotten with big-name carriers -- AT&T, Telstra and Windstream, to name a few. Overall, the company claims 50 service providers and 1,000 enterprises as customers.

VMware entered the networking market through the SDN door, acquiring startup Nicira in 2012. That deal was the basis for NSX, VMware's network virtualization product that rivals (but can also be used in conjunction with) Cisco's ACI. (See VMware to Buy SDN Startup for More Than $1B.)

VMware also acquired the assets of SDN startup PLUMgrid late last year. (See VMware Buys SDN Startup PLUMGrid's Assets .)

VeloCloud has raised $84 million in four rounds -- including a Series C that counted Cisco as an investor. (See Cisco Joins $27M Round for SD-WAN Startup VeloCloud.)

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— Craig Matsumoto, Editor-in-Chief, Light Reading

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