The growing maturity of NFV is, you could argue, creating a mutual attraction between VMware and the communications service provider community. But is VMware rushing to the telco market? Or is NFV bringing the telcos to VMware?

The way VMware Inc. (NYSE: VMW) sees it, NFV is at the forefront of the movement that is transforming service provider networks from specialized, purpose-built equipment and waterfall software development to standardized IT servers and IT-inspired DevOps development, part of the transition to New IP networks. And the team at VMware believes that all plays to its virtualization strengths.

"Our mandate is to enable telco networks to benefit from the same agility and improvement that IT has benefited from, by using the core concepts of virtualization," Shekar Ayyar, VMware senior VP strategy and corporate development and GM of the Telco NFV Group, tells Light Reading.

Figure 1: VMware Man NFV head Shekar Ayyar

Ayyar adds: "The telco industry is in the early days of the transition, but VMware is not. The movie has been played by us in a parallel domain for some time."

Probably only a handful of telcos have deployed NFV architectures at scale, Ayyar says. "In contrast, you would be hard pressed to find a single enterprise today that has not virtualized its architecture." Telcos will follow the same path with NFV that enterprises followed with virtualization, Ayyar says. VMware hopes to see 100 carriers adopting NFV by 2017-18.

And VMware plans to lead the trend. "VMware fully expects to be a market leader in terms of number of customers and market share."

Taking charge
Ayyar took command of the new Telco NFV Group a little more than a year ago, in February 2015. He joined VMware in 2007, and during his tenure he led the acquisitions of Nicira -- which became the foundation of VMware's SDN business -- and Airwatch, an enterprise mobility management vendor. (See Nicira Founder Casado Leaves VMware, VMware to Buy SDN Startup for More Than $1B and VMware to Buy AirWatch for $1.54B.)

Find out more about network functions virtualization on Light Reading's NFV Channel.

The push to NFV comes as VMware goes through a transition. In January, it laid off 800 staff as part of a shift from its declining on-premises computing business to its growing cloud and networking business, the company said on its fourth-quarter 2015 earnings call, on January 26. The company's mainstay vSphere business is slowing down but software-defined data center products, including compute, storage, networking and management, are growing, with the NSX virtual networking line of business boasting 100% growth year-over-year. (See VMware Announces 800 Layoffs, Executive Shake-Up.)

In another big transition, VMware will soon get a new corporate parent. Dell Technologies (Nasdaq: DELL) plans to acquire EMC Corp. (NYSE: EMC), which holds a controlling interest in VMware, for $67 billion. Dell and EMC jointly announced the acquisition in October. (See Dell Buys EMC for $67B in Biggest Tech Deal Ever and Dell-EMC-VMware Merger Could Push Comms to Kids' Table.)

Next page: A foot in the door

A foot in the door
VMware already has a foot in the door with telcos, on the enterprise side of the telco house, Ayyar says.

"This problem is similar to what we have solved for the enterprise, getting better capabilities and more economic value from x86 hardware," Ayyar says. But telcos have their own, specific demands, including service and support for high availability and performance. "We need to spend time to be sure our products are packaged right and perform in the telco environment."

Additionally, the NFV market is international and every region has its own "flavor." Europe is ahead of the US in product NFV deployments, Ayyar says. Carriers there have had to deploy VoLTE quickly and had no choice but to go virtual.

Asia-Pacific carriers are showing high interest, particularly among mobile operators, he says.

US carriers take a top-down approach to network planning, deciding what kind of network functions they need and then determining the transition. For them, "it doesn't look like a burning platform to have up and running by next quarter; it's more like 2018-2020 by the time we have something up and in production," Ayyar says.

Getting started
VMware kicked off its NFV business at Mobile World Congress in 2015, with the launch of a suite of packaged solutions and its first production customer, Vodafone Group plc (NYSE: VOD). Later in the year, VMware signed on Ooredoo Kuwait and Internet Initiative Japan (IIJ). (See Ooredoo Kuwait Taps VMware for NFV and VMware Lands NFV Deal at Internet Initiative Japan.)

VMware followed up by launching the vCloud NFV Platform, VMware Ready NFV Program and new carrier-grade services in October. (See VMware Debuts New NFV Platform, Services.)

At this year's MWC in February, VMware followed up with delivery of new vRealize Management Packs for simplifying NFV operations and troubleshooting. It announced Transatel and Smart Sky Networks as the latest customers to deploy virtual network functions from VMware partners on the vCloud NFV platform, and brought on eight VMware NFV ecosystem partners.

VMware provides the network functions virtualization Infrastructure (NFVi) software layer and part of the orchestration layer. For other NFV elements, it's working with partners.

"We are not a VNF vendor -- with some exceptions. For example, NSX has some capabilities for firewalling," Ayyar says.

"What we see ourselves doing is easing services for the customer," Ayyar says. "Customers wanting to deploy VNFs on a common platform can have VMware and an NFV vendor working together to make sure interfaces are seamless."

Next page: Facing competition

Facing competition
VMware's strategy is similar to other enterprise vendors looking to crack the telecoms market. It's looking to leverage expertise and an installed base in enterprise IT -- including the enterprise IT side of carrier businesses -- to get a foothold at carrier networks as operators transform their infrastructure along enterprise IT lines.

Hewlett Packard Enterprise is following a similar strategy, as is VMware's current parent EMC, and its future parent company, Dell. (See HPE Bridges Physical, Virtual Networks, HPE Lands NFV, PCRF Deals, Dell Sees NFV as Gateway to Telecoms and EMC Enters Comms Market With NFV Platform.)

Indeed, the combination of Dell and EMC presents challenges for both Dell and VMware. On the one hand, the two companies are partners, with Dell providing hardware, software infrastructure and services, while VMware provides NFV and other virtualization capabilities. Bringing them together will only enhance that collaboration.

On the other hand, Dell and VMware also partner with other companies, including each other's competitors, and plan to continue to do so. They'll have to counter the perception of favoritism.

As a step in that direction, soon after the acquisition was announced, Dell CEO and founder Michael Dell put out a statement affirming Dell's commitment to keeping VMware independent.

Narrow focus
The VMware NFV business unit is narrowly focused. VMware has around 600,000 customers total: Of these, VMware has identified 400-500 telcos/communications service providers that matter globally.

The US has a half-dozen top providers, then drops off. European companies are structured differently; every operating company serves as its own unit, going after market share in four or five geographies, Ayyar says.

VMware is building an internal account and technical team to address service provider needs. He declined to comment on headcount and revenue.

"This isn't about a new product for telcos," Ayyar says. "VMware is taking all the abstraction layers it has built around the network hypervisor, storage, compute, and leveraging hardware that we have been perfecting over the last 15 years."

VMWare sees a multi-stage process for NFV adoption.

Users start with a proprietary box from a supplier such as Alcatel-Lucent (NYSE: ALU) or Ericsson AB (Nasdaq: ERIC). The vendor moves the function to a virtual machine. But it's still essentially the same function, just virtualized.

The next step is to run multiple network functions on a shared platform, chained together with workflows for increased efficiency.

The final, "fully evolved" stage is to rewrite functions and platform tools for a clean slate approach and chain functions together differently as customers require it, Ayyar says. For example, all consumer bits don't have to go through every process on the service chain; and video and audio have different needs than other traffic. This approach allows the operator to build a composite NFV layer.

The approach Ayyar describes is not unique. Saar Gillai, HPE SVP & GM for NFV outlines a similar view, and HPE enabled that kind of architecture with its ContextStream acquisition last year. Affirmed Networks Inc. and Versa Networks have similar approaches. (See HP Acquiring ConteXtream for Carrier SDN, HP: ConteXtream's Precision Network Configuration Drove Acquisition, Juniper & Affirmed Target Virtual Core , and Startup Versa Announces 'Carrier-Grade' Multi-Tenant NFV Platform.)

Ayyar talked with Light Reading CEO Steve Saunders recently about the NFV opportunity.

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— Mitch Wagner, , West Coast Bureau Chief, Light Reading.