VMware is expanding its existing ecosystem of partnerships with its latest announcement of NSX integration with Arista as it moves closer to Cisco for network virtualization implementations between our studies. In 1H 2013, about 13 percentage points of in-use implementations separated Cisco’s lead in the space from VMware, but in 1H 2014, the gap has declined to just 2.4 percentage points. Announced earlier this month, the expanded strategic relationship with Arista may serve as an additional tailwind for VMware CEO Patrick Gelsinger to strengthen the company’s competitive stance against Cisco’s ACI platform. Cisco continues to display more future project plans than VMware for network virtualization, but if Cisco fails to convert those implementation plans into in-use cases and VMware successfully makes the conversion, we may see a new king of the hill.
More decision-makers are taking advantage of virtual networks today than a year ago. In 1H 2013, 37% of large and midsize enterprises reported implementations and an additional 11% had future project plans, while in 1H 2014, in-use cases have climbed to 41% of respondents with an additional 13% planning future implementations. Spending intentions also remain positive for the technology, with 16% citing budget increases in 2014 and 21% in 2015 vs. just 1% and 2% having budget cuts in plan respectively.
VMware and Cisco are the main beneficiaries of future adoption plans and budget increases for network virtualization. The two incumbents are taking different approaches to network virtualization, and both are goliaths in this standoff. It is too early to judge whether VMware’s lead in core server virtualization will spread into network virtualization or if Cisco’s entrenched position in the space will hold off. A recently published Technology and Business Insight from 451 Research, titled ‘Software-Defined Networking: Making Sense of a Complex Technology Inflection and Market Opportunity,’ explores network virtualization in detail and discusses the two approaches taken by VMware and Cisco.
Network managers had the following comments about network virtualization in their environments:
- “We’ve become a VMware shop. We’ve done a little with Cisco virtual switches, but VMware’s big in that.” – LE, Services: Business/Accounting/Engineering
- “We do a lot of that in the area of VMware.” – LE, Other
- “We stand up virtual network switches that support the VMware servers.” – LE, Consumer Goods/Retail
- “Discovery phase – Cisco Nexus offers some capability here.” – LE, Services: Business/Accounting/Engineering