VMware Continues to Grow NSX SDN Revenue

VMware reported its first quarter fiscal 2016 financial results on April 19, showing how important its NSX network virtualization business has now become.

For the quarter, VMware reported revenue of $1.59 billion, up from $1.5 billion in 2015. Net income was reported at $161 million, a decline from the $196 million reported for the first quarter of 2015. Looking forward, VMware provided second quarter 2016 guidance for total revenue between $1.660 billion and $1.710 billion, up 4 to 7 percent year-over-year.

Zane Rowe, Chief Financial Officer and Executive Vice President at VMware, highlighted the strong growth numbers of NSX during his company’s earnings call. Rowe noted that NSX license bookings grew by over 100 percent year-over-year.

“NSX customers now total over 1,400, with nearly 350 of these in production deployments,” Rowe said. “NSX is proving to be the premier network overlay solution across any hardware infrastructure.”

Rowe also noted that eight of the top ten deals that VMware had in the quarter included NSX, showing its importance as a key part of VMware’s overall business.

NSX was first announced by VMware in August 2013, based on technology developed by Nicira, which was acquired for $1.2 billion in July 2012.

VMware CEO Pat Gelsinger is also very enthusiastic about NSX, commenting that VMware is continuing to increase the customer count for NSX and more customers are going into production.

“We see a very powerful pipeline for the year, also across geography, across verticals, large and mid-size customers,” Gelsinger said. “So I’ll just say overall, with NSX, we are really excited about the potential and the transformative capabilities.”

Gelsinger also highlighted a number of customer deployments of NSX, including a big U.S. life sciences customer combining it with VDI to deliver the virtual desktop environment in a secure way. Micro segmentation, which has been further enabled in NSX with Distributed Network Encryption, is a key driver for adoption, enabling organizations to secure their networks.

From a competitive perspective, Gelsinger noted that NSX is in some respects now being seen as a complementary technology to Cisco’s ACI SDN approach.

“We had a couple of customer announcements specifically how they’re using NSX and ACI environments like SugarCreek and Shutterfly,” Gelsinger said. “So overall, this is a hot product area and one that we see tremendous strategic potential for in the long-term.”

Sean Michael Kerner is a senior editor at Enterprise Networking Planet and InternetNews.com. Follow him on Twitter @TechJournalist.

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