- Arista Networks is reportedly eyeing Broadcom’s VeloCloud SD-WAN unit
- Analysts said a deal could help Arista better compete in the market, particularly against Cisco
- For Broadcom, cloud and virtualization is more of a priority than SD-WAN
Reports are buzzing that Arista Networks could make a $1 billion play for VeloCloud, Broadcom’s SD-WAN business. Analysts told Fierce a deal would be a win for both companies as well as give Arista an edge with its SD-WAN competition.
Notably, snagging VeloCloud would broaden Arista’s portfolio to make it more competitive with the likes of Cisco, said AvidThink Principal Roy Chua.
Cisco is an incumbent network supplier in the enterprise cloud market, as Dell’Oro VP Sameh Boujelbene told Fierce in February. While she noted Arista is “definitely gaining share,” Cisco for now remains top dog.
Arista’s SD-WAN product “has been decent but not particularly groundbreaking,” Chua said. Arista's SD-WAN pluses are that it has unified orchestration, visibility and automation, plus it works consistently with the company’s other cloud networking offerings.
“The combination of Velocloud software with Arista's routing strengths could be powerful,” he said.
VeloCloud, which Broadcom picked up when it acquired VMware in 2023, has been “a mainstay” of many managed SD-WAN offerings from CSPs and MSPs, Chua added, and it has a “strong market footprint” to boot.
What Broadcom’s strategic shift means for VeloCloud
If VeloCloud is so great, why would Broadcom want to sell it off? Simply put, VeloCloud is “really not all that pertinent to their strategic vision of what they bought VMware for,” said Jack Gold, founder of J.Gold Associates.
For Broadcom, “SD-WAN is not a high-growth area, and it’s really a networking play more than a cloud and virtualization play,” he said. VeloCloud is much “more aligned” with Arista’s business.
Though SD-WAN demand fell off for a bit due to post-pandemic inventory backlogs, Dell’Oro in March reported the market “rebounded to 17 percent growth” in Q4 2024.
But given Broadcom’s focus on cloud enablement and infrastructure, the vendor probably wants to cut back on “lower value offerings,” such as SD-WAN, Gold said. For folks like Arista and Cisco, “it’s an add-on sale to their existing infrastructure networking product sales,” he added.
It wouldn’t be the first time Broadcom divested a VMware asset. Broadcom in 2024 sold VMware’s End-User Computing (EUC) division to private equity firm KKR for about $4 billion. The company planned to sell off its Carbon Black cybersecurity unit as well but instead decided to integrate it with its Symantec offering.
In Chua’s opinion, Broadcom “missed an opportunity” to combine the SD-WAN biz more tightly with the security assets. Such a move could have been “a strong contender against the other security companies,” like Cato Networks or Palo Alto Networks.
“Nevertheless, it appears that Broadcom has been managing the VeloCloud asset in a manner that was conducive for subsequent sale — including keeping the brand and operations more separate,” he said.
Michael Leonard, product marketing specialist and former VMware exec, thinks an Arista-VeloCloud deal is far from a match made in heaven.
“Arista will use the Velo sales teams to exploit the Service Provider segment and grow their market share for switching and routing,” Leonard wrote on LinkedIn. “They will incorporate SASE into the routers and kill the standalone devices.”
An acquisition could also spell out trouble for VeloCloud employees. “The ones that have employment offers are not feeling the love,” he added. The VMware workforce did not fare well at all after the Broadcom buy out, as the company laid off more than 2,800 employees once the transaction closed.