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Hewlett-Packard, VMware Team Up to Deploy SDN Infrastructure

Zacks Equity Research

Hewlett-Packard Company (HPQ) and VMware, Inc. (VMW) recently joined forces to deploy software-defined networking (SDN.V) aided infrastructure to deliver enhanced performance for networking customers.

Through this collaboration, Hewlett-Packard will combine its  Virtual Application Networks SDN Controller with the VMware NSX network virtualization platform that provides a private cloud-based service. This would make the cloud-computing environment more secure, simple, flexible and efficient. The announcement also stated that VMware’s enterprise-class virtualization technologies will be supported by HP’s Helion OpenStack services. The partnership will enable Hewlett-Packard to offer an efficient and improved hybrid IT environment to drive performance.

As VMware remains one of the leading companies in the virtualization and cloud computing space, we believe Hewlett-Packard will gain significantly from this collaboration.

Software-defined networking is an approach to networking in which control moves from hardware to a software application called a controller. A network administrator uses these controllers to direct and regulate network traffic from a centralized hub. Another important factor for choosing SDN technology is that it is applicable for both private and public cloud infrastructures.

The VMware NSX network virtualization platform will be of immense importance since the joint effort will ward off difficulties while setting up a mature virtualized cloud-based infrastructure. This is turn will help Hewlett-Packard to expand its existing networking-based infrastructure with the benefits of the VMware NSX network application.

Moreover, Hewlett-Packard’s growing focus on new business segments, such as electronic medical records, cloud computing and the recently-added analytics segment will help it grow in the ensuing quarters.

Nonetheless, competition from Computer Sciences Corp. (CSC) in the Medicaid service space, weak PC market and a sluggish macroeconomic environment remain headwinds. Also, competition from other technology providers such as International Business Machines (IBM) and Salesforce.com makes it even more difficult to gain market share in the cloud and security space.

Currently, Hewlett-Packard has a Zacks Rank #3 (Hold).

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