VMware’s acquisition of software-defined wide-area networking (SD-WAN) vendor VeloCloud is intended to fill a gap in the company’s portfolio and deliver a way for customers to extend VMware’s NSX solution beyond the data center and closer to the network edge.

Currently, customers using VMware’s NSX platform must hand off the WAN to another vendor. That SD-WAN vendor may be VeloCloud, but VMware is also integrated with other SD-WAN vendors, too. Now, that extra complexity is eliminated. “The VeloCloud acquisition gives VMware a well-regarded SD-WAN product that can be seamlessly integrated with NSX under one company; deeper integration can be achieved,” said Mike Fratto, research director at GlobalData.

And that seamless integration will likely be compelling to enterprise customers, particularly as they look to run more of their applications closer to the network edge. It will also make VMware a more viable competitor to Cisco, which recently finalized its $610 million acquisition of SD-WAN company Viptela. But VMware downplayed that angle. “There will be some cases where we compete with Cisco’s SD-WAN solution,” said Rajiv Ramaswami, COO of products and cloud services at VMware, during a call with media and analysts on the deal. “Enterprise buyers want to move to the software-defined world and run applications anywhere.”

For VMware the bigger benefit of the acquisition is that it will create more credibility with network buyers. “Before we did this, we had leads from customers buying NSX who asked if we had an SD-WAN solution,” said Ramaswami.

And while VeloCloud’s extensive portfolio of 1,000 enterprise customers is appealing to VMware, the company’s inroads with its 50 or so service provider customers like AT&T, Sprint, Deutsche Telekom, Macquarie Telecom, Windstream, and Telstra is an even bigger draw. “SD-WAN lets [service providers] be more competitive at a time when margins are pressured,” said Peder Ulander, vice president of product marketing in the networking and security business unit at VMware.

Cisco’s acquisition of Viptela coupled with VMware’s purchase of VeloCloud seems to indicate that SD-WAN vendors are ripe for consolidation. Fratto believes there will be more consolidation in the months ahead. “I think other networking vendors — both wired and wireless — should be looking at acquiring an SD-WAN vendor if they want to expand branch office and cloud connectivity,” Fratto said. He noted that since many of the SD-WAN vendors already have service provider customers, it also gives these potential buyers a ready pool of customers.

Which SD-WAN company is likely to be next? Versa Networks seems like an appealing choice, particularly because of its inroads with Asian operators like Japan’s KDDI and China’s China Telecom. Fratto noted that Versa actually has a Cloud IP Platform that includes SD-WAN, which is appealing for a service provider that doesn’t want to spend time building out a network functions virtualization (NFV) environment. However, he’s hesitant to say that makes Versa or similar SD-WAN firms an acquisition target.