401k, ROTH IRA, and NSX, Wait What?

Datetime:2017-04-19 05:32:47         Topic: Virtualization          Share        Original >>
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Today is “ tax day ” here in the United States where the deadline to file your personal income taxes is due and many of us are looking at our tax burden, investments, and how to deal with the 4 million words in the U.S. tax code. So why not take this day to compare the complexity of taxes with the complexity of traditional data center networking and security. If legacy networking is the 1040-long form then NSX is the 1040-EZ form. Akin to the questions I have for my tax advisor, I sometimes get questions from customers about NSX asking: “We don’t need micro-segmentation, we have VLANs and Firewalls”, or “We don’t need network virtualization, we can do that today with routers and switches…If have to have network hardware anyways, why do I need network software as well?”

So, in the spirit of Tax Day here in the US, let’s compare hardware and software to what they really are…investments. And yes, different investments are taxed differently. Let’s think of traditional networking as a 401K and NSX as a ROTH IRA. Both are investments, and both get taxed.

  • Traditional networking investments are “tax-free” UNTIL you retire (or refresh every 3-5 years), when at that time, you must pay the taxes again at future more expensive rates.
  • Traditional networking also locks you in and you are penalized if you try to remove the investment and put it into another vehicle (vendor A vs. vendor B) prior to it maturing.
  • You are typically limited on choices for traditional networking. Lifecycle is 3-5 years, so if today’s rates are 10G/40G, but 50G/100G becomes vogue, it is not easy to change since you are tied to previous investments.

OR

  • NSX’s ROTH investment is paid for with “after-tax” dollars, but is TAX FREE upon refresh. Since network virtualization and security now runs in the compute platform, host lifecycles for servers allows for increase in capacity (Moore’s law) without any additional “tax” as the per-socket perpetual NSX licensing model allows for “tax-free” upgrades. More future compute power per CPU at the cost of today’s dollar.
  • NSX does not lock you into any hardware and there is no penalty for changing your data center make up (Dell, Cisco, HP, Arista, Juniper, whomever) as we run over top of any IP fabric .
  • You are not limited in choice as we have a large ecosystem of portfolio choices that integrates with NSX. If you need to switch out the underlay to 50G/100G, choose a whitebox switch, add best-of-breed security or automate multiple solutions together, NSX allows for that at any time during the life of the vehicle – investment protection.

So, as Benjamin Franklin once opined that nothing in this world is as certain as death and taxes, NSX investment protection is certain to provide modern software-defined data centers the needed tax cut they deserve.

If you would like to learn more about building the business case for network virtualization and security with VMware NSX in your environment, check out these resources:








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