VMware is taking on another level of virtualization in the data center with the announcement of VMware NSX, which will virtualize networks in much the same way that their ESX technology creates virtual servers. Like virtual servers, virtual switches are software representations of what used to require dedicated hardware—an approach that cuts costs, increases usage, and enables more flexibility.

The coming of virtual networks, also known as software-defined networks, is pretty much inevitable from VMware's point of view. For every virtual machine running in a VMware data center there is a virtual network switch, called vSwitch.

According to VMWare CTO Martin Casado, because each vSwitch has a number of virtual ports, then somewhere in 2012, the number of virtual ports in the world exceeded the physical ports in global data centers.

Because of this, he argued in a keynote at VMware's annual VMworld conference in San Francisco, virtual networks were simply an inevitably. The virtual switches were already there, so VMware is adding a new control layer in the data center, NSX, that will manage all of these vSwitches in order to reshape and redefine networks as needed.

Instead of software embedded in the routers and switches managing the traffic, software from outside the devices takes over the job. The network layout, or topography, is no longer rooted in the physical—it's decoupled from the hardware. Instead, it's flexible and adjustable to the systems’ needs on the fly.

This means an application running inside the cloud itself can take over the job of directing networking traffic. Or a cloud-management application—such as those offered by VMware—could do the job. That could make it easier to perform tasks such as load balancing devices across servers and automatically adjusting the network architecture to deliver the fastest and most efficient data paths at the right time.

NSX is expected to be generally available in the fourth quarter of 2013. Today's announcement from Casado and VMware CEO Pat Gelsinger represents one part of VMware's journey towards what it calls the software-defined data center.

In a software-defined data center, all elements of the data center are virtual: compute, storage, IT management and networking.

It's a lofty goal for VMware, but also a natural progression for a virtualization company to make. Automation is a huge driver in IT right now, and VMware wants to make sure it's in front of the curve.

Correction, Aug. 27: NSX should be released in the fourth quarter of 2013. This article previously misstated the year.