Method and system for virtual machine networking

A network device, comprising:

• a plurality of virtual machines running on the network device;
• and
• a network adapter that
• transmits first management information to a second network device that is external to the network device,
• receives second management information from the second network device, and
• determines, based on the first management information and the received second management information, whether to communicate traffic, between a transmitting virtual machine of the plurality of virtual machines and each of a plurality of receiving virtual machines of the plurality of virtual machines, via an internal path that resides solely within the network device, or via an external path including the second network device, wherein
• the second network device, after reception of the first management information from the network device, receives the second management information from a network management entity external to both the network device and the second network device and then transmits the second management information to the network device.

A method, comprising:

• transmitting, by a first network device, first management information to a second network device external to the first network device;
• receiving, by the second network device, second management information from a network management entity external to both the first network device and the second network device;
• receiving, by the first network device, the second management information from the second network device;
• communicating traffic from a transmitting virtual machine running on the first network device to a plurality of receiving virtual machines running on the first network device;
• and
• determining, based on the first management information and the received second management information and for each of the plurality of receiving virtual machines, whether to communicate the traffic between the transmitting virtual machine to the receiving virtual machine via an internal path that resides solely within the first network device, or via an external path including the second network device.