VMware Acquires Nicira to Bolster Software-Defined Data Center

VMware executives have been openly talking about the software-defined data center (SDDC), so it makes sense that they would acquire a company like Nicira which is focused on software-defined networking (SDN). I use that term as an umbrella to describe all the companies working to add programmability, open standards, and centralized control to the network. Nicira’s specific role in the SDN ecosystem is network virtualization. Nicira leverages a centralized controller and virtual switches to deliver network services that enable very large, very complex (read multi-tenant and heterogeneous), and highly virtualized environments to become more agile and flexible. Nicira didn’t debut its technology working on fringe use cases, they did it by tackling very complex cloud environments at some very large companies – NTT, ATT, and Rackspace, to name a few. For example, according to published reports, Nicira is helping NTT live migrate cloud data centers to avoid outages caused by the rolling blackouts Japan had been experiencing.

Nicira was also founded by some of the hottest SDN talent in the valley and had big name backers which in my humble opinion probably helped to drive the purchase price up to the reported $1.05 Billion. Martin Casado, Nick McKeown, Scott Shenker and a host of other talented members of the team will now join the VMware network team that has helped to pioneer virtual switching, VXLAN, and VCloud. VMware anticipates the combined talent pool will allow them to innovate SDDC solutions at an accelerated pace.

You might be asking, isn’t that a lot of money for a company that just came out of stealth and had about a half a dozen reported customers? The answer would be yes, so clearly VMware views Nicira as extremely strategic and complementary to their SDDC initiative. And while network virtualization plays an important role in highly virtualized and cloud environments, keep in mind that there still need to be actual network devices to move all this traffic, so ultimately any SDDC solution will need to tie in or orchestrate with the physical network devices as well.

This move also marks an area of continued (and increased )co-opetition with their partner Cisco. Both organizations have virtual switches and with Cisco’s recently announced Virtual Network Overlays, this will definitely be an area where the companies agree to disagree. However, I doubt it will impact their VCE entity. And besides, Cisco has Insieme – whatever that is, ;-).

The big question is whether this acquisition will now set the tone for company valuations in the SDN market. Other startups in the space like BigSwitch, ConteXtreme, Embrane etc, must certainly be motivated to work a little harder and will be closely watching to see if this triggers a buying spree to scoop up SDN technologies and talent. But for now, I look forward to seeing what the combined VMware networking and Nicira teams will be able to dream up and bring to market to help enable not only Software-Defined Networking, but eventually the Software-Defined Data Center.

Topics: IT Infrastructure Networking Cloud Services & Orchestration