VMWare-Nicira Buy Spotlights Software-Defined Networking

On Monday, VMWare made a bold statement about the future of data center automation, purchasing software-defined networking startup Nicira for just under $1.3 billion in cash and stock.

Like VMWare, Nicira believes that the future of the data center lies in virtualized hardware, specifically the ability to decouple network services and control from the underlying networking switch. In effect, this means that VMWare’s relationship with traditional hardware providers such as Cisco may fray somewhat, as Nicira’s technology turns Cisco hardware into more of a commodity with Nicira’s OpenFlow networking protocol.

Basically, VMWare executives characterized the acquisition as complementary to the company’s vision of a software-defined data center, where pools of hardware resources—compute, storage, and networking—can be abstracted, pooled, and provisioned. While adding a new virtual machine may take just minutes, VMWare executives have argued that associating network services can take far longer.

What does this mean for those in the data center business? As outgoing VMWare chief executive Paul Maritz told Wall Street analysts yesterday afternoon:

“As you’ve heard us say before, we believe at the end of the day, we are in the data center automation business. And to be in the data center automation business, one has to be able to speak to the automation of all the key functions in the data center. So having the ability to play in the software-defined networking space, we see as very important when you combine it with our traditional strength, in server virtualization and in management and in other areas such as securities which we’re addressing through our vShield products. So we believe that success in the long run there comes through the coordination of all of the factors that play in the data center, and as such, this is a very important step in that direction.”

Maritz also addressed the timeframe for SDN adoption. Nicira has managed to convince a handful of customers to sign on, and those include some big names: AT&T, eBay, and RackSpace, among others.

“We see it going into large scale service providers who have an immediate need for it and we see it starting to go into forward-thinking corporate customers,” Maritz said. “And whether that’s going to be a 2-year cycle or a 3-year cycle, I can’t say to you today but the one thing I can say with absolute certainty that this is the tide coming in.”

Maritz and other VMWare executives maintained, in several interviews, that they see the Nicira technology as a participant in a heterogeneous environment. But has VMWare thrown itself into a war with physical switch vendors like Cisco?

An InformationWeek analysis notes that both Cisco and VMWare have an existing partnership around the VMware hypervisor’s vSwitch, the Virtual Distributed Switch, and Cisco’s Unified Computing System hardware. The two have also formed a subsidiary, Virtual Computing Environment.

“I can imagine skepticism as to whether we will continue this substantial embrace of non-VMware hypervisors and clouds,” Steve Herrod, VMware’s chief technical officer, wrote in a blog posting. “Let me be clear… we are absolutely committed to maintaining Nicira’s openness and bringing additional value and choices to the OpenStack, CloudStack, and other cloud-related communities.”

Herrod also noted that the deal “builds upon the openness delivered by our other recent acquisition of DynamicOps, a leader in cloud automation solutions for heterogeneous environments” as well as “our experience with the SpringSource community as well as our stewardship of the CloudFoundry Open Platform as a Service Project.”

However, Cisco is also rumored to be developing its own software-defined networking play, reportedly called Inseimi, but with just a handful of employees. If true, one would think Cisco would fast-track that effort.

Since the Nicira-VMWare deal is scheduled to close in the second half of the year, the market will have some time to digest the implications. It also makes VMWare’s September VMWorld conference potentially that much more interesting, assuming that the acquisition has closed, and that the two sides can talk even more freely about the future.


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