VMware, Nicira and the Data Center

VMware's acquisition of Nicira is jostling some relationships between tech heavyweights, and its impact will be closely watched by leading players in open source projects for cloud computing and networking. Here's a look at some of the notable analysis and commentary from around the web.

Rich Miller

July 24, 2012

3 Min Read
VMware, Nicira and the Data Center
Some of the racks space inside the Purdue Universioty data center in West Lafayetter, Illinois. Purdue staff have developed a program to put server clusters into power-saving mode during cooling failures.


VMware said yesterday that it will acquire open networking company Nicira for $1.26 billion in a move that furthers VMware's vision for a "software-defined data center." The deal focused attention on the emerging importance of networking in virtualized data centers and cloud computing. The deal is also jostling some relationships between tech heavyweights, and its impact will be closely watched by leading players in open source projects for cloud computing and networking. Here's a look at some of the notable analysis and commentary from around the web:

Wired Enterprise - This analysis looks at the big picture. "As the world moves to the sort of massive cloud services offered by the likes of Google and Amazon, virtual networks — which make it far easier to build such services — become increasingly more important. For months now, VMware has been pushing the idea of the “software-defined data center,” where storage and networking are virtualized as well as servers, and now, this push makes all the more sense. “This is clearly the architecture for the cloud, and from our perspective, it’s a multibillion-dollar opportunity — networking being central to all of it,” VMware chief technology officer Steve Herrod tells Wired.

NYTimes Bits Blog - What impact will the deal have on the often cosy relationship between Cisco and VMware (and its parent EMC?). "While (VMware CTO Steve) Herrod was quick to say that VMWare would continue its strong relationship with Cisco Systems, there are reasons to think the networking giant is less thrilled with this deal. While, as  Herrod said, 'you’re still going to need hardware,' network virtualization means you need less of it for whatever applications you are planning to employ in a data center. It almost certainly hits the profit margins in networking gear from Cisco, Juniper, Hewlett-Packard and others, too, since these machines become somewhat undifferentiated."

GigaOm - Derrick Harris looks at the new competitive landscape. "VMware sees the writing on the wall, it knows acting like a dictator won’t work in an IT society that craves democracy. Half of the story around VMware’s rumored cloud computing spin-out focused on the need for the company to focus on its core virtualization business in order to fend off advances from the likes of Microsoft, Citrix, OpenStack and others. Most experts agree that embracing those competitors is VMware’s best chance to blunt their attacks."

TechCrunch - What does the deal mean for the open source cloud and networking projects? "Krishnan Subramanian of Rishidot Research said Cloudstack, Eucalyptus and OpenStack will serve as the foundation for federated ecosystems. Nicira fits right into that play with its software defined networking. In the future, clouds will be defined by big data and services environments, Subramanian said. VMware recognizes that shift as a long term strategy. 'You will need to program the network to fit your needs,' he said."

The Register - El Reg considers the valuation of Nicira, which reflects the strategic nature of the deal. "Nicira, which has been operating in pseudo-stealth mode, is the largest acquisition that VMware has ever taken down, and will very likely have the highest premium that VMware will ever pay for any company it will ever buy. The price is especially high considering that Nicira only has a couple dozen customers, according to Alan Cohen, vice president of marketing, who coincidentally talked with El Reg about software defined networks prior to the VMware acquisition."

Ben's Blog - Ben Horowitz, an investor in Nicira, is understandably thrilled with the deal: "Since Nicira only recently shipped its first production ready systems, this acquisition may stun observers. However, those who fully understand the depth of Nicira’s technology and the implications of the combination of Nicira and VMware will recognize the brilliance of VMware’s move. In one bold step, VMware moves from a footnote in the networking market to the clear technology leader in Software Defined Networking and more specifically—and importantly—Cloud Networking. By combining Nicira’s technology with VMware’s market-leading server virtualization and cloud products, VMware today creates a clear path to becoming the most important infrastructure company across servers, networks and storage for the next 10 years."

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