Cisco's stake in Parallels ramps up rivalry with VMware

Cisco's investment in virtualization and cloud firm also offers direct response to VMware's networking encroachment

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Back in July, VMware bought network virtualization startup Nicira for $1.26 billion. Nicira, which helped to nurture the field of software-defined networking (SDN), offers a disruptive technology that puts VMware and Cisco on a collision course as companies build their networks in the future. This new technology is aimed at transforming Cisco's core networking industry in much the same way as VMware's server virtualization technology has transformed the x86 server industry.

That acquisition may have been a bit more than Cisco was prepared to swallow. The move was obviously a challenging proposition to Cisco's sweet spot, and it goes against everything the networking vendor has been telling its own customers for years.

This latest investment in Parallels wasn't Cisco's first move in building some separation between itself and VMware. In October 2012, Cisco announced the release of an edition of OpenStack that ultimately competes with VMware's cloud operating system, vCloud. Even more recent, Cisco acquired Cloupia, a cloud management company that gives Cisco yet another piece of the cloud puzzle to compete with VMware head on if and when it so chooses.

Cisco vice president for corporate business development Hilton Romanski said, "In collaboration with Parallels, we are focused on offering a more efficient and easier-to-use cloud services delivery model for service providers. We are particularly excited about Parallels global presence -- including its operations in Russia -- which affords Cisco a continued opportunity to fuel innovation there and around the world."

As VMware expands into Cisco's domain, Cisco will now further expand into VMware's domain with the help of a few select acquisitions and a small investment in Parallels.

A 1 percent stake in Parallels certainly won't break the bank at Cisco, but it is obvious that this small investment can have far-reaching implications in the ongoing complicated relationship between Cisco and VMware.

Expect to hear more about this news one week from today at the Parallels Summit event in Las Vegas, Nev.

This article, "Cisco's stake in Parallels ramps up rivalry with VMware," was originally published at Read more of David Marshall's Virtualization Report blog and follow the latest developments in virtualization at For the latest business technology news, follow on Twitter.

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