VMware announced it intends to purchase networking virtualization software startup Nicira for approximately $1.26 billion, VMware's largest acquisition to date. The purchase price reflects just how serious VMware is about the evolving software-defined networking (SDN) market.
Nicira is a privately held company that launched five years ago and has raised $50 million along the way from venture capital firms Andreessen Horowitz, Lightspeed Venture Partners, and New Enterprise Associates. VMware historians will also remember the name Diane Greene, former CEO and co-founder of VMware, who is herself, an individual investor in the networking virtualization company. Ironically, Greene was ousted from VMware in order to bring in someone new to lead the company into its next growth stage was the one who saw the potential for network virtualization five years earlier.
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Like VMware, Nicira was founded by research leaders from Stanford and University of California at Berkeley. But rather than virtualize the physical server, this new company was formed to transform the cloud by virtualizing the network.
"Five years ago we started Nicira to transform networking," said Martin Casado, co-founder and CTO of Nicira. "It was clear that networking's traditional operational model was not suitable for cloud data centers, so we set out to increase flexibility, reduce operational complexity, and provide full automation through software."
Casado went on to explain, "Just as VMware unbound the control of servers to the hardware infrastructure, at Nicira, we have decoupled network services and control from the networking hardware. The result is a multihypervisor network infrastructure that matches the operational model of server virtualization. Virtual networks can be created and configured dynamically, and they allow any workload to be placed or migrated anywhere."
Nicira played a large role in bringing open networking to the cloud. The company created OpenFlow and helped to pioneer the SDN market. It also started and led the Open vSwitch project, the first open source virtual switch technology, and the company headed the charge behind the Quantum component of OpenStack, ushering in a new type of cloud-based model where the network can be fully virtualized. OpenStack is an open source cloud effort backed by industry leaders such as AT&T, Dell, HP, IBM, NASA, and Rackspace.
Prior to announcing the acquisition of Nicira, VMware was in the process of developing its own virtualized networking technology called VXLAN. The technology is similar to what Nicira offers, but VMware's VXLAN is proprietary and designed to work with VMware's own cloud platform. Having both technologies, VMware can offer virtual networking capabilities in both its own and non-VMware cloud offerings.
VMware said the company plans to continue to support Nicira's open principles and technologies, including the Open vSwitch to connect physical networks and multiple hypervisors and the open extensibility framework to implement business-level policies from any cloud management system. This, according to the virtualization giant, will allow enterprises and service providers to create the most flexible network topologies that seamlessly span any cloud environment.
Nicira is the latest in a series of cloud-related acquisitions made by VMware, the most recent being VMware's intent to purchase DynamicOps, a maker of cloud management software that works with multiple hypervisor technologies.
With both the DynamicOps and Nicira acquisitions, VMware seems to be emphasizing heterogeneous support for the first time. With each move, VMware's cloud strategy appears to be shifting to give customers and partners alike more choice at the hypervisor layer now that demand is growing and competitor technologies are maturing.
This latest acquisition makes it perfectly clear that VMware fully understands a virtualized environment requires technology that makes the network as dynamic and agile as the virtual servers themselves.