Why is Nicira worth $1.2 billion?

In an exclusive interview with InfoWorld, the CTO of Nicira explains why VMware is paying big bucks for his company and how the acquisition will affect Nicira's key role in OpenStack

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Casado: Open vSwitch provides a virtual switch on each hypervisor. And virtual networking solutions are normally broken up into two pieces: The virtual switching layer that sits in the hypervisor, and the control plane that orchestrates all of them together. Open vSwitch is another project that was created by Nicira, though these days we're not even the majority contributor to it.

It can be used by anybody who wants to build a virtual networking solution. So, for example, Cisco could use it, BigSwitch could use it, Midokura could use it, NTT could use it. It's a piece of a solution but it's not the entire solution. That solution is going to have your control plane, it's going to have the data plane, which is going to be the vSwitching layer. And then of course it's going to have the management abstraction, which will be something like Quantum.

Knorr: What will be the effect of the VMware acquisition on Nicira's participation in OpenStack? VMware and OpenStack don't seem to be natural allies, shall we say.

Casado: This acquisition is actually a statement. Part of this acquisition is a strategic direction to embrace open standards, embrace open source, and go multi-hypervisor. Not only will we continue the level of contribution to these projects, we'll most likely accelerate them in certain areas.

Knorr: You mean this is a statement by VMware?

Casado: That's right. Maybe "statement" is the wrong word, but it's certainly a concrete step in the direction towards multi-hypervisor. And the reason is, if you look at the software-defined data center, you're pulling the zoom level back from a single server to all of the technologies in the data center.

The reality is, if you look at data centers today, you've got all sorts of different technologies in play. You have different hypervisors and different cloud management systems. You could have CloudStack, you could have OpenStack, you can have Xen, you can have KVM, you can have vCloud Director, you can have ESX.

And so for the software-defined data center, VMware is very interested in working in these heterogeneous environments, and this is something Nicira has been doing from day zero. We support multiple hypervisors already. We support Xen and KVM and VMware. We support multiple cloud management stacks, we support CloudStack and OpenStack. This trajectory would be maintained going forward.

Knorr: The Folsom release of OpenStack this fall will be the first release that includes Quantum. It will be interesting to see how this all plays out. The politics are pretty intense, and the fact is your acquisition is now building a bridge between VMware and OpenStack that didn't exist before. That's quite an event in itself.

Casado: That's right, and I think it's going to take awhile for the communities to understand that this is in everybody's best interest. I think OpenStack is a phenomenal project. I'm an enormous supporter. We've put a lot of effort into contributing to it, and we'll continue to do so.

But OpenStack by design is meant to be an open framework by which you can have multiple components -- some open source, some closed source -- but an open framework, so you can have horizontal integration. And that fits very well within our strategy going forward. While it will take a little while for nerves to settle, ultimately I think this is better for everybody to have strong technology available within an open framework.

This article, "Why is Nicira worth 1.2 billion?," originally appeared at InfoWorld.com. Read more of Eric Knorr's Modernizing IT blog. And for the latest business technology news, follow InfoWorld on Twitter.

Copyright © 2012 IDG Communications, Inc.

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