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VMware Buys Nicira For $1.26 billion, Will Transform The Future of Networking

The networking equipment maker Cisco has announced new plans to lay off about 2% of its global workforce, counting 1,300 positions. On the same day, the server virtualization leader VMware has announced a $1.26 billion deal to buy network virtualization company Nicira. These two events may seem to be coincidental. But, they also tell one thing about the future of networking. It’s going to be virtual. Whoever doesn’t adapt to the trend will be outdated.


VMware Marks

On a press release, yesterday, VMware has confirmed that the company will acquire virtual networking leader Nicira for “approximately $1.05 billion in cash plus approximately $210 million of assumed unvested equity awards.” Though the acquisition is subject to regulatory approval, both the parties hope to complete the process by second half of 2012.

The acquisition is expected to make VMware the undisputed leader in both server vitualization and network virtualization. NIcira, started in 2007, has already bagged telecom and data center giants like AT&T, NTT, ebay, DreamHost, Rackspace and more. “The acquisition of Nicira adds to our portfolio of networking assets and positions VMware to be the industry leader in software-defined networking,” said Paul Maritz, chief executive officer, VMware.

The conventional network equipments are limited by their hardware. Vitual networking or Software Defined Networking (SDN) tries to eliminate the issue by separating the control plane from the data forwarding plane. SDN implements the control plane in separate devices (for example a server) than the conventional networking devices like switches or routers. The firmware implemented on a server lets network administrators create and maintain complex virtual networks which exists only in the software. The networking hardware only forwards and receives packets.

Nicira and VMware both have their own versions of SDN controllers– STT and VXLAN, respectively. But the technologies are quite different.

VMware plans to back both STT and VXLAN protocols side by side, when the teams merge. VMware also plans to continue support for “open principles and technologies” behind Nicira’s solutions. VMware plans to integrate Nicira’s network virtualization technologies in its “software-defined datacenter” concept. “I’m thrilled to be joining forces with VMware to help build the software-defined datacenter”, said Steve Mullaney, chief executive officer, Nicira. He also added, “Nicira helps customers dramatically improve business velocity and efficiency by transforming how networking works in the Cloud era,”

Source: Wired, VMware

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