VMware Pays Large Sum To Acquire Nicira

    July 23, 2012
    Chris Crum
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VMware has agreed to acquire software-defined networking (SDN)/network virtualization provider Nicira for $1.05 billion in cash plus about $210 million of assumed unvested equity awards.

“VMware has led the server virtualization revolution, and we have the opportunity to do the same in datacenter and cloud networking,” said VMware CEO Paul Maritz. “The acquisition of Nicira adds to our portfolio of networking assets and positions VMware to be the industry leader in software-defined networking.”

Nicira CEO Steve Mullaney says, “Nicira helps customers dramatically improve business velocity and efficiency by transforming how networking works in the Cloud era. I’m thrilled to be joining forces with VMware to help build the software-defined datacenter.”

VMware CTO Steve Herrod talks about the acquisition on the company’s blog:

Cloud computing is about agile, elastic, efficient, and reliable services, and it can only be achieved through intelligent software that abstracts out hardware resources, pools it into aggregate capacity, enabling automation to safely and efficiently dole it out as needed by applications.

Tenants or customers utilizing the software-defined datacenter can have their own virtual datacenter with an isolated collection of all the compute, storage, networking, and security resources that they are used to. Furthermore, this virtual datacenter can grow and shrink to efficiently utilize physical resources. But most importantly, the time to deploy these resources can be orders of magnitude faster than in most of today’s IT environments. This is what the software-defined datacenter is all about, and it is the architecture for the cloud. This acquisition advances our software-defined datacenter strategy.

The acquisition is expected to close during the second half of the year, and is pending regulatory approvals. It’s already been approved by both boards.

  • kafantaris

    With everybody else falling asleep at the network switch, VMware and Nicira have cornered the virtual server market and thus became indispensable to cloud-based services.
    But up to now these two had at least each other to compete with. This has assured both strong development in virtual controllers and servers as well as fair pricing.
    Now, however, the two are about to become one. With everybody else lagging far behind, they will be able to not only monopolize the virtual server market, but also annihilate the old hardware-based switches from Cisco and company.
    “So what,” you say. “Survival of the fittest.”
    Not so fast.
    With the Cisco hardware obsolescence will come a dependency on virtual controllers and servers. This is not bad in itself since they streamline the setting up and maintenance of networks.
    But it can be bad if the virtual controllers and servers take hold to the exclusion of everything else.
    Aside from the inherent monopoly in this, we will also have a dependency on a networking platform — which though efficient, economical, and ingenious — has nonetheless not been around long enough to warrant a complete reliance on it.
    A go-slow approach, therefore, might be in order and the Justice Department perhaps ought to look at all the ramifications before it gives its blessing to VMware to buy Nicira.
    Besides, the two companies have already worked out the necessary protocol to coexist in networks — without being the same entity.
    Staying that way might be better for all of us for the time being.