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VMware Insists It's Not Warring With Cisco

Craig Matsumoto
News Analysis
Craig Matsumoto
7/23/2012
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The pending $1.26 billion acquisition of Nicira Networks Inc. would seem to pit VMware Inc. (NYSE: VMW) at odds with partner Cisco Systems Inc. (Nasdaq: CSCO)

Predictably, VMware officials say it's not so. But others find it hard to describe the situation without using the word "war."

"This is the first shot in the VMware vs. Cisco war," says Guido Appenzeller, CEO of Big Switch Networks , which, like Nicira, is an SDN-related, Stanford-bred startup that everyone's been talking about. "They used to be best friends, and that changed today."

"VMware has basically declared themselves a networking player, and the corollary to that is they have declared war on the networking industry," says Dante Malagrinò, CEO of SDN startup Embrane Inc.

A few analysts asked about this during VMware's earnings call Monday afternoon, but officials stayed polite. "We look forward to continuing to work closely with Cisco and our other ecosystem partners," outgoing CEO Paul Maritz said.

There's an argument to be had that VMware and Cisco could stay buddies for a while. It's similar to the Dell Technologies (Nasdaq: DELL) acquisition of Force10 Networks Inc. -- a move that got Dell into networking but didn't sever the company's partnership with Cisco, says Elizabeth Hedstrom Henlin, an analyst with Technology Business Research Inc. (TBR) .

"We're in a converging market on multiple fronts in multiple systems, so I don't see this as particularly combative. I see this as opportunistic," she says.

Nicira would give VMware an SDN story, and Nicira's open-source contributions could ingratiate VMware a little more with the open-source community. The acquisition would also stretch VMware's influence from the desktop all the way into the network. "That's a very credible end-to-end stack," Henlin says.

Nicira's software decouples virtual machines from network IP addresses. It's a step toward network virtualization, in which switching and routing resources become pools that any client in the network can tap.

VMware made its name doing the same thing for server capacity, and in fact, VMware sees a parallel between its early virtualization efforts and today's SDN development. History looks like it's repeating itself, which is one reason why acquiring Nicira became important even though the startup has practically no sales, Maritz told investors.

It doesn't bother VMware that Nicira will have no substantial revenues this year, or that the industry hasn't been screaming out with an SDN mandate. "It's the same thing with virtualization. Customers didn't ask us for virtualization 12 years ago," Maritz said.

Transforming the data center with SDN is central to VMware's new goals, and it looks like it's going to be a long process. Nicira -- and VMware's other recent acquisitions, such as DynamicOps and Wanova, two companies providing cloud-provisioning tools -- are being made "to strengthen our technology portfolio and prepare for the future," not for immediate revenues, Maritz said.

As part of that process, VMware announced last week that Maritz would step aside for Pat Gelsinger to become CEO.

For more



— Craig Matsumoto, Managing Editor, Light Reading

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Pete Baldwin
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Pete Baldwin,
User Rank: Light Beer
12/5/2012 | 5:26:52 PM
re: VMware Insists It's Not Warring With Cisco


Looking at the Dell example, and the strained Cisco/HP relationship... all these companies are going to end up competing with each other, especially in the data center. They can be friends for a while, but it seems like the pressure is going to increase over time.


VMware still doesn't have a switching component of its own, but someone on the earnings call asked about the possibility of VMware doing its own white-box kind of switch.  VMware said they're not interested, and I don't blame them. But if they got really ambitious (and really didn't mind pissing off Cisco), there are a couple of candidates that could be had.


That's looking way ahead, though. I can believe VMware and Cisco will play nice for now, and as Henlin mentioned to me, Cisco seems to be putting more into VCE (having put up Praveen as CEO for the partnership, e.g.). 

Soupafly
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Soupafly,
User Rank: Light Sabre
12/5/2012 | 5:26:50 PM
re: VMware Insists It's Not Warring With Cisco


Yes Craig and you have only mentioned the obvious Hardware guys.


You could also include;

<ul>
<li>Huawei</li>
<li>IBM</li>
<li>ZTE</li>
</ul>

....and what about the software players? Think;

<ol>
<li>Microsoft</li>
<li>Google</li>
<li>Amazon</li>
<li>Apple</li>
</ol>

As the network converges and becomes a utility, the competive distinction will blur further and they will all have to compete for the same consumer &amp; enterprise purse, albeit with different niche requirements &amp; demographic needs.

BigBro
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BigBro,
User Rank: Lightning
12/5/2012 | 5:26:49 PM
re: VMware Insists It's Not Warring With Cisco


So what happens next?


Will EMC (which owns 80% of VMware) buy a networking hardware company? Or partner with all the whitebox hardware vendors and/or the "ABCs" ("Anything But Cisco")?


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tmmarvel
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tmmarvel,
User Rank: Light Beer
12/5/2012 | 5:26:48 PM
re: VMware Insists It's Not Warring With Cisco


In 2000, the runtime performance demands of most business software application were not pushing the limits of performance achievable with sequential execution. A single standard CPU could host dozen(s) of VMs. The processor clock rates stopped increasing in ~2005, but the application performance requirements have kept increasing. Now VM software supports (technically) multiple CPU cores under the same VM, but the VM abstraction does not help in parallelizing the application execution over multiple cores. Other than for embarrassingly parallel programs, it often is very hard to get performance gain by adding more than just a handful or so parallel cores. But when one does need to keep up with the realtime performance requirements, eg the ever increasing analytics event rates, data volumes and complexity, doing increasingly finer grade parallel processing becomes necessary -- often requiring to remove any intermediate software abstraction layers such as VMs. How is VMware addressing this emerging customer need?

In networking, an increasing number of applications with demands for deterministic (and high-end) latency, jitter, throughput, reliability and/or security guarantees, need connectivity below the packet-layer shared L2/3. Does the SDN virtualization go down to L1/0, without being constrained by the (conventionally very strict) functional limitations of the 'white box' hardware being programmed? Sure, one can virtualize shared L2/3 networks, but multi-client shared L2/3 switches unavoidably cause non-deterministic latencies and bandwidth availabilities, as everything affects everything in these network architectures. Going forward, an increasing portion of high-revenue network applications cannot tolerate the uncertainties of multi-client shared L2/3 switched/routed networks.

Non-vendor specific abstractions, such as VMs are essential for productivity, flexibility and manageability. At the same time, there is a need to provide improved, and deterministic performance. Software abstractions work against this objective. Moreover, "software defined networks" are in reality still hardware limited networks. Can't program in software 'white box' hardware equipment to do what they don't support. For high-performance and high-efficiency networking, as well as computing, we do need innovative capabilities beneath the traditional software layers. Instead of additional layers of abstraction/virtualization software over generic 'dumb' hardware, the new hardware needs to provide a higher level of programming interface to software, to provide improved per performance and efficiency.

Yes, the functionalities need to be definable in software from the management systems without vendor-specific idiosyncrasies. But the key necessary new functionalities and capabilities need to be actually enabled by new hardware, so that they exist in the first place and can then be configured in software, in an open standard manner, by the system operator and/or service users.

VM software abstractions have worked fine in the past. The application performance requirements mostly have not exceed the limit underlying hardware capabilities in the past, but they will increasingly going forward. Of course one should pursue the productivity, flexibility and manageability benefits by the easiest way available that still meets the performance requirement. Software abstractions such as VMs have fit this purpose fine, until recently for the more latency critical applications -- and this trend will continue among greater and greater number of business applications. Virtualizing networks using the same decade+ year old software abstraction models without architectural innovations all the way down to hardware is ignoring the fact that application performance requirements will be increasingly exceeding the capabilities of present gear of hardware (in computing, limited by the design for sequential execution, and in networking limited by data load adaptive bandwidth allocation stopping at L2, causing hugely inefficient, though expensive, high nominal bandwidth capacity, physical layers).



joanengebretson
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joanengebretson,
User Rank: Light Beer
12/5/2012 | 5:26:46 PM
re: VMware Insists It's Not Warring With Cisco


The analogy between what VMware does with computer hardware and what SDN aims to do with router hardware is an interesting one.


By virtualizing computer resources VMware has fueled the growth of the cloud market. But I'm hearing more and more that the network hasn't kept up and people increasingly are questioning what value there is in being able to add computing resources on the fly if they can't do the same with the connection to the data center.


Seems like this acquisition is VMware's attempt to address that.


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