& cplSiteName &

VMware to Buy SDN Startup for More Than $1B

Craig Matsumoto
News Analysis
Craig Matsumoto
7/23/2012
50%
50%

VMware Inc. (NYSE: VMW) announced Monday that it's acquiring Nicira Networks Inc. , the prominant software-defined networking (SDN) startup, for $1.05 billion in cash.

The deal is actually worth a little more, as VMware is adding $210 million worth of unvested equity awards, according to the company's press release.

Nicira, for those not familiar with the name, is one of the startups that sprang from the OpenFlow work initially done at Stanford University . The company only launched in February.

The deal is expected to close in the second half of 2012.

Why this matters
If there was any doubt that SDN has reached fever pitch, this should dispel it. The biggest name in server virtualization is buying one of the hot startups that's most closely tied to SDN.

SDN is usually discussed as a way of virtualizing the network -- an extension of the work VMware already does. The acquisition could solidify an early leadership position for VMware in network virtualization.

But it could also be seen as a sign that VMware had quickly fallen behind as the SDN craze took hold. Only last week, VMware changed CEOs in order to better pursue the idea of the virtualized data cetner. It's clear now that the company is working hard to redefine itself for the next wave of virtualization.

For more



— Craig Matsumoto, Managing Editor, Light Reading

(8)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View        ADD A COMMENT
Pete Baldwin
50%
50%
Pete Baldwin,
User Rank: Light Beer
12/5/2012 | 5:26:56 PM
re: VMware to Buy SDN Startup for More Than $1B


What's this mean for Cisco's relationship with VMware/EMC?  Brad Casemore brought that up on Twitter: "the EMC-Cisco divorce could be imminent."

Sisyphus
50%
50%
Sisyphus,
User Rank: Light Beer
12/5/2012 | 5:26:56 PM
re: VMware to Buy SDN Startup for More Than $1B
..as usual everybody will still pretend to be friends and emphasize the synergistic nature etc... But Cisco has to replace the vSwitch pretty quickly.
Pete Baldwin
50%
50%
Pete Baldwin,
User Rank: Light Beer
12/5/2012 | 5:26:55 PM
re: VMware to Buy SDN Startup for More Than $1B


> ..as usual everybody will still pretend to be friends and emphasize the synergistic nature etc... But Cisco has to replace the vSwitch pretty quickly.


I'm doing a followup story along those lines. I'd tend to agree with you, although I've found at least one non-VMware person who disagrees. 

Pete Baldwin
50%
50%
Pete Baldwin,
User Rank: Light Beer
12/5/2012 | 5:26:51 PM
re: VMware to Buy SDN Startup for More Than $1B


NY Times says Nicira's price was 25x what investors put into it.


http://bits.blogs.nytimes.com/...


(hat tip: @BradCasemore on Twitter)

BigBro
50%
50%
BigBro,
User Rank: Moderator
12/5/2012 | 5:26:48 PM
re: VMware to Buy SDN Startup for More Than $1B


As I posted in another discussion thread: what's the next move?


Will EMC, which is already a hardware vendor, expand to become a networking hardware vendor? If they chose to buy, it would seem their choices are pretty much limited to Arista and Brocade at this point.

patentchoi
50%
50%
patentchoi,
User Rank: Light Beer
12/5/2012 | 5:26:22 PM
re: VMware to Buy SDN Startup for More Than $1B


Nicira is threatening the margins of physical switch vendors by removing the dependency on their high-margin features/line-cards.


But it would be a massive effort for the VMW sales folks to capitalize on this opportunity. They are only in the data center and enterprise with almost no presence in service provider.


There is a long battle ahead and VMW has $1B less in its limited war-chest.

Pete Baldwin
50%
50%
Pete Baldwin,
User Rank: Light Beer
12/5/2012 | 5:26:22 PM
re: VMware to Buy SDN Startup for More Than $1B


That's true, Nooser, but it's the data center that VMware is mainly interested in.  It's going to be a while before SDN starts to make major changes in the service provider area.

patentchoi
50%
50%
patentchoi,
User Rank: Light Beer
12/5/2012 | 5:26:20 PM
re: VMware to Buy SDN Startup for More Than $1B


Even in the DC it is going to be tough. Providers such as Google and Amazon most likely would not use a Nicira product. In enterprises, closed solutions such as UCS (with ONE), Q-fab etc will make it hard to justify network-virtualization exclusively at the server-virtualization layer. The primary assumption of the Nicira solution is a dirt-cheap IP fabric and it is doubtful if such solutions exist.

From The Founder
Download our complete guide to de-risking NFV deployment in 2016, including:
  • An eight-step strategy to deploying NFV safely, based on input from the companies that have already started virtualizing their production networks.
  • Interviews with leading executives at Colt, AT&T, Deutsche Telekom, Cisco, Nokia, ZTE, Ericsson and Heavy Reading.
  • Flash Poll
    Live Streaming Video
    Prepping for the Future: Upskill U Explained
    During this short kick-off video, Doug Webster, Vice President of Service Provider Marketing, Cisco, and Light Reading’s CEO & Founder Steve Saunders give an overview of Upskill U.
    Telecom Innovators Video Showcase
    Atrinet's NetACE – Migration to NFV & SDN With NetOps-Driven LSO

    5|4|16   |     |   (0) comments


    At Atrinet's headquarters, Ray Le Maistre sits down with Roy Silon to get an in-depth look into the company's focus and the secret recipe for their success.
    LRTV Huawei Video Resource Center
    Amsterdam ArenA, Powered by Huawei

    5|4|16   |     |   (0) comments


    Huawei's ICT solutions power the state-of-the-art Amsterdam ArenA, turning it into a smart stadium.
    LRTV Interviews
    Testing When There's No 'There' There

    5|4|16   |     |   (0) comments


    The benefits of SDN/NFV are well known, but the transition comes with some challenges, prominent among them is: how do you test a network that has been abstracted and has the potential to be endlessly reconfigurable? Light Reading was at NFV World Congress in Santa Clara, Calif., where we bumped into Mats Nordlund, CEO and co-founder of Netrounds, a Swedish ...
    LRTV Interviews
    Ditching the Slash & the Orchestration Wars

    5|3|16   |     |   (2) comments


    SDN and NFV have been inextricably bound with each other for so long that on a conceptual level, smooshing them together into one catch-all phrase – SDNFV – is now justifiable, according to Dan Pitt, executive director of the Open Networking Foundation (ONF). Light Reading spoke to Pitt at the NFV World Congress, where he explained that the next ...
    LRTV Custom TV
    ZTE TV Connect Highlights

    5|3|16   |     |   (0) comments


    ZTE gives us a tour of its booth and new products at TV Connect in London.
    LRTV Custom TV
    Deluxe's Unified Delivery Solution

    5|3|16   |     |   (0) comments


    Join Alan Breznick of Light Reading and visit the Deluxe booth at NAB! Here you'll find Deluxe's Unified Delivery Solution, OTT video, virtual reality, HDR, 4K and much more!
    LRTV Interviews
    Verizon Puts Gray Boxes in the Shade

    5|2|16   |   04:33   |   (1) comment


    When it comes to the white box trend, "gray" boxes, which have a slight proprietary twist, don't give service providers and end users the advantages they're seeking, according to Verizon's Vice President of Product and New Business Innovation Shawn Hakl.
    LRTV Custom TV
    Dealing With a Disrupted Video Market

    5|2|16   |     |   (0) comments


    Ericsson's Simon Frost discusses how traditional pay-TV providers can cope with the big changes wrought by the rise of OTT video and IP technology.
    LRTV Custom TV
    The VNF Responsibility of Red Hat

    5|2|16   |     |   (0) comments


    At MWC, Caroline Chappell of Heavy Reading visits the Red Hat booth and sits down with Chris Wright to talk about the responsibility the VNF needs to take on in order to ensure the operators get the carrier-grade performance they expect for their network.
    LRTV Interviews
    AT&T Expert on the Key Pillars of UC

    4|29|16   |   03:58   |   (0) comments


    Vishy Gopalakrishnan, AVP of product marketing at AT&T, talks about the three developments that are making unified communications and collaboration secure and reliable for enterprise users.
    LRTV Documentaries
    LRTV Report: Mobile Core Innovation

    4|28|16   |   25:32   |   (0) comments


    Hear from multiple industry experts from Deutsche Telekom, SK Telecom, Heavy Reading, Huawei, Cisco, Ericsson, Nokia, NEC and many more about developments in the mobile core as operators virtualize their IMS and evolved packet core systems and prepare for a 5G world.
    LRTV Huawei Video Resource Center
    NFV World Congress Highlight

    4|26|16   |     |   (0) comments


    The highlight of the NFV World Congress contains exciting telecom news. Join us for an inside look at Huawei's ICT 2020 plan and its latest collaboration with industry leaders.
    Upcoming Live Events
    May 23, 2016, Austin, TX
    May 23, 2016, Austin Convention Center
    May 24-25, 2016, Austin Convention Center, Austin, TX
    September 13-14, 2016, The Curtis Hotel, Denver, CO
    December 6-8, 2016,
    June 16-18, 2017, Austin Convention Center, Austin, TX
    All Upcoming Live Events
    Infographics
    A new survey conducted by Heavy Reading and TM Forum shows that CSPs around the world see the move to digital operations as a necessary part of their overall virtualization strategies.
    Hot Topics
    Ultra-Broadband Summit, Hong Kong
    Iain Morris, News Editor, 4/27/2016
    Amazon AWS Reports $2.6B Quarterly Revenue, Up a Colossal 64%
    Mitch Wagner, West Coast Bureau Chief, Light Reading, 4/28/2016
    WiCipedia: Woman Cards & Bitch Switches
    Sarah Thomas, Director, Women in Comms, 4/29/2016
    Sprint CEO: Our Spectrum Is for 5G
    Dan Jones, Mobile Editor, 5/3/2016
    Amazon & Other 'Big 4' Cloud Providers Crushing Competitors
    Mitch Wagner, West Coast Bureau Chief, Light Reading, 4/29/2016
    Like Us on Facebook
    Twitter Feed
    BETWEEN THE CEOs - Executive Interviews
    In this latest installment of the CEO Chat series, Craig Labovitz, co-founder and CEO of Deepfield, sits down with Light Reading's Steve Saunders in Light Reading's New York City office to discuss how Deepfield fits in with the big data trend and more.
    Grant van Rooyen, president and CEO of Cologix, sits down with Steve Saunders, founder and CEO of Light Reading, in the vendor's New Jersey facility to offer an inside look at the company's success story and discuss the importance of security in the telecom industry.
    Animals with Phones
    Sloth Mail Click Here
    Sloth mail -- somehow even slower than snail mail.
    Live Digital Audio

    Of all the tech companies in the Valley, Intel has made the most aggressive commitment to building a diverse and inclusive workplace culture. It's doing so by taking concrete, measurable steps, making a large financial investment and through a commitment to complete transparency about its progress. In this radio show, WiC Director Sarah Thomas will be joined by Shlomit Weiss, Intel's Vice President, Data Center Group, and General Manager of Networking Engineering, who will share with us why Intel is tackling this huge challenge, how and to what effect. She will also discuss her unique experiences leading development of Client SOC development in the past and today leading development of all of the chipmaker's silicon hardware for networking IPs and discrete devices and managing a team of 600 engineers across Israel, Europe and the US.