Light Reading
The proposed acquisition shows how valuable software-defined networking has become, especially to a company that doesn't have it

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
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.

Flash Poll
LRTV Huawei Video Resource Center
IHS Analyst Discusses eLTE at CCW 2014

9|10|14   |   7:09   |   (0) comments


Thomas Lynch, associate director of critical communications at IHS Technology, talks about broadband in critical communications.
LRTV Huawei Video Resource Center
TCAA on Huawei eLTE: A Broadband Solution for Mission-Critical Communications

9|10|14   |   2:29   |   (0) comments


At CCW2014 in Singapore, the TCCA's Phil Kidner talks about the importance of broadband data for critical communications.
LRTV Custom TV
Spotlight on Cisco: SDN for Optical Networks

9|8|14   |   9:27   |   (0) comments


Cisco's Greg Nehib talks OpenFlow and more on the 'Software-Defined Networking for Optical Networks' panel at the Big Telecom Event in June 2014.
LRTV Custom TV
Cisco's Evolved Programmable Network (EPN)

9|8|14   |   4:05   |   (0) comments


A look at the various demos Cisco showed at Light Reading's Big Telecom Event highlighting Cisco's EPN innovation and how SDN and NFV technologies are enabling a variety of new services.
LRTV Huawei Video Resource Center
The Future of Ultra-Broadband, With Kevin Kelly (UBBF2014)

9|5|14   |   1:13   |   (0) comments


If you think the technological changes we've seen up to now are astounding, just wait until you see what the future has in store. Discuss upcoming breakthroughs with Kevin Kelly, Founding Executive Editor of Wired Magazine, at the Huawei Ultra-Broadband Forum on September 24.
LRTV Huawei Video Resource Center
The Inaugural Optical Innovation Forum in Nice

9|2|14   |     |   (0) comments


More than 170 attendees from network operators, service providers, analyst firms, and component companies from around the world convened in Nice in June for the inaugural Optical Innovation Forum, co-produced by Huawei and Light Reading.
Wagner’s Ring
Data Centers Drive Telcos Into the Future

8|28|14   |   2:20   |   (2) comments


Data centers are at the heart of key trends driving telecom -- network virtualization, the drive for increased agility, and the need to compete with OTT providers.
LRTV Custom TV
Why SPs Should Consider Cisco's EPN

8|27|14   |   5:40   |   (0) comments


Sultan Dawood from Cisco discusses Cisco's EPN, which enables SPs to build agile and programmable networks delivering new network virtualized services using Cisco's Evolved Services Platform (ESP).
LRTV Huawei Video Resource Center
Huawei’s Showcase @ Big Telecom Event 2014

8|26|14   |   2.56   |   (0) comments


SoftCOM is Huawei's framework for telecom business and network transformation. Haofei Liu, Solution Marketing Manager, Carrier Business Group, Huawei, showcases Huawei's SoftCOM architecture in this video.
LRTV Huawei Video Resource Center
Huawei @ BTE 2014: Director of Integrated Solutions on SoftCOM & NFV Monetization

8|26|14   |   4.43   |   (0) comments


Libin Dai, Director of Integrated Solutions, Carrier Business Group, discusses Huawei's SoftCOM and NFV monetization. Huawei believes that NFV monetization should be service-driven rather than network-driven, and that operators should have network transformation, service transformation and a compatible and collaborative ecosystem in place in order to deploy NFV.
LRTV Huawei Video Resource Center
Huawei @ BTE 2014: Director of US NFV Lab on CloudEdge & the Future of NFV

8|26|14   |   4.06   |   (0) comments


Sean Chen, Director of US NFV Lab at Huawei, discusses Huawei's new approach to NFV in open collaboration. Huawei believes that through Proof of Concept tests, it could help operators learn and communicate with the industry more effectively. Sean believes that successful implementation of NFV should have its values reaching to end users and discusses how Huawei's ...
LRTV Huawei Video Resource Center
Huawei's Highlights @ Big Telecom Event 2014

8|26|14   |   3.34   |   (0) comments


At the Big Telecom Event in Chicago Huawei showcases its high-level strategy, the SoftCOM architecture, which helps operators reduce the cost of ownership of their network infrastructure and generate additional revenue in the ICT service environment. Huawei showcases over 30 pilot programs from across the globe, focusing on the industry-leading commercial ...
Upcoming Live Events!!
September 23, 2014, Denver, CO
October 29, 2014, New York City
November 6, 2014, Santa Clara
November 11, 2014, Atlanta, GA
December 2, 2014, New York City
December 3, 2014, New York City
December 9-10, 2014, Reykjavik, Iceland
June 9-10, 2015, Chicago, IL
Infographics
A survey conducted by Vasona Networks suggests that 72% of mobile users expect good performance all the time, and they'll blame the network operator when it's not up to par.
Today's Cartoon
Vacation Special Caption Competition Click Here
Latest Comment
Hot Topics
Introducing 'The New IP'
Stephen Saunders, CEO and founder, Light Reading, 9/11/2014
AT&T to Launch WiFi Calling in 2015
Sarah Reedy, Senior Editor, 9/12/2014
Glimpsing the Self-Driving Car
Dan Jones, Mobile Editor, 9/12/2014
Is Rackspace the Best Next Move for CenturyLink?
Ray Le Maistre, Editor-in-chief, 9/9/2014
T-Mobile Accuses Huawei of Espionage
Sarah Reedy, Senior Editor, 9/9/2014
Like Us on Facebook
Twitter Feed