in M&A, networking, tech

VMware buys Nicira for $1.26 Billion

The big news for today is VMware’s acquisition of Nicira for $1.26 Billion. For those who don’t know, Nicira is a pioneer in Software Defined Networking (SDN) and Openflow. SDN is a technology that allows the virtualization of the network, thus abstracting the network and allowing a company to create multiple virtual networks based on their needs.

This is big news because of two reasons –

1. This opens doors for VMware into the networking world. Traditionally dominated by Cisco, Juniper, Brocade and a few others, the networking industry is now ripe for major disruption. There is a lot of buzz with the Cloud and SDN and now these buzz words are becoming a reality. By buying Nicira, VMware, traditionally a server virtualization company has stepped into the networking world, allowing them to take their expertise of virtualization and apply it to data centers. This way, VMware controls major portions of the data center world, from servers to the networking itself. The acquisition seems befitting too, considering that Nicira is often called the VMware of the networking world.

2. Nicira is not just an Openflow/SDN company concentrating on networking. It is a backbone to another project called OpenStack. OpenStack is a complete data center solution that has components that help a datacenter control the servers that store information, that do large computations and those that provide networking. By acquiring Nicira, VMware has enabled itself to be an end-to-end solution for datacenters and thus expanding their presence in that market.

 

This news comes at a time when the entire tech industry is in a flux, with many companies taking on new roles that are not traditionally theirs. If anything, this proves that the future of the networking industry is big and led by companies you wouldn’t expect to take the lead.

 

Further Reading –

TechCrunch’s news about VMware/Nicira acquisition

Marc Andreessen talks about Nicira on Forbes