What VMware's Nicira Buy Signals to Enterprise IT

By Chris Preimesberger  |  Posted 2012-07-24 Print this article Print

NEWS ANALYSIS: Why, you ask, is a little, virtually (no pun intended) unknown 5-year-old startup named Nicira such a key figure in this changeover? Because it is dedicated to software-defined networking, and does it very well. It also bails out VMware from spinning its networking development wheels.

VMware is the server virtualization software king of the world and has been for several years. Could this young company--still a teenager, by the way, at 14--now be on its way to becoming the external network virtualization king as well?

Think about it. With a single strategic move, one company now has the potential to control the virtualization markets in two of the three key elements of enterprise computing: compute and networking. Only storage virtualization remains out of VMware's market control at this point, and that may not be all that far away; VMware's already deeply connected in that area, too.

Some day in the near future we may look back on the July 23 acquisition of Nicira for a staggering $1.26 billion as one of the defining moments in this virtualization revolution.

Nicira Also May Rescue VMware

Why, you ask, is a little, virtually (no pun intended) unknown 5-year-old startup with little cash flow named Nicira such a key figure in this changeover? Because it is dedicated to software-defined networking, does it very well, and has earned trust and investment from the IT community in a short period of time.

There's another reason--a very important one at that--VMware spent all that cash in this deal: It missed the boat the first time it began developing software-defined networking, at least according to one knowledgable industry veteran.

"VMware missed the boat on network virtualization, so they bought a startup despite the large price tag," Delphix founder and CEO Jed Yueh told eWEEK. "It's the classic story. Large, established vendors fumble their may into new markets. Even though VMware invested a great deal in developing network virtualization, they still failed to produce the architecture and features required for the market.

"That's the reason why they acquired Nicira for such a large dollar amount."

So, in view of slowing license revenue and new products that are taking more time than expected to drive significant revenue share, VMware was forced to make a move, Yueh said.

Yueh, who started data deduplication provider Avamar in his late 20s and sold it to EMC in 2006 for $165 million, knows about virtualization. He started Delphix in 2008, developing a tool for database admins like no other in the market. Delphix's product can virtualize several copies of a live Oracle database, enabling admins to patch, update or fix problems in the DB--and return them to the live instance--without affecting production. That's gold to an IT department.

Chris Preimesberger Chris Preimesberger was named Editor-in-Chief of Features & Analysis at eWEEK in November 2011. Previously he served eWEEK as Senior Writer, covering a range of IT sectors that include data center systems, cloud computing, storage, virtualization, green IT, e-discovery and IT governance. His blog, Storage Station, is considered a go-to information source. Chris won a national Folio Award for magazine writing in November 2011 for a cover story on Salesforce.com and CEO-founder Marc Benioff, and he has served as a judge for the SIIA Codie Awards since 2005. In previous IT journalism, Chris was a founding editor of both IT Manager's Journal and DevX.com and was managing editor of Software Development magazine. His diverse resume also includes: sportswriter for the Los Angeles Daily News, covering NCAA and NBA basketball, television critic for the Palo Alto Times Tribune, and Sports Information Director at Stanford University. He has served as a correspondent for The Associated Press, covering Stanford and NCAA tournament basketball, since 1983. He has covered a number of major events, including the 1984 Democratic National Convention, a Presidential press conference at the White House in 1993, the Emmy Awards (three times), two Rose Bowls, the Fiesta Bowl, several NCAA men's and women's basketball tournaments, a Formula One Grand Prix auto race, a heavyweight boxing championship bout (Ali vs. Spinks, 1978), and the 1985 Super Bowl. A 1975 graduate of Pepperdine University in Malibu, Calif., Chris has won more than a dozen regional and national awards for his work. He and his wife, Rebecca, have four children and reside in Redwood City, Calif.Follow on Twitter: editingwhiz

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