Oracle, VMware Deals Show SDN, Virtual Networks Are Key to Cloud

Oracle’s effort to buy Xsigo comes a week after VMware’s $1.26 billion for Nicira. Both illustrate the need for SDNs in cloud computing environments.

Oracle and VMware over the last week have hammered home what many in the industry have been saying for a few years: You can€™t have a real virtualized infrastructure unless the network is included.


Oracle, which is making a rush into the cloud computing space, bolstered its efforts July 30 with the acquisition of Xsigo Systems, one of a number of smaller companies that are aggressively pushing the network virtualization and software-defined network (SDN) trend.

Oracle€™s move came a week after VMware executives announced they were spending $1.26 billion to buy Nicira, another startup that comes with SDN technologies. VMware officials hope to leverage the Nicira products, including its Network Virtualization Platform, to create what they are calling the software-defined data center, replacing traditional hardware-based facilities.

At a time when enterprises are embracing cloud computing€”a computing model with virtualization at its core€”and Web 2.0 companies like Google and Facebook are looking to make their massive, dense data centers very fast and very energy efficient, the need for networks that offer the same advantages as virtualized servers and storage arrays becomes increasingly apparent.

Server and storage virtualization have become commonplace in the data center, but the network has been left behind by the virtualization trend, making it more of a bottleneck in the infrastructure, keeping virtualization from reaching its full potential. With vendors like Nicira, Xsigo and Big Switch Networks, this has begun to change.

€œIn essence, without virtualization, cloud computing is an amorphous pipe dream,€ Charles King, principal analyst at Pund-IT Research, wrote in a report following VMware€™s announcement of its bid for Nicira. €œBut virtualization alone or of just one type isn€˜t enough to make a truly agile, elastic, efficient and reliable cloud. Instead, vendors need to supply, and businesses need to adopt, virtualization solutions which extend across and allow the abstraction, aggregation and pooling of all infrastructure resources, and automate their provisioning and management.€

"The acquisition [of Xsigo by Oracle] is a testament to the momentum behind software-defined networking and network virtualization technology and a sense of urgency among large IT vendors to position themselves following VMware Inc's acquisition of Nicira," ISI Group analyst Brian Marshall said, according to Reuters.

SDN has become the key trend in the networking space. Descriptions can vary to some degree, but essentially, SDNs decouple the workloads from the physical network, moving intelligence in the network€”such as directing traffic to minimizing latency to security€”from switches and routers to a software-based controller. SDNs reduce the need for expensive, complex switches and routers, and instead let enterprises buy simpler and less expensive networking equipment. In addition, networks become more dynamic and easier to manage.

For major vendors looking to become larger players in the cloud space€”like Oracle and VMware€”SDNs become a key part of the equation. For vendors like Cisco Systems and Juniper Networks, which bring in a lot of money through the sale of expensive, full-featured switches and routers, the trick is to develop software-based networking solutions while protecting their legacy businesses. Cisco, Juniper and others, such as Extreme Networks, have embraced OpenFlow, the protocol that is a cornerstone of SDNs. Meanwhile, Cisco also is pushing out its Cisco Open Network Environment and is funding a startup, called Insieme, to build software-defined networking solutions. If successful, Cisco will buy Insieme.

Oracle and VMware, with Xsigo and Nicira in hand, will add their names to a growing list of competitors facing Cisco, which already has been challenged by the likes of Hewlett-Packard and Juniper in traditional networking gear. Other acquisitions, like Dell€™s of Force10 Networks and IBM€™s of Blade Networks, also have opened up the competition in networking.

VMware€™s bid for Nicira is particularly tough for Cisco. The two vendors€”along with VMware majority owner EMC€”have collaborated on data center infrastructure solutions for several years, including the creation in 2009 of the Virtual Computing Environment company and converged offerings called Vblocks. In addition, Cisco has a 1.5 percent stake in VMware.

But VMware executives, like those at Oracle, understood that to offer a complete virtual infrastructure solution, they would need networking technology.

€œVMware€™s acquisition of Nicira shined a light on the cloud€™s dirty little secret: The cloud doesn€™t exist without the network,€ Forrester analyst Andre Kindness wrote in a July 27 blog post. €œVMware got network religion, and it€™s not alone; many other recent acquisitions have also shown how critical the network is to the future of infrastructure.€

Both VMware and Oracle already had network virtualization efforts underway, but by buying Nicira and Xsigo, they are able to inherit not only those vendors€™ technologies, but also their customer bases. Nicira has a host of big-name customers, including eBay, Rackspace Hosting and AT&T. Xsigo reportedly will bring some 300 customers€”including EMC, Salesforce, eBay, Avaya, McAfee and VMware€”to Oracle, which first began talking about network virtualization in 2006, with Project Crossbow.

Xsigo will become a key part of Oracle€™s efforts in cloud computing, according to John Fowler, executive vice president of systems at Oracle.

"The proliferation of virtualized servers in the last few years has made the virtualization of the supporting network connections essential," Fowler said in a statement. €œWith Xsigo, customers can reduce the complexity and simplify management of their clouds by delivering compute, storage and network resources that can be dynamically reallocated on-demand."