VMWare Acquires Nicira, Network Virtualization Specialist for $1.26 billion

By | Aug 7, 2012

Virtualization juggernaut VMWare made moves to extend its reach and capabilities by acquiring a venture-backed network virtualization company. Palo Alto-based Nicira is young--founded only five years ago--but has made significant impacts and inroads with large clients including AT&T, eBay, and Fidelity Investments. The company's Network Virtualization Platform (NVP) creates virtual networks at Layer 2 and 3 of the OSI model that operate independently of the physical network.

Along with VMWare's recent acquisition of DynamicOps, vSwitch can connect NVP controllers and Open vSwitch, allowing users to create, move, and control virtual machines across multiple hypervisor platforms. This freedom will give VMWare customers tremendous flexibility to design, deploy, and manage networks, be they private, public, cloud-based, or a hybrid. The desire for integrated interoperability gives VMWare the ability, and acknowledges that multiple hypervisors from multiple vendors will be a reality, according to a ZDNet story.

Battle for the Data Center and the Cloud

Nicira is a strategic acquisition for VMWare, not just a financial play. It was important for VMWare to own the capability rather than a competitor. The acquisition both rounds out as well as extends VMWare's vision and portfolio and gives it enhanced leadership in the virtualization segment.

It's nearly impossible to have a day pass without reading news stories about XaaS (software, infrastructure, platform ... whatever-as-a-service) and cloud computing. It's also difficult to miss the fact that U.S. and overall global demand remains weak and erratic. It is also true that companies of all size --particularly midsize firms--are in a constant struggle to remain vibrant, viable, and agile. It is a critical requirement for them to control and wring out cost, yet remain in a state of readiness such that they can respond quickly to changes in demand or in new competitive threats.

VMWare's recent changes in leadership as well as its acquisitions enable them to help their midsize clients prepare for these business realities and technical challenges: the XaaS and the cloud help control costs and provide the technical and business agility to respond quickly to changes in scale. The peripheral benefit to increased virtualization may be--with emphasis on may, as it is not a guarantee--increased security. But security posture, protection, and readiness are dependent on numerous factors, including systems architecture, operational discipline, active monitoring, and team quality.

The more complicated and expansive your environment and the greater your need to enjoy cost control with technical agility, the more you will likely find the VMWare acquisition a positive development in aiding you to more effectively manage your organization.

This post was written as part of the IBM for Midsize Business program, which provides midsize businesses with the tools, expertise and solutions they need to become engines of a smarter planet. Like us on Facebook. Follow us on Twitter.