VMware’s acquisition of Nicira posted a big risk on Cisco’s future control of networking market. The risk was in fact there from day one of VMware ESX with virtual switches and then distributed virtual switches, which reduces the need for customers to buy physical geeks from Cisco because virtual machines use “free” virtual ports. For the inter-physical server communication, customers still need Cisco and other vendors even though the volume is not as high as otherwise. That is why Cisco quickly came up with its own distributed virtual switch Nexus 1000v to stay relevant in the virtualization market.
On this past Monday VMware announced to buy Nicira for $1.26 billion. Congratulations to many of my former VMware colleagues who joined Nicira and will return back to VMware soon.
Overall this deal aligns well with VMware’s newly found vision on software defined data center. You must have read many of similar explanations and comments from various sources including this one from VMware CTO Steve Herrod, and this one by Nicira cofounder and CTO Martin Casado.