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VMware's competitors, including the OpenStack community, instead call VMware a proprietary vendor as it has not made its core technology available to the open-source community.
Nicira, on the other hand, is a very active member of the OpenStack community, and has been a leader in the development of OpenFlow, an open standard for letting software on a separate server determine how data packets move across multiple heterogeneous network switches and routers.
The company is also active in the development of Open vSwitch, a multi-layer virtual switch licensed under the Apache 2.0 license for network automation to support distribution across multiple physical servers.
Both are central to developing virtual networks in clouds built on open source technologies.
That means VMware is changing how it views 'open' cloud computing, Balkansky said. "So now the definition is, the ability to manage any heterogeneous cloud with a single plane of glass, the ability to allow third party technologies, and the ability to span management across heterogeneous clouds," he said.
Prior to announcing the acquisition of Nicira, VMware was in the process of developing its own virtualized networking technology called VXLAN, which works similar to the Nicira technology but is specific to the VMware cloud platform. It was unveiled early last year in conjunction with networking technology partners such as Cisco, Arista, Emulex, Brocade, Intel, and Broadcom. No delivery time has been announced.
Balkansky said the acquisition of Nicira means VMware will be offer virtual networking capabilities in both its own and in non-VMware clouds.
He discounted the possibility that paying $1.2 billion for a company which has only recently started shipping products is too expensive.
"For us to build that technology organically was definitely an option," he said. "But we made the decision to acquire Nicira because it is already the leader in the open cloud market. If we built our own, it would take a lot of time and resources, and would have given Nicira time to take the leadership in that market."
VMware and Rackspace, one of the founders of the OpenStack open-source cloud community, have been eyeing each other warily as potential rivals with competing cloud platforms where VMware’s licensing model would seem to run counter to Rackspace's embrace of OpenStack.
NEXT: Rackspace Welcomes VMware's Nicira Buy