Report: Cisco Outgunned Trying To Acquire Nicira

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Cisco was in the mix to acquire hotshot software-defined networking startup Nicira, and it was outbid for the company, according to a published report.

Bloomberg on Tuesday cited "two people with knowledge of the matter" in saying Cisco was in talks to buy Nicira. But, it was VMware that swooped in with a $1.2 billion buy of Nicira last month.

It's unclear how Nicira, which in the past two years stacked its team with veteran executives from Cisco, Juniper and other companies, would have complemented -- or replaced -- the SDN technology under development at Cisco and the Cisco-seeded startup Insiemi. But, a Nicira buy wouldn't have been all that surprising for the networking king, whose role in the emerging SDN ecosystem has been questioned and which has returned to its traditionally frequent pace of M&A activity.

[Related: 25 Software-Defined Networking Players To Know]

Nicira's Network Virtualization Platform (NVP), which the company officially unveiled in February, is a software system intended to provide distributed virtual network capabilities to cloud-ready data centers.

Nicira's edge is in how the system itself is decoupled and independent from physical network hardware, and the buzz generated around the NVP put Nicira in the vanguard of emerging companies focused on the SDN trend. Several other startup SDN companies, including Big Switch Networks, are often mentioned as acquisition targets for tier-one vendors like Cisco, IBM and Oracle.

VMware's acquisition of the company makes it more of a competitor to Cisco, with which VMware, and VMware's majority parent EMC, is otherwise closely aligned in the market for converged infrastructure.

Cisco, for its part, has sunk $100 million into a startup called Insiemi, run by the same engineers who had a hand in previous so-called Cisco "spin-in" acquisitions. Cisco finally confirmed initial details about Insiemi during the Cisco Partner Summit in April, including that it retains rights to acquire the company for up to $750 million on top of the initial investment.

Cisco's role in the SDN segment -- a market expected to produce some $14 billion to $17 billion in revenue by 2016, according various analyst projections -- has been a subject of much discussion thanks to the perception that network virtualization technologies will further limit the need for the types of expensive, proprietary switches and routers that remain Cisco's bread-and-butter.

NEXT: Cisco's Goal To Reinvent Networking

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