Lloyd: VMware's Nicira Deal A Competitive Threat To Cisco

In other words, Lloyd, Cisco's executive vice president, worldwide operations, has no problem calling VMware's $1.2 billion acquisition of software-defined networking upstart Nicira exactly what it is: a move that will potentially put VMware into competition with Cisco as a virtualized networking vendor, even as the two vendors partner more tightly than ever.

The same understanding of "co-opetition" also goes for Microsoft, with which Cisco battles tooth-and-nail in unified communications but partners with in virtualization and other areas.

"It's a complex ecosystem out there," Lloyd said in an exclusive interview with CRN this month. "Today's ecosystems are more gray-area. So, let's not get confused. Most of what we've done is that we have strategically partnered. There is a competitive side to this Nicira [deal] with VMware that has the potential to be competitive to some of the activities we do. And Microsoft, boy, do we want to compete with those guys. But remember that Hyper V and Systems Center are also key applications our customers want to run. We're encouraging our teams to compartmentalize."

[Related: Chambers On EMC, VMware: 'Candidly, They Need Us' ]

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Lloyd communicated that message to more than 20,000 Cisco employees as part of Cisco's recently held GSX, a virtual sales conference through which Cisco attempts to set strategy for its legions of salespeople at the start of the new fiscal year.

His candid comments come amid speculation that the relationships between Cisco and strategic partners like EMC, which majority-owns VMware, are fraying thanks to a number of recent moves made by both vendors.

But, Lloyd said that just isn't true. Cisco is more committed to EMC and VMware than ever -- it just announced deeper integration between vSphere and Cisco's Nexus 1000V switch at VMworld, for example -- and is likewise committed VCE, the companies' much-conflicted joint venture for converged infrastructure.

Kent MacDonald, vice president of business development for Long View Networks, a Calgary-based solution provider that partners closely with Cisco and allies like EMC, VMware and NetApp as well as rivals like HP, said he isn't concerned moves like VMware buying Nicira will be too threatening to Cisco's strategy.

"They're a vendor where we're used to seeing co-opetition," he said of Cisco. "We play with certain vendors to make certain gains, and we recognize some vendors compete with some others. Our role as a partner is to be aware and recognize how to complement that. Everything is potentially a threat to a Cisco, depending on what lens you look through. My belief is Cisco will find a way to complement the technology as well."