Analysis: Nicira Buy To Bring VMware Closer To OpenStack, Networking Vendors

With the acquisition of virtual networking technology developer Nicira, VMware is moving closer to the rival OpenStack open cloud software community and breaking down the barriers between clouds built on different software platforms.

VMware has never been part of the OpenStack community of vendors offering cloud infrastructure services under an open-source model where users are free to mix and match products to build the cloud stack.

However, with this week's planned purchase of Nicira, the company will likely begin expanding its reach across the entire cloud market via virtual networks.

[Related: VMware Plunks Down $1.2 Billion To Acquire SDN Startup Nicira ]

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VMware on Monday unveiled plans to acquire Nicira in a $1.2-billion deal that would give it the leading developer of virtual networking technology and a big stake in the software-defined networking and software-defined data center business.

That will give VMware and its technology and channel partners the ability to extend virtual networking across any cloud platform, said Bogomil Balkansky, VMware's senior vice president of cloud infrastructure products.

That includes using Nicira technology to extend VMware's reach into clouds built on the OpenStack open source software platform which currently is the leading alternative to VMware's vSphere platform, Balkansky told CRN.

"After the acquisition closes, we'll start working on roadmaps that look at what technologies on both (the VMware and Nicira) sides we can leverage," he said.

VMware and the OpenStack community have become primary rivals in determining the architecture of cloud computing, and indeed, what the word "open" means when it comes to the cloud.

In VMware parlance, "open" has always meant that third party developers are all welcome to easily integrate into the cloud architecture based on VMware's vSphere virtualization platform for building cloud infrastructures and its vCloud Director platform for shared cloud computing.

"Historically, when it comes to hybrid clouds, we provide customers a choice of which public cloud to use based on VMware technology," Balkansky said. "Also, for us, 'open' is the idea that our stack is open to third parties to plug in virtual services, such as Cisco's Nexus 1000V open virtual distributed switch, or virtualized anti-virus security, intrusion detection, or firewalls."

NEXT: VMware Vs. Open Source Clouds

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

However, Rackspace CIO John Engates declined to criticize VMware’s cloud approach Tuesday in an interview with CRN. He said Rackspace partners with VMware and uses its virtualization technology to manage its cloud infrastructure.

Engates said he thinks VMware’s Nicira purchase will lead VMware to adopt more OpenStack practices. Nicira is a Rackspace partner and is a leader in the OpenStack Quantum project to develop network connectivity as a service.

’It’s important for VMware to have that [Nicira] technology inside the hypervisor,’ Engates said. ’It’s the reason we were going in that path with Nicira. The reason we worked to integrate Nicira into OpenStack is because ultimately you can’t build a large-scale cloud without virtualizing the network layer.

’Rackspace cloud has hundreds of thousands of virtual machines running, all connected to the network,’ Engates added. ’We need a virtual, scaled network. Nicira takes intelligence out of the network and moves it to the cloud layer.’

Keith Norbie, vice president of Nexus, the Minnetonka, Minn. office of Stratos Management Services, an Atlanta-based solution provider and partner to both VMware and Rackspace, said what is most interesting with Nicira is that it was VMware, and not an OpenStack partner, which moved to acquire it.

"Customers are looking at how to manage clouds across the future hypervisor, or in other words, across not only VMware's vSphere," Norbie said. "I'm wondering if this is VMware's way to integrate into this scheme."

Norbie said this also looks like a play by VMware for the software-defined data center market, which is built on commodity hardware and which features a high degree of automated management.

"If you look at networking hardware, other than the proprietary backplane, nothing is proprietary," he said. "Look at [VMware's] vCloud Director. There's lots of technologies running on the processor. ... Why are people talking about software-defined data centers? They're struggling with multi-tenancy issues. You need software and automation to manage it."

Elizabeth Hedstrom Henlin, an analyst at Technology Business Research (TBR), a Hampton, N.H.-based analyst firm, wrote in a Tuesday research report that Nicira's open-source traction will be important to VMware's cloud growth.

"VMware's open-source credibility remains nascent, and Nicira's executives can deliver significant visibility to VMware's open-source assets -- particularly with Nicira's ongoing involvement with OpenStack and the Open Networking Forum," Henlin wrote. "With technologists at Nicira's helm... along with VMware's broadening go-to-market approach (inclusive of cloud and virtualization), TBR believes VMware is well-positioned to integrate and monetize the acquisition of Nicira by the end of 2012."

NEXT: Nicira Likely To Bring VMware Closer To, Not Farther From, Networking Vendors

VMware's planned acquisition of Nicira and its virtualized networking technology is also not likely to bring the company in competition with traditional networking vendors as many in the press and analyst community believe.

Kevin Johnson, CEO of Sunnyvale, Calif.-based networking vendor Juniper Networks, on Tuesday told financial analysts that his company is committed to developing technology related to software-defined networking, including working with Nicira and VMware.

"We're going to continue to be very thoughtful and balanced in terms of what we're doing on the R&D agenda to make sure that we're delivering the best possible solutions to our customers, and certainly, the work that we're doing in our switching and fabric business, as it relates to datacenters is very applicable and very relevant to Nicira and very applicable and relevant to what VMware is doing," Johnson said.

Bob Muglia, executive vice president of software solutions for Juniper, said on the same call that Juniper is developing technologies like OpenFlow and other open source capabilities across its products going into 2013.

"We have products today, and we're going to continue to enhance and expand those products, and we'll work very closely across the industry, including with partners like VMware, to ensure that Juniper Networks, the platforms and the software that we provide, is the best complement to the software that they deliver," Muglia said.

Joe Tucci, chairman and CEO of storage vendor EMC, which owns the majority of VMware and has a strong partnership with Cisco through their VCE joint venture, on Tuesday said during EMC's second quarter financial call that VMware's Nicira strategy will work well with Cisco.

The Nicira acquisition is an area where VMware can extend its relationship with Cisco, including running the virtualized networking technology across Cisco's hardware layer, Tucci said.

"As such, (Cisco Chairman and CEO) John Chambers and I remain very committed to VCE," Tucci said.

Cisco was unable to reply at press time other than to note that a blog related to the topic is expected to be posted soon.

Balkansky said that networking vendors, rather than being worried about competition from VMware, will instead more likely see an expansion of their business in building cloud infrastructures.

NEXT: Balkansky Says Nicira Will Drive New Networking Tech

"In a superficial first analysis, you could say networking vendors will be worried," he said. "But when VMware first came to market, there were similar concerns about our technology destroying the server business. But since then, we've seen a lot of development in server technology. Look at multi-core processors. Before virtualization, customers didn't know how to use them. Intel has added virtualization technology to its processors. And Cisco UCS servers came virtualization technology."

Balkansky said he expects the same thing to happen with networking.

Virtual machines can currently be moved between physical hosts via top-of-rack switches with technologies such as vMotion, he said. "With network virtualization, you can do it on a much larger scale, from one rack to another or from data center to data center," he said. "To do that, you need higher performance switches. So this will generate a new generation of networking technology with more powerful routers and switches."

PUBLISHED JULY 25 Solution providers said that the acquisition will create new networking opportunities in the cloud.

Steven Reese, vice president of collaboration and security architectures West at Presidio, a Greenbelt, Md.-based solution provider, said in an e-mail to CRN that he believes the acquisition will undoubtedly create some great opportunities for manufacturers to take transparent networking to a new level.

"With manufacturers like Cisco moving toward SDN (software-defined networking), there is an opportunity for some really unique integrations if these manufacturers are willing to share APIs. It will be interesting how VMware looks at partnering Nicira with the incumbent physical network manufacturers to create a true next generation network strategy. Time will tell how this will all end up, but I think customers will really dictate what the end result will be," Reese wrote.

VMware is using software to define data centers and the cloud, and networking technology already has a strong software component, said Dan Weiss, CEO of Varrow, a Greensboro, N.C.-based solution provider and partner to VMware and Cisco.

"It will take time, but people want everything to be turned into a software plug," Weiss said. "That means lots of opportunities for OEM agreements."

Even as networking moves towards SDN, it still requires some type of physical device, Weiss said. "Cisco has software," he said. "But look at the customer. Who would customers go with first in their networking, Cisco or VMware? SDN extends to Cisco, Juniper, Hewlett-Packard, and any companies that want to be in this market."

Weiss said he cannot imagine VMware going out and damaging its relationships with networking vendors with its own technology. "Nicira will provide more functionality for VMware, and better partnerships with networking companies in the future," he said.

Another solution provider, who declined to give his name, said a lot of people at his company have been looking Nicira's SDN technology and how to work with it.

"Moving it under VMware's control will make it a lot more clear how we can work with it," the solution provider said. Often these smaller companies are hard to work with. VMware will make it easier."

That solution provider said he expects great things from Nicira under VMware. "We were expecting this to become the VMware of networking," he said. "Now it is VMware."