Why did VMware buy Nicira? Validation for Openflow?

In late July, Vmware announced the acquisition of Nicira, maker of the Network Virtualization Platform (NVP) based on the ONF standards for Openflow v1.1 ratified in February 28, 2011.  What's even more interesting is that Diane Green, co-founder of Vmware, was one of the first investors of Nicera's initial $50M.  So why would Vmware acquire this small upstart network company, especially when it has key network partners (like Cisco) in it's eco-system? What does it mean for VXLAN?

The main reason - flexibility in the cloud.  To really understand the value of what Nicera - more specifically Openflow and SW defined Networking (SDN) - brings to VMware is to understand the current limitations of traditional networking (ACLs, VLANs, etc) in our current "developing" cloud-connect world.  In the same way VMware defined OVF standards with hypervisor-based server virtualization, then moved that same virtual abstraction to the storage layer with increasing development of their VSA functionality, it was evident that to provide truly a flexible and "open" vcloud community, VMware would need to solve the "virtual" networking challenge.  Networking remains the biggest challenge (with the exception of bandwidth) of an open system of "clouds" for bursting and/or moving from service provider to service provider, in a seamless, uninterrupted manner that gives businesses maximum choice.

Trying to build-out flexible networks between clouds in a scaling fashion is too difficult to achieve with traditional networking.  Over-simplifying, because the typical network couples network control (learning and forwarding decisions) to the network topology (junctions, interfaces, and how they peer), there are limitations in scalability and flexibility.  Openflow (or SDN), de-couples the forwarding control to the SW layer that then forwards to the network topology - just like the hypervisor did for compute resources.  By handling forwarding control to layer 3, it allows much more scale and flexibility, as the network topology then becomes just connectivity - sound familiar?

Just as Vmware revolutionized server virtualization, SDN has the opportunity to do the same in virtual networking. Further, just as Vmware emerged as a leader in defining the OVF standards for guest OSes, early adopters of Openflow can help define the standards for SDN (http://en.wikipedia.org/wiki/Open_Networking_Foundation).  So this goes back to WHY VMware and the $1.26B (yes with a B) acquisition of Nicera, versus allowing the ecosystem partners, like Cisco, to drive this.

My opinion - though not worth very much - is because VMware understands that this will become the next "Vmware".  Those who get on board first and help define SDN and its capabilities in cloud will become the market leaders in the maturing cloud space.  It also helps that Nicera already gained customers like AT&T, eBay, Fidelity Investments, NTT and Rackspace before it's acquisition by VMware, some of which are current Cloud Service Providers in VMware's VSP program.

So the big question remains - will Openflow succeed or will networking heavyweights like Cisco develop their own standard for SDN based on their market share?  While that remains an unknown, viability of Openflow is validated by the major networking vendors pledging to adopt it as part of new product releases - including Cisco and HPN.

For those who are looking for a more technical "how-to" for Openflow integration into VXLAN, Brad Salisbury has written a great guide based on both VXLAN and GRE tunnel integration into OpenvSwitch (Openflow):


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