For VMware and Nicira, software trumps hardware

By David Krozier, Principal Analyst, Network Infrastructure Practice

On July 23 VMware, the server virtualisation powerhouse, agreed to acquire software-defined networking pioneer Nicira for $1.26bn; both parties expect the transaction to close in 2012.

VMware, a subsidiary of EMC, expects the acquisition to advance its progress towards programmatic control of virtualised compute, storage, and network resources – what it calls software-defined data centres.

Although Nicira’s current annual revenues are only in the $10m range, its technology complements VMware’s cloud strategy and will allow the combined entity to attack data networks with a comprehensive software-based cloud solution that is completely hardware-agnostic.

The acquisition certainly complicates the relationship between EMC, VMware, and longtime ally Cisco in providing virtualised infrastructure for cloud data centres.

While the companies have been long-term partners they also compete in the market, and Ovum expects the acquisition will end up polarising the EMC and Cisco camps.

Nicira has an early lead in network virtualisation software for cloud data centers

Nicira, formed in 2007, developed its Network Virtualisation Platform (NVP) to support virtual networks in cloud data centres.

Large tier-1 data centre operators including AT&T, eBay, Fidelity Investments, Rackspace, NTT, and T-Systems (Deutsche Telekom) have tested or deployed NVP software.

Just as VMware’s vSphere software decouples virtual machines (VMs) from physical servers, Nicira’s NVP software decouples virtual network ports from the switches and routers of the physical network.

As applications on VMs move from one physical server to another, NVP enables the policies and service parameters associated with the application to follow by moving the virtual port along with the VM.

In a multi-tenant environment, NVP can create isolated virtual networks that can be independently managed and monitored, making the network appear as a single virtual switch to each tenant.

NVP consists of controller software running on servers in a distributed cluster configuration to provide high levels of availability. The controller communicates with Open vSwitch (OVS) software running within hypervisors or installed in physical appliances.

Nicira’s NVP works with all the leading hypervisors including VMware ESXi, Linux/KVM, Xen/XenServer, and Microsoft HyperV. Nicira also provides management software and a RESTful API to link with cloud management systems such as the Quantum plug-in for OpenStack.

NVP is a software solution that is independent of the physical communications network; it requires only IP connectivity from the physical network. Therefore NVP works with any vendor’s hardware. The controller computes the operational state of the network and links OVS virtual switches across the physical network between them with VLAN tags or other tunneling techniques.

VMware and Nicira: a Cisco partner and competitor

VMware built an important role in data centres with software that creates an abstraction layer over a pool of physical servers and automates the allocation of virtual compute power to applications as needed.

In 2009, VMware collaborated with EMC and Cisco to form the Virtual Computing Environment Company (VCE) and developed a converged compute, storage, and networking solution called Vblocks. In fact, the EMC, Cisco, and VMware relationship goes beyond VCE. EMC owns 80% of VMware, and Cisco took a 1.5% ownership stake in VMware in 2007.

On the other hand, VMware and EMC are competing with Cisco. In April of this year Cisco funded Insieme as a spin-in to develop what is widely expected to be a SDN-enabled Nexus-compatible storage product that may compete head-to-head with VMware/Nicira.

In 2010 Cisco launched FlexPods with storage vendor NetApp. FlexPods directly compete with Vblocks in providing a converged compute, network, and storage platform for data centres.

With Nicira, VMware and EMC are presenting a software data centre solution that is agnostic to network hardware. With FlexPods and Insieme, Cisco is adding storage capabilities to its compute and network products, but it is still dependent on third-party hypervisors (a Citrix acquisition seems like it would be a nice fit for Cisco).

Ovum sees increasing competitive pressure polarising the EMC and Cisco camps and expects this to translate into customer uncertainty over the future of VCE.

What happens to Nicira’s support for open standards?

Nicira’s solution is proprietary, but NVP employs a number of open source technologies.

Nicira leads the Open vSwitch project and the Quantum OpenStack project and is a member of the Linux Alliance. Ironically, Citrix and Nicira developed Open vSwitch as an open source alternative to software switches from VMware (vSwitch) and Cisco (Nexus 1000v).

Nicira claims it will continue to support these open source technologies after the acquisition, and since they enable the NVP Ovum is sure Nicira’s support will continue for some period.

Still, Nicira might be tempted to port its software to operate with VMware’s vSwitch and take the solution proprietary.

Will this happen? Ovum expects the answer will depend on market acceptance of alternatives to vSphere. While vSphere is widely deployed for server virtualisation, customers are concerned about the power VMware exerts as a result of its dominant position, and some of the biggest cloud providers (Amazon and Google) are already using open source hypervisors.

If open source solutions proliferate, expect VMware/Nicira to ride that bus.

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