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Six months ago, I wrote a blog post called “The Future of Networking" about Nicira Inc., a company that I said would turn the data networking market upside down. Today, VMware arrived at the same conclusion and acquired Nicira for $1.26B in cash.
Since Nicira only recently shipped its first production ready systems, this acquisition may stun observers. However, those who fully understand the depth of Nicira’s technology and the implications of the combination of Nicira and VMware will recognize the brilliance of VMware’s move.
In one bold step, VMware moves from a footnote in the networking market to the clear technology leader in Software Defined Networking and more specifically—and importantly—Cloud Networking. By combining Nicira’s technology with VMware’s market-leading server virtualization and cloud products, VMware today creates a clear path to becoming the most important infrastructure company across servers, networks and storage for the next 10 years.
As current networking architectures migrate to cloud architectures, VMware has the opportunity to eat a good portion of the $37B data networking market. In that light, $1.26B is a great price.
Nonetheless, since VMware acquired primarily a product and a team—as opposed to a fully developed company and a large, cash-generating business—it’s useful to understand how a new company built such a valuable product and team.
Like many successful technology companies, Nicira started with a brilliant engineer who had the right experience to see the future more clearly than anyone else. Unlike consumer startups, where engineers tend to be their own first and best customers, most data networking engineers have never run large-scale networks. As a result, they never develop a clear picture of the real operational challenges of running a network. Most people who run large-scale networks, on the other hand, don’t have the product creation skills to solve those same problems.
Enter Martin Casado, the one man who had both the knowledge and the skill required to solve problems that vexed the networking world for three decades.
Because Martin began his career running large-scale, highly secure networks, he had the knowledge. He then took that knowledge to Stanford, where he developed the skill, working with legendary networking computer science professors Nick Mckeown and Scott Shenker.
But to build the next generation data networking company, he had to replace 30 years of functionality and needed to build a phenomenal team to do so. Martin recruited networking veteran Steve Mullaney as CEO, and together they assembled an all-star crew of the very best engineers in the business. That team brought to market a product that is so far ahead of the competition and clearly the future of data networking that VMware had to have it—and was smart enough to seize it.
In the future, all computing, networking and storage infrastructure will be infinitely elastic, totally reliable and perfectly flexible. VMware just took a giant step towards bringing the future forward.
I am grateful to have been part of the Nicira team and story. I look forward to seeing what happens next.