VMware snaps up Nicira

In a move that delivers a major windfall for top Silicon Valley venture capital player Andreessen Horowitz and then some, EMC-owned virtualisation giant VMware has acquired cloud firm Nicira for $1.05 billion in cash plus an additional $210 million in equity, Silicon Republic reports.

IT architecture player Nicira is a pioneer in the area of software-defined networking as well as network virtualisation for open source initiatives.

Its technology is also instrumental in the realm of agile computing and allowing data centre providers to grow and shrink resources as needed.

“VMware has led the server virtualisation revolution, and we have the opportunity to do the same in data centre and cloud networking,” The Street quotes VMware CEO Paul Maritz as saying in a statement.

“The acquisition of Nicira adds to our portfolio of networking assets and positions VMware to be the industry leader in software-defined networking.”

In a statement that described its efforts with Nicira as creating “the architecture for the cloud”, VWware said “managing networks and network services to support cloud architectures is complex, time consuming”, and the company praised Nicira for its work in boosting the power of data centres, MercuryNews.com writes.

“Nicira helps customers dramatically improve business velocity and efficiency by transforming how networking works in the cloud era,” Nicira CEO Steve Mullaney said in a statement. “I'm thrilled to be joining forces with VMware to help build the software-defined data centre.”

Analyst Trip Chowdhry with Global Equities Research says that while the move provides a way for VWware to broaden its virtualisation efforts into software, the price it's paying for the young company raises troubling questions.

He says the offer suggests “that we are in a valuation bubble”, mentioning a previous big-ticket purchase that another Valley giant recently announced.