Cisco buys VCider to boost its distributed cloud vision
Cisco is buying vCider, a specialist in virtual network overlay technology (and a former GigaOM Structure LaunchPad finalist). The move is a response to VMware's acquisition of Nicira and its software-defined networking technology …
Context & Ripple Effects
Cisco has spent 2012 buying capability rather than boxes: the $5 billion NDS acquisition in March added video software, following the earlier ExtendMedia deal aimed at IP video services, and its virtualization push dates back at least to 2008. The vCider purchase extends that pattern from media delivery into the network layer itself.
The trigger is competitive: GigaOM frames the deal explicitly as Cisco's answer to VMware's acquisition of Nicira and its software-defined networking technology. Overlay networking — abstracting virtual networks on top of physical infrastructure — is the same territory Nicira staked out, and the pickup was noted by Cisco's own blog alongside Light Reading and virtualization.info.
First-order effects
- Cisco gains in-house virtual network overlay technology, giving it a direct counter to VMware's Nicira-based SDN portfolio in accounts deciding between the two stacks.
- vCider's team and roadmap are absorbed into Cisco's distributed cloud effort, ending the startup's run as an independent vendor.
Second-order effects
- VMware now faces a Cisco that can bundle overlay networking with switching hardware and its existing data center relationships, pressuring VMware to deepen its own network software push.
- With VMware, Intel and NEC having applied in August 2012 to join the OpenStack Foundation as Gold members, overlay networking is becoming a contested layer inside open cloud platforms as well as proprietary ones.
Third-order effects
- If incumbents keep absorbing overlay specialists rather than building the technology themselves, independent SDN startups become acquisition targets by default, concentrating network virtualization inside a handful of large vendors.
- The value in enterprise networking shifts further from physical switches toward the control software above them, eroding the hardware moat that historically defined Cisco's business.
The trend: Software-defined networking is pulling traditional hardware vendors into a software acquisition race, with each major deal forcing a counter-move from rivals.