What’s Not Nice about Nicira?

Cisco says that they’re laying off another 1300 workers or about 2% of their employee base.  VMware says it’s buying Nicira.  Are these two things related?  I think they are.

Nicira is a “network virtualization” player, a company who has built a connectivity layer on top of traditional networking and used that layer to offer communications services to applications, particularly those running on virtualization platforms or in the cloud.  Unlike network-based VPNs or VPLS, there’s no real limit to the number of virtual networks Nicira can support.  And they can run above anybody’s network, so they are “platform independent”.   They can also provide connectivity features to applications, acting as a kind of shim between the real network interfaces and the applications’ southbound service APIs.  Want TCP/IP?  You may get it via Nicira and not directly, and so VMware becomes a network vendor, which they probably like given that their current quarter was light.  One analyst even said it was the future of networking.

Of course it’s not that simple.  Network virtualization is at best like any other kind of abstraction, meaning that you still need a network to virtualize.  While network virtualization can help with aligning network connectivity and segmentation to computing virtualization, it’s hardly a total solution.  Furthermore, network virtualization is an application for software defined networking—if you believe in SDNs—and SDNs are a hot button with the network vendors.  Collision?  You bet, and be patient because that’s where Cisco jobs come in.

Applications link to networks via two distinct layer, what could be called the “logical” interfaces of the software APIs in the communication middleware and the physical interfaces to the network—Ethernet, IP.  Neither Ethernet nor IP are complete service protocols, which is why we have things like TCP to augment them.  We know that both have security issues too, so the point is that network service needs are likely to evolve.  You could argue that SDN principles represent a network-centric vision of that evolution, a bottom-up transformation.  You could argue that network virtualization represents a top-down software-centric vision.

So what does this have to do with Cisco jobs?  Every dollar spent on network virtualization is a dollar lost to Cisco, a dollar that could fund additional work and jobs.  Every feature that’s absorbed into network middleware is gone from the network, and with it the differentiation and margin protection that features bring.  More job risk.  Cisco at its Live event said it was getting architecture religion, but the question now is whether they can get it quickly enough.  There’s real work involved in making SDNs into the capability set that network virtualization already is.  Has Cisco done that work, or have any of its competitors?  We’ve reviewed some of the vendor SDN strategies, but there’s little we can say about them explicitly because the briefings were wrapped in NDA.  So yes, there’s progress, but how many of these vendors could have sold their SDN solution for a billion dollars like Nicira did?

SDN and network virtualization are faces of the same coin, one seen from below and the other from above, and since neither of the two concepts are particularly well understood most don’t recognize that.  They’re outriders in the battle for differentiation between IT and networking, and IT is winning because whatever might be said about the “architecture” of an SDN solution here versus a Nicira-style software solution, you can buy the latter and not the former.  This isn’t about boxes, it’s about capabilities.  Those who produce them win.


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