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Summary:

Companies spent roughly $1.6 billion buying networking startups in 2012 with one deal being responsible for the lion’s share of that total. Yet, even if VMware hadn’t purchased Nicira for $1.26 billion, networking deals and software-defined networking deals in particular, were red hot in 2012.

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The network was the star of the data center this year as hype around software-defined networking hit the mainstream tech press and consciousness of IT professionals. There were company fundings, massive acquisitions and a glut of company launches. So while a lot of ink has been spilled this year, the changes in networking this year have led to more confusion than coherency about what software defined networking is and what its promise is for the industry.

After two years of trying to figure out what OpenFlow was and how it might change networking for the better, 2012 was when the promise of OpenFlow morphed into software-defined networking, which was later co-opted into network virtualization. Things are still heating up, but let’s look at where we’ve been.

Guido Appenzeller (left) and Kyle Forster of Big Switch

Guido Appenzeller (left) and Kyle Forster of Big Switch<br />

OpenFlow, a protocol that came out of Stanford as part of the Clean Slate project, is pretty simple. The idea is to separate the control plane from the data plane in a networking box. Thus, the same box no longer has to choose the right route for a network request as well as actually send the packet along the route it chose. In practice, this has the potential to commodify the router, but in reality what happened has been the rise of software-defined networking, or SDN. So while Google built hardware and software based on the Open Flow protocol to help optimize the traffic flows for its inter-data-center traffic, most other companies looking at OpenFlow quickly fell in line with the concepts of building a programmable network that virtualized the underlying hardware.

This was the concept of SDN. Under that title, the physical hardware of a network was abstracted from the virtual machines and applications running on the network. Sometimes OpenFlow might have a hand in this and sometimes it won’t.

Instead of commodifying the router, these companies added a layer of software between the networking gear and the application, generally known as the controller. Some of these were open source, some provided APIs for the accessing the underlying networking gear and some did not. The point in SDN was that once you had this virtualization, it became possible to link your network to your application. Depending on whose controller you used, this process was easier or more difficult.

Dante Malagrino Embrane Jonathan Heiliger North Bridge Venture Partners Martin Casado Niciria Structure 2012

Dante Malagrino, Co-Founder and CEO, Embrane; Jonathan Heiliger, General Partner, North Bridge Venture Partners; Martin Casado, Co-Founder and CTO, Niciria<br />(c)2012 Pinar Ozger pinar@pinarozger.com

Toward the latter half of 2012, some vendors started pushing the concept of network virtualization as synonymous with software-defined networking. The companies basically tried selling network virtualization as the solution, which then meant they could determine the winners and losers for applications and services that would rely on a virtualized network, such as scaled-out firewalls. It’s a co-opting of the term SDN, but for many customers this is probably what they want — for today at least.

With that framework in mind, here are the notable deals in the networking world in 2012.

Oracle buys Xsigo: This deal, which was announced in July, wasn’t really an SDN deal. Xsigo has really tried to grab ahold of the SDN banner with its marketing, but it was about the virtualization at the hardware and port layer. Xsigo’s hardware (plus fabric) make it possible to plug storage and networking cables into a Xsigo box and then allocate those physical resources without a network engineer having to get involved. Oracle buying Xsigo fits with its proprietary hardware plans and less with any sort of Oracle SDN play.

Nicira's CTO Martin Casado

Nicira’s CTO Martin Casado

VMware buys Nicira for $1.26 billion: This deal, announced in July, is all about the controller and control. Nicira made an SDN controller that works to abstract the underlying networking hardware from the applications. But in many ways it’s a network virtualization play as opposed to seamlessly connecting applications to the networking layer. Instead, the controller is the control point where Nicira and now VMware will let partners and maybe other vendors hook into the controller via an API or partnership program.

Brocade buys Vyatta: Vyatta is another company that tried to give itself an SDN facelift. In this case, Brocade, the company better known for making switching hardware took the bait (or was simply merciful), and said it would buy Vyatta while the company was making the rounds trying to raise another round of venture capital. Brocade can use Vyatta’s networking software to move up the stack and possibly provide a more modular approach to SDN that allows customers to piece together Broacde’s hardware and software if they so choose (but they won’t have to choose both as they might in a Cisco or Arista decision).

Cisco to buy Cariden for $141 million: In November, Cisco purchased a network mapping and optimization company that has recently adopted some SDN features (and marketing). For Cisco, buying Cariden made sense because it delivered the type of controlled network virtualization ecosystem that posed no danger to Cisco’s router business, but allowed Cisco to sell SDN services and applications to its service provider customers. Meanwhile, Cisco this year also announced its own controller layer and an API to let applications talk to it (but not the underlying Cisco gear.)

Juniper to buy Contrail for $176 million: Finally, last week Juniper said it is buying Contrail, a startup in the SDN space that had only launched a day or two prior to the acquisition announcement. The deal came just a few months after Contrail had received $10 million in funding from Khosla Ventures, with Juniper participating as a strategic investor. Contrail’s technology centers around rethinking where the controller would sit in a virtualized network and how those pieces work together. It had a great team and good-sounding tech, but few real customers.

The year isn’t over and it’s possible one of the myriad networking startups funded this year, such as Big Switch, Pluribus Networks, Pica8, Plexxi and/or Cyan might end up getting bought before we close the books on 2012. But even if that doesn’t happen, I’m comfortable saying this is the clearly the year SDN has sold out and networking has really broken out.

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  1. The first picture on this post has some html that is visible beneath the picture

    1. Thanks for catching that, it’s fixed.

  2. Great post Stacey, when do you SER services like Virtella fitting in to the network players arena and therewith the linkage to Cloud?

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