Summary:

By taking a stake in Embrane, Cisco gains a better foothold in the upper layers of the networking stack which could boost its competitive position vs. VMware.

In a bid to boost its SDN smarts, Cisco Systems is investing $6 million in Embrane, as part of an overall $12 million cash influx.

That move would give Cisco, which brought its SDN-focused spin-in Insieme back in house late last year, a foothold in the higher levels of the network stack. Cisco/Insieme plays mostly in the lower layers, so there’s a potential fit there.

Or, as Stacey Higginbotham wrote at the time of Embrane’s last funding round in 2011: Embrane’s product:

” … allows companies such as Rackspace, Verizon or hosting companies building out Infrastructure-as-a-Service offerings, to add virtualized services at Layers 4 through 7 of the networking stack. In laymen’s terms, these layers encompass everything that’s not the actual movement of packets, and include services such as load balancing, firewalls, virtual private networking and others.”

A source with knowledge of the investment said Cisco would like to ensure that Embrane’s technology works well with Cisco’s stuff, but it’s all theoretical at this point: Embrane would not comment;  and Cisco could not be reached for comment. Cisco said it does not comment on rumor or speculation.

In 2011, Embrane snagged $18 million in Series B funding, bringing its total till then to about $27 million, but has been quiet since then. The promise of SDN is to facilitate the creation of readily re-configurable networks in software, companies could even deploy SDN on commodity (i.e. cheap) hardware  — a proposition that obviously has ramifications for Cisco, which pays its bills by selling high end networking hardware.

Late last year, Embrane confirmed to SDNCentral that it had cut some jobs but said a Series C round of investment was on the way. The new Cisco money, which is part of a $12 million found, is part of that funding. Existing Embrane investors include New Enterprise Associates, Lightspeed Venture Partners and North Bridge Venture Partners.

 VMware’s 2012 purchase of Nicira, an SDN player, proved that the SDN gold rush was on among vendors trying to expand their own footprints in customer data centers. Last year, VMware incorporated some of Nicira’s capabilities into its NSX network virtualization play. As the rivalry between VMware and Cisco heats up in the data center, having a stake in the higher level networking application expertise via Embrane could come in handy as VMware also moves up the stack.

But, all of this technology is still very young and evolving and customer acquisition has been a challenge — to say the least — for all of these companies.

Note: This story was updated at 9:25 a.m. PST with Cisco reaction.

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