"We're at the birth at this technology," said Kindress, who said he was surprised at the value put on this company by VMware. And while the firm has assembled a solid list of users, "it's difficult to know how much [of the technology] they have put in production," he said.
"Nicira has a great networking team and VMware was starting to get bypassed by IBM and HP," which are working on their own virtual networking products, Kindress said.
But analysts, including Kindness and Rohit Mehra at IDC, said the need for network virtualization is clear. They say the benefits of virtualization are hindered by labor-intensive networking tasks imposed on data centers.
"To make the IT architecture more flexible, dynamic and respond to the needs to the application, the network needs to be an equal player," said Mehra. "And the only way to do that is to virtualize the network."
IDC has sized the market OpenFlow market alone at slightly more than $100 million this year, with it expected to reach $2 billion by 2016. "That is a significant growth," said Mehra.
Nicira is far from the only company in software-defined networking space. Plexxi, another firm, announced $20.1 million in new financing last month. Some other firms include BigSwitch Networks and Vello Systems
Gartner analyst Alessandro Perilli said that with the acquisition of Nicira, VMware "has a chance to significantly move forward in cloud management."
But Perilli said that it will be a matter of execution. "VMware has yet to prove that vCloud Director, vCenter Operations Management, DynamicOps, Nicira and all other products can be integrated in a cohesive cloud management platform," he said.
Patrick Thibodeau covers cloud computing and enterprise applications, outsourcing, government IT policies, data centers and IT workforce issues for Computerworld. Follow Patrick on Twitter at @DCgov or subscribe to Patrick's RSS feed. His email address is email@example.com.
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