Nicira, an innovative startup which began in 2007, has finally made it big. It has been acquired by VM Ware in a whopping 1.26 Billion dollar deal. Nicira is known for creating a network virtualization platform, a software suite that creates virtual networks which are independent from other physical networks. It seems that Nicira was an underdog or rather a black horse until VMWare decided to take it under its wings in one of the most talked about acquisitions recently.

Earlier VMWare had partnered with Cisco to come up with several products such as Unified Computing System (UCS), Virtual Desktop Infrastructure (VDI), Overlay Transport Visualization (OTV), vCloud computing, Cisco Virtualization Services, Nexus 1000V (Nv Kv) , Virtual Computing Environment (VCE), Secure Multi-Tennant(SMT), Enterprise License Agreements(ELA), etc. In a latest blog post, VMWare’s chief technology officer Steve Herrod said that this acquisition will not affect the company’s other mergers, such as its partnership with Cisco. He also said that the belief of the company lies in networking that is software defined.

Nicira has a list of influential clients like eBay, Rackspace and Fidelity among others. Herrod wrote that it is a lengthy process to manage networks and networking services in a cloud environment. There are other issues also that make the job tedious. These issues can be addressed by Nicira’s software defined networking. He further claimed that VMWare will fully support Nicira’s openness.

In his own blog post, Nicira chief technology officer Martin Casado also spoke on similar lines. He claimed, “The cloud is about openness. Openness is in our roots, and it will stay there.” He frankly admitted that the aim of cloud computing is to increase business velocity and efficiency.

Casado spoke of Nicira’s pioneering of software defined networking and of other projects like Open v Switch and OpenFlow. He announced that the company was ‘thrilled’ to be joining VMWare.

VMWare is to pay 1.06 Billion dollars in cash and 210 million dollars in equity. The deal is to close in the second half of 2012. Analysts speculate how this development will affect VMWare’s other projects–pointing to stiffer competition between Cisco and VMWare in the near future. With Nicira under its wing, VMWare will seek to enable provisioning virtual machine networking, doing this through vSphere 5, which might be located in multiple points at the data centre. Contrastingly, Cisco trusts centralized Cisco switches and routers for network intelligence.

Finally, in his closing lines Herrod said that the company was excited about the latest developments. He said that customers will benefit from this deal as this brings together two pioneering teams in network virtualization and this will speed up the realization of software defined datacenter and the advantages will go to the customers as well as service providers.

We’ll keep you posted on how this acquisition plays out in terms of profits and technological advancements.