Bangalore: In an interesting turn of events, the ruler of virtualization software market: VMware has publicized its intentions to acquire Nicira, a five year old start-up that has generated revenues worth 50 million from investors that also includes the original founder of VMware, Diana Greene at a whopping price of $1.26 billion. Nicira makes controller software that facilitates freeing the act of moving data and packets in a network from the constraints of network hardware, a problem that has been a major issue in highly virtualized and web scale data centers.

Nicira boasts of an esteemed list of customers that includes biggies like eBay, AT&T, Rackspace, NTT, Fidelity, Calligo among others but it is not clear how many of these companies have implemented Nicira’s controllers in their production environment.

This is VMware’s second acquisition in a span of three weeks, one being Nicira and the other being the virtualization and cloud management vendor; DynamicOps. Nicira’s acquisition not only brings VMware in the software-defined network (SDN) but also broadens VMware’s support for open standards and even open source.

When EMC acquired VMware in 2004, it had pledged to address customer needs beyond server virtualization into virtualization of the network layer in the data center. But seeing at VMware’s timeline once could figure out that VMware has lacked in network sophistication and Nicira is exactly what it needed to sharpen its image in network virtualization.

SO waht made VMware aquire a five year old start-up? Read on