VMware has just announced that it has acquired Nicira for US$1.25 billion in cash and equity. Nicira is a startup known for its software defined networking technology. Its product creates a software defined environment that can essentially be programmed to change through adjustments in the software. Essentially, this creates a flat network which reduces bottlenecks and allows for elasticity and the ability for data to be moved about easily.
The deal will help VMware compete in the cloud networking space where it is facing competition from Amazon Web Services and OpenStack, both of which are emerging as viable alternatives for building cloud environments. The acquisition of Nicira will also put VMware in competition with Cisco, who earlier announced it will cut 2% of its global workforce in response to uncertain economic outlook.