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Cisco catching a falling Big Switch?

Rumors swirling around a possible acquisition of the SDN start-up with the reported shrinking valuation, ecosystem

The rumor mill is rife just after VMworld with perhaps none bigger than the one SDNCentral wrote about this week: Cisco possibly acquiring SDN nemesis Big Switch Networks. Cisco and Big Switch declined comment, according to SDNCentral's Craig Matsumoto, but he writes that tongues were wagging at VMworld that something like that was up.

A high-flyer up to and including its launch 10 months ago, Big Switch and OpenFlow have become yesterday's news after VMware rolled out its NSX network virtualization platform at VMworld, and the industry awaits Cisco's launch of the Insieme Networks programmable networking line. Meanwhile, OpenDaylight has accomplished what some believe was its original intention: marginalizing Big Switch by opting for a Cisco/IBM open source controller code base rather than Big Switch's Floodlight-based controller.

[DELAYED RESPONSE: Chambers: Cisco waited too long to address SDNs]

Matsumoto writes that the whisper number for acquiring Big Switch is a paltry $100 million, less than half of the company's valuation as of its 2012 funding round. The loss in value can be traced to a couple of things: not being bought shortly after VMware paid $1.26 billion for start-up Nicira, developer of the NSX platform; and former ecosystem partners - like Juniper - and non-partners, like HP and Alcatel-Lucent, developing or acquiring their own controllers.

"Nobody wanted to be dependent on Big Switch" in case the start-up was acquired by a competitor or raised the price of its technology to unattractive levels, says Gartner analyst Joe Skorupa.

SDNCentral then goes on to state a couple reasons why Cisco might want to acquire the SDN start-up: the personnel - Cisco already attracted VP of Engineering Howie Xu, while OpenFlow basher Prashant Gandhi went from Cisco to Big Switch; and the products, which include an OpenFlow controller and switch, SDN applications and a 'thin' switch. The post says this would give Cisco two controllers - OpenDaylight for open source and Big Switch as the commercial offering - but it would really give Cisco three or four contollers: CiscoONE for its legacy installed base and perhaps a new one from Insieme for Application Centric Infrastructure.

And we see a third and fourth reason Cisco might buy Big Switch. SDN customers like Fidelity and Goldman Sachs, even though Cisco is undoubtedly in those accounts already; and killing a competitor. One hundred million dollars is a pittance to a company with a $50 billion cash hoard stashed in bank accounts around the world. Shaving off .2% of that to eliminate a nuisance seems an undetectably small sacrifice.

It would also keep Big Switch from falling into the hands of a more formidable competitor.

"Why would they want a fourth controller?" asks Skorupa, of Cisco's reported interest in Big Switch products. "Unless they want to keep it from a competitor - buy the asset and bury it in a landfill."

More likely suitors for Big Switch might be data center and hypervisor titans without an SDN controller: Dell, Brocade and Microsoft, Skorupa speculates.

"Dell is in the OpenFlow camp, they don't have their own controller and they're not interested in OpenDaylight," he says, adding Dell would first have to complete its deal to go private.

Microsoft could buy Big Switch to respond to VMware's NSX; and Brocade might find that its participation in and support for OpenDaylight amounts to very little differentiation and commercial success, Skorupa suggests.

Dell and Microsoft are still Big Switch partners. Brocade was initially, but is no longer listed as such on the Big Switch website. The 27 partners announced 10 months ago are now down to 22, with a couple being acquired.

And where's Arista?

Whether it's acquired or not, changes are coming for Big Switch, according to Matsumoto's post. A company spokesperson told SDNCentral that an "adjustment" to business as usual is coming this fall.

More from Cisco Subnet:

Some final notes on Cisco Live

Chambers: Cisco waited too long to address SDNs

Cisco, Insieme tout 'penalty-free' fabric architecture

Cisco forms Internet of Things group

Cisco delivers 'monster' Catalyst switch in major product refresh

First look: Catalyst 6800 switch and friends

Insieme will be in the house at Cisco Live

Cisco denies spying

Cisco looks to standardize context-aware security

CCIE's raise Voice over Cisco cert move

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