Why Oracle’s Acquisition of Xsigo Is Brilliant

When I read the headline ‘Oracle acquires SDN company Xsigo’ I literally laughed out loud.  I had never heard Xsigo and SDN in the same discussion, let alone the same sentence.  Oracle had been on my list of companies looking to acquire SDN properties but Xsigo?

The future of SDN, in my opinion, is tight coupling of the physical and virtual network.  Any company building a complete SDN strategy will need to build, buy, or partner for both so Oracle buying a hardware company makes sense.  What I could not understand was why Xsigo over other independent switch vendors such as Arista or Extreme, both of which are already talking SDN.  Xsigo’s history with Infiniband makes for an obvious excuse, but I suspect SDN truly is the play here and for Oracle’s competitors is no laughing matter.

I see your $1.26B and raise you negative $1B!

Like all major players, Oracle has been pushing converged infrastructure with its Exalogic ‘engineered system’.  Converged infrastructure is a trend that is not going away and the rack is quickly becoming the new unit of consumption within cloud enabled data centers.  The trend has turned racks into a black box with the components and technology inside the rack become largely irrelevant and obscured by management and orchestration systems.

Cisco pulled this off flawlessly when it launched its UCS computing platform.  FCoE, Fabric Extender and VN-Tag were slow starters on their own but widely deployed within UCS without users even realizing it.  Oracle has already done this with Infiniband by embedding it in the Exalogic platform, giving users cheap bandwidth, low latency and easy access to the benefits of RDMA.  The acquisition of Xsigo doesn’t change this as Oracle already has Infiniband switches.  What Oracle didn’t have until now was a SDN ready platform.

I don’t claim to be an expert on Xsigo but what I do know is their switches have the potential to deliver some interesting SDN capabilities.  Xsigo uses one of EZChips network processors, which also happens to be the NPUs NoviFlow is using in their OpenFlow 1.1 compliant switching platform.  A quick pass of the EZChip data sheet shows a boat load of features including L2 switching, L3 routing, load balancing, deep packet inspection, and of course encapsulation for overlay tunneling.  Oracle just acquired a switch that looks like it was purpose built to turn Exalogic into a full data center in a box.  With

In such a tightly integrated system like Exalogic it’s not clear that Oracle will need a full blown SDN controller but they will need to extend Exalogics orchestration stack if they intend to deliver distributed SDN capability.  Xsigo doesn’t have a history of building SDN controller, at least to my knowledge, but Oracle has a long history of building distributed systems.  Something tells me Oracle can pull off a the basics of SDN, in a way that is tailor made for Exalogic, fairly quickly.  Even so, it would not surprise me if they acquire someone to accelerate time to market.

Oracle didn’t release (that I could find) specifics of the deal, but I’d be surprised if there was much more than a few hundred million involved.  My guess is Oracle just found the perfect way to one up VMware’s acquisition of Nicira for a billion dollars less.  Brilliant!



Categories: Cloud Computing, Data Center, Networking, SDN & OpenFlow, Virtualization

2 replies

  1. Great insight Dan. I think most of us looked at the headline and laughed at the thought of Xsigo being a SDN player. But it does make since that they have the foundation for the hardware and Oracle has the know how from a distributed systems perspective. It looks like they still need to acquire talent to complete the transformation of Xsigo’s hardware. When I think of Oracle I don’t think network or SDN for that matter.

    I wonder where they would pick up that talent. Arista is doing some seriously interesting things and I’m pretty sure Oracle still has a couple of bucks in the bank.

    • If Xsigo can pull off tunneling from it’s box Oracles networking needs may be fairly light (today). They do what they need within the rack and simply tunnel over the rest of the infrastructure.

      As for Arista I think they may be the second half of a longer term strategy at EMC (my personal opinion only). EMC needs to milk VMware as partner friendly as long as possible. If Cisco does what I think it will and acquires Red Hat (look at RHT stock price the last couple weeks) then EMC needs to pull the trigger and snatch up Arista giving them a full stack.

      In the end everyone will have a fully integrated converged infrastructure. The question really is how soon it all comes together. 3 years from now the world may look like this:

      EMC+ VMware + Arista
      Cisco+ RedHat + Netapp(?)
      HP + Microsoft partnership
      IBM + Juniper
      Dell + Citrix
      Oracle

      Pick your rack…

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