Computer networking is the heart of the cloud data centers that power the Internet. But those networks are complicated, and they aren’t as open as they could be.

Intel is attacking this problem — and its rival Cisco — with two new technologies in the coming year: software-defined networking (SDN) and network function virtualization (NFV). The result, according to the world’s biggest chip maker, will be the unlocking of new revenue opportunities for cloud data center and telecom service providers.

Intel is investing and partnering in the networking ecosystem to make it happen. It is, for instance, announcing today at the Open Networking Summit that it has created a reference switch platform that the industry can use to implement applications that simplify networks. Intel also has a reference server platform for open networking as well and a DPDK Accelerated Open vSwitch.

Rene Torres, director of marketing for Intel’s effort, said in an interview with VentureBeat that the technologies will lead to the creation of more open and lucrative networks in the enterprise.

“This is a transformation within the network,” Torres said. “Proprietary networks have a high cost for provisioning in your networking infrastructure. We want an open ecosystem that separates the hardware from the software.”

Software-defined networks are simpler to operate. They allow system administrators to provision network connections on the fly instead of manually configuring things. With the rise of virtualization, it has become necessary for administrators to remotely configure their networks without having physical access to networking hardware. SDNs decouple the system that decides where traffic has to be sent (the control plane) from the underlying system that forwards traffic to the right place (the data plane).

Beyond simplifying networking, these abstractions enable new applications, such as network virtualization. Rivals such as Cisco or Ericsson may not see eye-to-eye with Intel on this, but Torres believes customers will get excited about it.

Abhi Dugar, an analyst at market researcher IDC, told VentureBeat, “The semiconductor value chain is shifting towards merchant silicon as opposed to custom designed switch silicon that Cisco gear is based on because developing [the custom chips] is becoming increasingly uncompetitive as development cost increases rapidly.”

Dugar added, “The stated goal of NFV is to consolidate network elements onto industry standard high volume servers, switches, and storage, which will necessarily be based on commercial silicon, although alternative commercial silicon, including system-on-a-chip solutions, from other vendors would also be acceptable.”

The makers of network appliances, such as firewalls or intrusion detection systems, have tried to simplify life for administrators by creating server appliances that can be plopped into the network. Those appliances bundle hardware and software together, and they aren’t necessarily easily configured for your own special situation. A single appliance could cost $20,000, and data center needs lots of them.

“They’re really expensive,” Torres said. “You have to do homework to make sure they stitch together.”

Administrators don’t know how these appliances function and how to mix and match them with other technologies. Those proprietary appliances have become part of the problem, not the solution, Torres said. They add to costs and delay the launch of new services.

With SDN and NFV (ideas that were born in academia), those appliances go away. Instead, companies adopt standard servers, switches, and storage. That equipment can be stored in a data center or in a customer’s office. That reduces the size of data centers and the energy consumed by them, reducing overall operating costs.

Intel provides all of the different pieces of standard hardware to make SDN and NFV happen. Administrators will be able to use external software to program the appliances that are typically bundled, hardware and software together. Application creators will be able to create hardware and software separately. That allows the movement from proprietary networks to open networks that don’t lock customers into specific vendors. Or that’s the idea, at least, when SDNs and NFV become universally adopted.

The result will eventually be that, rather than create a new network appliance with both hardware and software elements, the networking companies can simply create software applications running on top of the standardized network. The need for expensive custom hardware, such as Cisco’s equipment, goes away.

Rob Enderle, analyst at the Enderle Group, said, “I would have thought that they were competitors, but Cisco and IBM are launch partners. It looks like Cisco is using Intel to get ahead of what likely will be a massive reduction of costs associated with switching. IBM has had a long term relationship with Intel and this fits their service and software oriented strategy; it appears Cisco is on this same page now. Cisco in particular appears to be planning to use this technology to resist losing customers (given they are the largest in the space) during the move to Software Defined Networks and protect their base. It is very unusual for a dominant entrenched vendor to make such a move, but it is also critical that they do.”

Intel is embracing the standards-based OpenFlow networking platform as part of its solution. Supporters include Google, Big Switch Networks, and Facebook, all of whom have adopted the OpenFlow protocol in their data center technology. The Open Networking Summit was created to promote SDN standards. Torres said the telecom carrier Telefonica plans to work with NEC and Intel to implement an open network.

“This is all about moving the needle on what is networking and what is computing,” said Jennifer Pigg, an analyst at the Yankee Group. “Core and metro service provider routers will remain on specialized hardware for foreseeable future (which in this market is five years). Everything else is up for grabs: enterprise, data center, access routers – will all benefit from SDN. “

She added, “We will see more storage and compute vendors move into traditional networking markets buoyed by the wave of cloud, virtualization, SDN, and NFV. Intel is laying the keel for these new vendors. Traditional vendors are threatened, but Cisco is trying its best in the Daylight consortium to exert control over this market.”

Sept. 9 - 10, 2013
San Francisco, CA

Early Bird Tickets on Sale

VMware picked an unusually busy day (new pope, new Android head, new Kickstarter record) to dump a lot of high-level cloud announcements in the laps of tech reporters everywhere. The company has some big things in the works, including an upcoming public cloud that will challenge Amazon and a new focus on software-defined data centers.

Let’s dig into the news dump.

Public cloud to take on Amazon and Rackspace

First up, VMware vaguely announced that it will be offering a stand-alone public cloud from its newly formed “Hybrid Cloud Services” business unit. This public cloud will challenge all the big dogs offering infrastrcture-as-a-service — Amazon, Rackspace, IBM, HP, SoftLayer, Google, Microsoft, and more — and it will launch in the second quarter of 2013.

Forrester analyst James Staten, who was pre-briefed on the announcement, writes about the decision in a blog post:

Sometimes you can only coax a reluctant partner and I&O customer community for so long before you feel you have to take matters into your own hands. That is exactly what VMware has decided to do, to become relevant in the cloud platforms space. The hypervisor pioneer unveiled vCloud Hybrid Service to investors today in what is more a statement of intention than a true unveiling.

VMware’s public cloud service – yep, a full public IaaS cloud meant to compete with Amazon Web Service, IBM SmartCloud Enterprise, HP Cloud, Rackspace and others – won’t be fully unveiled until Q2 2013, so much of the details about the service remain under wraps. VMware hired the former president for Savvis Cloud, Bill Fathers, to run this new offering and said it was a top three initiative for the company and thus would be getting, “the level of investment appropriate to that priority and to capitalize on a $14B market opportunity,” according to Matthew Lodge, VP of Cloud Services Product Marketing and Management for VMware who spoke to us Tuesday about the pending announcement.

VMware said its public cloud will be aimed at its existing customer base and sold through its existing VAR and SI channel. This explains CEO Gelsinger’s strong comments from last month’s Partner Exchange — it wasn’t public clouds he was worried about but non-VMware public clouds. But for this channel fulfillment strategy to come true, its partners will have to get with the cloud program too and like the I&O clients they serve, many don’t see more revenue at the end of the public cloud rainbow. And most channel partners don’t have the skills or the trust level to help their I&O clients transition from static virtualization to cloud – that’s a culture and career path change more than a product they can sell them. This requires consulting skills and real cloud experience and most VMware partners don’t have either.

Software-defined data centers

VMware also said today that it will merge its “VMware vCloud Networking and Security” product line with the “Nicira Network Virtualization Platform (NVP)” into one product family called “VMware NSX.” VMware paid more than $1 billion to buy Nicira in July 2012 for its software-defined networking potential, so here we are seeing that move in action.

There is some skepticism that software-defined data centers are overhyped, but we’re willing to let VMware put itself out there and see what it is able to do on this front.

The company explained the decision in this excerpt from a lengthy blog post:

VMware NSX will be the world’s leading network and security virtualization platform providing a full-service, programmatic, and mobile virtual network for virtual machines, deployed on top of any general purpose IP network hardware. The VMware NSX platform brings together the best of Nicira NVP and VMware vCloud Network and Security (vCNS) into one unified platform. VMware NSX exposes a complete suite of simplified logical networking elements and services including logical switches, routers, firewalls, load balancers, VPN, QoS, monitoring, and security; arranged in any topology with isolation and multi-tenancy through programmable APIs – deployed on top of any physical IP network fabric, resident with any compute hypervisor, connecting to any external network, and consumed by any cloud management platform (e.g. vCloud, OpenStack, CloudStack).

The Pivotal Initiative is a go

Finally, the VMware and EMC spin-off The Pivotal Initiative has become official.

The Pivotal Initiative is led by former VMware CEO Paul Maritz. It is 69 percent owned by EMC and 31 percent owned by VMware and focuses on “big data” and data processing initiatives. The new company has employees and technology from EMC’s Pivotal Labs and Greenplum units and from VMware’s Cloud Foundry, Spring, and Cetas.

EMC CEO and Chairman Joe Tucci believes The Pivotal Initiative will go public in the future, and Martiz has stated it will likely be a $1 billion business in five years.

Just weeks after we reported a shift in strategy at VMware, the virtualization giant has announced its intent to acquire Virsto Software, a provider of storage performance optimization software.

VMware is refocussing its efforts to what it knows best: infrastructure. The company had intended to branch out to provide products at every layer of the entire software stack, including cloud-based applications. But with competition from scrappy startups and legacy vendors, VMware is concentrating its energies on the virtualized data center.

John Gilmartin, vice president of VMware’s storage and availability unit, said the company intends to extend the “benefits of virtualization to every domain of the datacenter — compute, network, and storage.” VMware has made a number of strategic acquisitions to bolster its technology in each of these domains, including the high-profile purchase of Nicira for $1.26 billion.

The buy-up, which the company announced in a blog post today, is expected to close at the end of the quarter. The terms of the deal were not disclosed.

The Sunnyvale, Calif.-based Virsto has raised over $24 million in venture capital from investors, including August Capital, Canaan Partners, Interwest Partners, Southern Cross Venture Partners and Correlation Ventures.

Network virtualization company Big Switch received a $6.5 million strategic investment from Intel Capital.

Also referred to as software-defined networking, this technology makes network architecture more flexible by enabling multiple networks to act as one. Big Switch’s OpenFlow platform gives network administrates more control over the behavior of network devices, such as routers and switches. The software virtually integrates multiple data centers, and people sharing the same physical network never see each others traffic.

The market for network switching is in the billions, as organizations with massive data needs look for more flexible, scaleable infrastructure. This sector gained heat after VMware paid $1.26 billion for virtualization startup Nicira in July. Since then, a number of companies, including Big Switch, PlumGrid, Pluribus Networks, have closed major rounds of funding with big-name investors.

Intel’s investment adds to the $25 million Series B Big Switch announced in October. It brings the company’s total capital raised to $45 million. Other investors include Redpoint Ventures, Goldman Sachs, Index Ventures, and Khosla Ventures. Read the press release.

If you deal in the esoteric art known as wireless data management, then you likely know this: Software-defined networking is in right now.

Cisco knows this better than most. The networking titan is plunking down $475 million to buy Intucell, an Israeli startup that specializes in self-optimizing network software.

Intucell’s software enables networks to automatically adjust cell activity based on demand, which makes network congestion far more unlikely and outages far less severe. Intucell’s software also helps networks repair themselves. (Sort of like the T-1000 in Terminator 2, but less homicidal and a lot more wireless.)

An early convert to the Intucell way is AT&T, which announced last year that it would use the company’s technology its in 3G and 4G networks. That, like the Cisco buy, is good news for Bessemer Venture Partners, which helped Intucell raise $6 million in 2011.

It seems like just about every time we mention Cisco nowadays, it’s in the context of another acquisition it’s made. This is at least the fifth one by the company since last November, and it’s clear from many them that Cisco has at least two agendas: Cloud computing and traffic management. And something tells me its shopping spree is far from over.

Sept. 9 - 10, 2013
San Francisco, CA

Early Bird Tickets on Sale

Jérôme Lecat is the chief executive of Scality.

In the past year, we’ve seen technology companies offering software-defined networks, software-defined storage, software-defined servers, even software-defined hardware. It’s fast becoming a buzzword. But does it have real meaning?

In a recent tweet, Randy Bias, chief technical officer of Cloudscaling, stated, “‘Software-defined’ is the new ‘cloud.’ Sprinkle it on your products along with an API and you *are* the future.” Through this statement, ironic as it may be, Randy is posing some good questions: Are we seeing a new “washing” phenomenon like “cloud-washing” or “green-washing” of products? Is the “software-defined” concept even useful?

https://twitter.com/randybias/status/276012931265744898

It is incredible what a $1.26 billion acquisition can do! In just the few months since VMware shelled out that total for Nicira, a maker of software-defined networking technology, I cannot count the number of startups which have rebranded themselves as “software-defined something.”

When it is a software start-up like Virsto, Datacore, Nexenta, or Scality (my own company), I can understand. But hardware startups? You have to be bold to call yourself “software-defined”! I will not mention names to not embarrass anybody, but there is undoubtedly some “washing” going on.

Beyond this, is the concept useful ? I believe it is.

The IT industry is regularly traversed by new concepts. Some are useful and they stick, some are not and they vanish. Some reappear a few years later under a different name. The Internet was a valid concept, and it stayed. But at the same time as the commercial Internet was developing, many established companies repainted their offerings as “extranets,” but the concept did not live long. VOIP (voice over Internet Protocol)  is a valid concept, but it only appeals to technologists.  At the end of the day, a phone call is a phone call, and I don’t care what protocol my phone speaks, as long as I can make calls.

I am still struggling with the “cloud” concepts. To be useful a concept needs to have a clear definition that is understood by everyone using the concept. “Cloud” actually has a definition, but the word is mostly used to mean something else than the definition. The first definition I have found is from Forrester Research and dates back to March, 2008: “A standardized IT capability (services, software, or infrastructure) delivered via Internet technologies in a pay-per-use, self-service way”.

With such a definition, the concept of “private cloud” is a pure contradiction. But the use of the term has evolved, and when people say they “store their documents in the cloud,” they really mean nothing different than what they meant three years ago when saying that “they pulled a document from the Internet.” I actually often joke that when I was selling Internet access in the late nineties, I would draw a screen (that was my customer), a line, and a cloud (which I labeled “Internet”). Some fifteen years afterwards, I do the same diagram, but now I have replaced the word “Internet” with the word “cloud”!

But “software-defined” is different. I can easily picture a world in which networking and storage are delivered by software running on standard servers and how this world contrasts with today’s datacenter, where networking and storage are delivered by special-purpose appliances.

Actually, when Scality came out of stealth in 2010, we were struggling to position ourselves. I would explain that we are a “storage software” company, and people would look at me with a grin. “Storage software? So what do you use for storage? A storage array from EMC or Netapp?” I would answer patiently that you don’t need a storage array, that we transform a set of generic servers into a storage platform. Most of the time I would be met with a more inquisitive look. In the defense of the puzzled people I was talking to, every analyst research firm out there considers storage as being part of companies’ hardware spending, so it is very difficult to conceive of storage as being software.

But in the last few months, I have been trying out the term “software-defined storage,” and people immediately get what we do. This in my mind is the sign of a useful concept.

Jérôme Lecat is the chief executive of Scality, a large-scale storage management startup. He is a serial entrepreneur and business angel with 15 years of internet start-up experience.

Disclosure: Scality was one of the sponsors of our recent CloudBeat 2012 conference.

Tree whitewashing photo: Shutterstock

Sept. 9 - 10, 2013
San Francisco, CA

Early Bird Tickets on Sale

VMWare chief technology officer Stephen Herrod believes in a future filled with choices. And he thinks networking companies better start embracing choice, especially open-source software, or face steep consequences.

“There’s not a networking company in the world that doesn’t realize things need to change dramatically,” Herrod said on-stage today at CloudBeat 2012.

VMWare currently has its hands tied to many different projects, trying to find a way forward in software-defined networking, trying to virtualize every piece of the data center, and embracing platform-as-a-service with Cloud Foundry. Herrod cited VMWare’s acquisitions of Nicira and DynamicOps as big wins that will help them continue to innovate in the virtualization space.

Herrod is so dedicated to choice that half of VMWare’s engineers are working on open-source software and the other half are on closed-source software.

“The approach we’re taking is the one that will win in the long term,” Herrod said.

Check out the great full interview with Herrod in the video below.

Photo credit: Michael O’Donnell

Evernote may be grabbing $100M

File that in your Evernote notebooks, with the tag “that’s a lot of cash.” The popular note taking/organization service is apparently raising a new round of $100M at a $1 billion valuation. Meritech Capital partners is said to be leading the round. Evernote has already raised $95.5 million in funding, so this new round would double its total funding.

Get social and chatty with Tango — it just raised $40M

Th video chat app that could rival Apple’s Facetime, Tango, just raised $40 million from Qualcomm Ventures and Access Ventures. The cross-platform app has snatched up 45 million users in the 18 months it’s been available.

Lifecrowd parties with a new $5M investment

Social events startup Lifecrowd has raised $5 million in its first round of funding from Lightbank, Bullpen Capital, Baroda Ventures, and Prism VentureWorks. Lifecrowd lets anyone create a social event, but curates its social calendar so only the best ones show up — no more lame meetups in someone’s parent’s basement.

BranchOut grabs $25M for a better LinkedIn

If you hate LinkedIn but like Facebook, BranchOut has you covered. The service has the same functionality as LinkedIn but operates on Facebook, so you can share business contact information and find jobs. BranchOut raised $25 million from Mayfield Fund, with participation by Accel, Norwest Venture Partners, and Redpoint Ventures.

Robot vacuum producer Neato Robotics gets funding

Neato Robotics has just snagged $12.2 million in fourth-round funding for its robot vacuum cleaner. Vorwerk Ventures and Noventi Ventures led this fourth round, which will be used to grow the company’s business and launch a new vacuum model.

Insieme gets a $100M investment from Cisco

Cisco has invested $100 million in a networking startup called Insieme that was started by three Cisco employees. The company also has the option to pay $750 million more to buy Insieme, should Cisco choose. Insieme tackles issues in software-defined networking (SDN), a somewhat easier and less expensive way to deploy cloud computing systems.

NComputing raises $21.8M for desktop virtualization

Desktop virtualization and thin-client computing firm NComputing has raised $20 million in a new round of funding. QuestMark Partners led the round with existing investors Menlo Ventures, Scale Venture Partners, and Daehong Technew. The company has raised a total of $57.8 million to date.

Greenlight Planet raises funds for solar lights

Greenlight Planet has raised $4 million. The company provides solar lights for rural villages in Africa and India, hoping to replace the kerosene lanterns most off-the-grid villages use. ZA Associates led the round.

Treehouse snags $4.75M to teach you how to code

Codecademy competitor Treehouse has raised $4.75 million for its online coding school. The company offers classes on how to do web design, write JavaScript, and build iOS apps. The Social + Capital Partnership led the round, with Reid Hoffman and David Sze from Greylock Discovery Fund participating.

If you’ve got funding new for us, send it to tips@venturebeat.com