Juniper Purchases Contrail to Strengthen Grounds Against Competitor

Earlier this week, Juniper Networks (News - Alert) bought a tiny startup, Contrail Systems, which was officially launched a few days ago, for $176 million. Contrail's founders, employees, and investors are sharing almost six million shares of Juniper stock and $57.5 million in cash. In a round led by Khosla Ventures, the networking equipment maker kicked in some of the $10 million Contrail raised in July.

Jim Duffy at Network World (News - Alert) reports that Contrail's first product wasn't even scheduled to be released until next year. However, known as software-defined networking, or SDN, the product is in the super-hot enterprise market.

Turning enterprise networking on its ear, SDN is definitely a new technology. Companies can buy simpler, cheaper hardware instead of buying expensive routers and switches with a lot of fancy features. This makes networks more flexible and less expensive than it is today. In July when VMware bought the SDN leader, Nicira, for $1.26 billion, it set the market on fire.

Since then, startups that do SDN in some form or another have been the hot cakes of the tech world. Big Switch, Nicira's biggest competitor, landed $25 million in financing in October. Earlier this week, Plexxi came out of stealth. In two big rounds, it was backed by $48 million, including $20 million this summer.

Plumgrid, an SDN startup, landed $10.7 million in August. Pouring out of the woodwork, those are just a few of the SDN startups. Giving Juniper a way to grab Cisco's (News - Alert) customers, Contrail is particularly interesting to Juniper Networks, one of Cisco's biggest competitors. Its product was specifically designed in a way that lets it control Cisco's network equipment as well as Juniper's.

Its founders knew Juniper and Cisco's products intimately since they previously worked at Google (News - Alert), Cisco, Juniper, and Aruba Networks. Before a stint at Google, Pedro Marques worked at Cisco and Juniper.

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