NVIDIA Buys Cumulus, Adding to Networking Stack

In an interesting twist, a week after NVIDIA announced the completion of its $7 billion acquisition of Mellanox, it announced in a blog that it also plans to purchase Cumulus Networks.

The combination of the technology components is significant and is likely to change the dynamic of the cloud networking market, believed by most industry experts to be led by Cisco Systems and Arista Networks. Mellanox has been a fast-growing supplier of high-performance network interface cards (NICs) for cloud and datacenter applications, as well as a provider of data-center switches -- a unit which the company recently said on an earnings call is growing at a 60% annual rate. Cumulus Networks offers an open-source network operating system (NOS) that Mellanox packages with its switches, in addition to other options such as Microsoft's SONiC open-source NOS.

The bottom line: It looks like NVIDIA now has all the pieces to offer sophisticated data-center and cloud networking switches, meaning it's going to make a run directly at market leaders Arista and Cisco.

Why Now?

The question is: Why now?

In a blog, Amit Katz, vice president of Ethernet switching for Mellanox, pointed out that cloud architectures are evolving into disaggregated and software-defined systems. Mellanox believes that high-performance computing and networking hardware and software must "go hand in hand." NVIDIA is now targeting higher-level integration by acquiring networking from Cumulus and NIC, switching, and security capabilities. Mellanox's NICs can be used to speed up important cryptographic functions for network security.

With Cumulus, Katz wrote that NVIDIA can optimize across the entire networking stack from chips and systems to software and employ analytics using Cumulus NetQ. "This open networking platform is extensible and allows enterprise and cloud-scale data centers full control over their operations."

Put into context with NVIDIA'S deal to buy Mellanox, a well-respected technical company that has focused on high-performance cloud applications, NVIDIA can now combine these networking technology capabilities with its own graphics processor units (GPUs), or accelerator chips, to build a full networking stack for cloud applications such as artificial intelligence (AI).

This is the vision laid out by NVIDIA Founder and CEO Jensen Huang, who said in a statement about the Mellanox deal last week: “With Mellanox, the new NVIDIA has end-to-end technologies from AI computing to networking, full-stack offerings from processors to software, and significant scale to advance next-generation data centers. Our combined expertise, supported by a rich ecosystem of partners, will meet the challenge of surging global demand for consumer internet services, and the application of AI and accelerated data science from cloud to edge to robotics.”

Elegant Exit for Cumulus Networks

In addition to giving NVIDIA formidable technologies to expand its cloud growth, the acquisition of Cumulus Networks closes another chapter in the evolution of the software-defined networking (SDN) market. Cumulus, based in Mountain View, Calif., was founded by JR Rivers, a leader in the SDN market who now works for Amazon. Although Cumulus has gone through many twists and turns in a competitive market, it has persevered to build a loyal following. Cumulus Linux now ships on more than 100 hardware platforms. Mellanox ships the Mellanox Spectrum with Cumulus Linux and SONiC. The two companies started their partnership in 2013.

The terms of the deal were not disclosed, but several sources have told Futuriom that the price paid was healthy and the deal was not described as an asset sale. Regardless, Cumulus is likely now in a much better position to succeed, being owned by one of the hottest companies in cloud infrastructure that has deep pockets with billions of dollars in cash.

This deal is likely to transform the cloud networking market and put more pressure on Arista and Cisco, which have been under pressure at webscale cloud vendors of late, based on conference call transcripts and sources in the industry.