Cisco announced a deal to buy Metacloud yesterday, affirming two big trends in cloud computing: 1) Private cloud and 2) OpenStack.

Metacloud is a provider of “OpenStack as a Service” offering, meaning it enables enterprises to set up cloud applications and services in their own data centers using the open-source OpenStack platform. OpenStack has gotten a lot of attention as a virtualization environment comparable to VMware (VWW), because it holds many advantages of open source such as speed of development and lower costs.

The OpenStack vs. VMware debate was in full swing at the recent VMWorld conference, and Cisco may see this as an opportunity to fight back at VMWare's dominance, as a growing conflict between the companies appears to be developing. The Rayno Report predicted this as far back as 2010.

The Metacloud offering seems perfect for the market -- and obviously Cisco -- because it takes advantages of the growing interest in OpenStack at the same time as increased interest among enterprises to build their own private cloud services.

The infrastructure-as-a-service (IaaS) approach is appealing. Many enterprises want to adopt OpenStack, but it's not as easy as it sounds. It requires specific expertise, and building a cloud service on top of the hardware is a bit like a hobby project -- building your own car from a kit, for example. The Metacloud product allows companies to outsource that expertise and skill.

Another key component is the private cloud. Building applications on top of public cloud services such as Amazon Web Services (AWS) is popular, but many enterprises find that as these applications grow and scale, they need to be moved to a private data center that the company owns so that it can control its own infrastructure. MetaCloud enables this as well.

This is a pretty savvy deal for Cisco, because it immediately puts the company on a tack toward both private cloud and OpenStack at the same time. Of course, there's a risk: Customers may be drawn to Metacloud because of its open approach, and now that may start to be biased toward Cisco hardware, even though Cisco says it wants to keep its cloud offerings vendor-agnostic. But you have to wonder what kind of pressure there will be for more Cisco offerings to be included in the Metacloud portfolio in the future.

Cisco has said in public statements that the Metacloud acquisition is part of its “Intercloud” initiative, in which it has said it will invest $1Bn in the next two years to build an expanded cloud business. Cisco said these plans include an infrastructure to support any workload, on any hypervisor and interoperate with any cloud, meaning it will stay open in nature.

Metacloud employees will join Cisco’s Cloud Infrastructure and Managed Services organization led by Faiyaz Shahpurwala, senior vice president. The deal is expected to be completed in the first quarter of fiscal year 2015, subject to closing conditions. The deal price was not announced.