Summary: The $25M round reveals strong SDN interest out of EMC Corp. and Goldman Sachs.

While GigaOm may have the “scoop” on Big Switch's software-defined networking (SDN) announcement -- only SDxCentral has the inside track about this financing and how it relates to VMware's acquisition of Nicira. (See additional SDxCentral Nicira acquisition coverage here and here.)

First, a congrats to our many friends at Big Switch -- even in the best of times, it's never easy to navigate a financing and they closed a fantastic round at a strong valuation with quality investors.

GigaOm alludes to rumors of EMC's interest at investing in Big Switch -- SDxCentral has learned that EMC went well beyond casual interest.  According to sources familiar with the situation the two apparently consummated an EMC Ventures investment into Big Switch while VMware was finalizing the purchase of Nicira.  We've been told that EMC Ventures was the lead investor and had closed the first tranch of Big Switch's Series B round at a pre-money valuation between $150M - $200M (while leaving room for a strategic investor - that we know now to be Goldman Sachs).

This effectively gave EMC considerable influence of two budding SDN controllers, an open-source vSwitch (Open vSwitch) and an open-source soft-switch (Indigo), in addition to EMC's / VMware's own vSwitch (vSphere Distributed Switch) -- all to ramp up their fight against Cisco.  This would have been problematic for everyone involved for a wide range of reasons ranging from anti-trust (EMC) to customer confusion (Big Switch), and loyalty (EMC and Big Switch) leading to a rapid effort to identify a new lead investor to buy out the EMC stake.  The rumor mill's been active since early September that Big Switch's new lead investor was RedPoint which was finally confirmed today.

This tussle over Big Switch is just one of many battles that are playing out in real-time over various SDN technologies and companies by the large public companies.  Cisco made its first move to answer VMware's acquisition for Nicira by purchasing vCider, perhaps Big Switch will be next.

What does this mean:

• Customers -- Carefully select your SDN vendors and make sure you negotiate provisions in your supplier contracts to protect you if your favorite SDN software company is acquired by a company that isn't your preferred networking vendor.
• Vendors -- Big Switch has strategic partnerships with just about every major networking and virtualization company that isn't owned by EMC -- have a back-up plan incase Big Switch is acquired by one of your competitors.  Remember, that unlike true-open source projects like, OpenStack or Apache, which are lead by a collection industry leaders; open-source projects like Indigo and Floodlight or Open vSwitch controlled by a single vendor (Big Switch and Nicira / VMware) pose the same strategic risks as relying on a partner who offers commercial software.