Nicira and a few other gutsy start-up companies could give networking heavyweights Cisco (NASDAQ:CSCO) and Juniper (NYSE:JNPR) a run for their money. The companies use a data traffic management technology known as software-defined networking, which operates using a combination of off-the-shelf chips and network virtualization to provide a product that is cheaper, easier to run and more adaptable than other offerings, says a New York Times report.

Nicira says it can save a facility with 40,000 servers as much as $37 million and reduce expenses by half in creating the fastest networks, according to the report. Nicira customers, including large phone companies, Internet service providers and computer manufacturers believe they can be even more efficient than Google’s (NASDAQ:GOOG) data center.

Other Nicira clients include EBay (NASDAQ:EBAY), AT&T (NYSE:T), which is spending $1 billion a year on its cloud, and Japan’s NTT, which used it to reconfigure thousands of machines in a computer center to assume the work of a center disabled by a tsunami.

Other players in the network virtualization game include Pica8 and VMWare (NYSE:VMW). Pica8 claims its virtualized switch made with third-party chips can handle the workload of a $25,000 Cisco box for $3,000, the report said. VMWare, a vendor of small-scale network virtualization, works with new switch vendors like Arista to build very large data centers. “Nicira is an element we can work with,” says VMWare’s Chief Executive Paul Maritz. “There will be tens of thousands of big clouds defined by software, and they’ll be easy to set up.”

Both Cisco and Juniper say that they are already pushing more software-intensive systems, although both companies use pricier custom chips, which they insist offer performance benefits.

To contact the reporter on this story: Gina Smith at staff.writers@wallstcheatsheet.com

To contact the editor responsible for this story: Damien Hoffman at editors@wallstcheatsheet.com

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