VMware is shelling out US$1.05bn in cash and about $210m in equity for Nicira, a network-virtualization company, to capitalize on the shift toward a data center where all physical infrastructure assets are completely abstracted and automated and all data center resource provisioning and management are done through sophisticated software – a vision known as the “software-defined data center”.

While Nicira already has a number of high-profile customers, Paul Maritz, VMware’s outgoing CEO, said VMware did not expect its largest acquisition yet to add in any meaningful way to its overall 2012 revenue.

“We’re not expecting a significant revenue contribution this year,” Maritz said about the deal during the company’s quarterly-earnings call Monday. “This acquisition is made because of its strategic value, as opposed to its current revenue value.”

Judging by the price tag, it is obvious that “we believe this is of utmost strategic importance going forward,” he added.

The acquisition fits in VMware’s overall three-layer strategy, which consists of new approaches to developing software-applications to fit modern realities, support for users in the “multi-device post-PC world” and remaking the data center as it becomes more and more software-defined.

Nicira’s software-defined networking solution fits into the third layer. Its technology abstracts physical network infrastructure, enabling the user to provision virtual network resources and services.

The solution automates network-hardware management. "Automation" is another strategic keyword for VMware.

“This is ultimately all about automation,” Maritz said. “At the end of the day, we are in the data-center-automation business, and to be in the data-center-automation business, one has to be able to speak to the automation of all the key functions in the data center.”

VMware considers Nicira to be the leader in its space, he said. The virtualization giant’s CEO said a sign that its technology was mature was the adoption of its products by a number of large service providers and enterprises at scale.

Nicira’s existing service-provider customers include Rackspace, AT&T, DreamHost and NTT. Enterprises using its network-virtualization solutions include eBay and Fidelity Investments.

These companies exemplify the two types of customers driving adoption of software-defined networking today. They are service providers with an immediate need for a solution to their network-bottleneck problems and forward-looking enterprises that adopt the solution in anticipation of network issues in the near future, Maritz explained.

This was the last VMware earnings call Maritz participated in as the company’s CEO.

Earlier this month, VMware announced that Maritz will step down from the role, while remaining on the board of directors and taking on a role in developing the strategy of EMC, which owns 80% of VMware.

Effective 1 September, 2012, Maritz will be replaced by Pat Gelsinger, the company’s current COO.

VMware announced US$1.12bn in revenue for the second quarter, up 22% year over year.

Its net income for the quarter was $192m, or $0.44 earnings per share (EPS). Income and EPS slid down in comparison to the second quarter of 2011, when the company reported an income of $220m, or $0.51 in EPS.