SDN is the concept of separating the software layer from the physical network and as a result facilitate much more efficient architectures and administration. It has been growing at a fairly moderate pace up until recently, when suddenly this trend seemed to have sparked an interest among some of the biggest players in the industry.

Software-defined networking in a nutshell is using less proprietary networking equipment (running closed firmware) in order to create a more cost-efficient data center environment. And as it’s picking up traction among both customers and the big IT powerhouses, more traditional vendors such as Cisco are facing more scrutiny from Wall Street.

VMware, which acquired network virtualization firm Niciria for $1.2 billion last month, is expected to report an 88 percent margin for this year. And Oracle, the database kingpin that bought out SDN startup Xsigo a week later, is expected to post a margin of 80 percent for fiscal 2013.

Cisco is way behind with a 62 percent projection, and it’s one of the slowest growing firms on the Russell 1000 Index. But that doesn’t mean it’s not trying to making a transition From Bloomberg:

“We not only want to participate in this market, we want to lead,” said David Yen, manager of Cisco’s data-center group, in an interview.

Cisco also was in talks to acquire Nicira, and was outbid, two people with knowledge of the matter said.”

VMware competitor Citrix was also involved in that bidding process, according to VP of strategic development Mike Cristinziano. The exec said that Citrix did show some interest but backed off when the price tag began to swell, and that his company is hoping to establish a position of its own in SDN via a partnership with the likes of Nicira and Xsigo, but mainly Cisco. In Cristinziano’s words, the vendor is the “800 pound gorilla in the lower layers of networking.”