The network is detaching from the physical hardware and leading to the biggest change in network operations that the market has not seen in 25 years. It’s not a question of if this will catch on. It’s a matter of when and how fast.

There are a few companies on the edge of this trend. One of those is coming out of stealth today. Nicira has been years in the making. It’s the kind of story we don’t hear often.

Nicira is a network virtualization company with $50 million in funding and a blue chip list of clients that include Rackspace, EBay and Fidelity. Its venture backers include red-hot Andreesen Horowitz, which recently raised $1.5 biilion and Lightspeed Ventures, which has won big by investing in transformative data center technologies and is now raising $855 million for a new fund. VMware Co-Founder Diane Greene is also an investor.

Nicira’s software turns a network into essentially an IP backplane. That’s critical in today’s world where the hierarchy of the physical network creates bottlenecks. In a flat network, devices connect directly to the switch, allowing for the data to distribute effectively across its infrastructure.

Nicira deliversa network virtualization platform (NVP). It works across any physical network infrasrtructure. It creates an intelligent service around the physical network.

Open vSwitch (OVS) is a switch that serves as the core component on the intelligent edge of the Nicira network virtualization platform. It can be deployed as a server hypervisor that works with ESX (VMware), Xen, Xen Server, KVM and HyperV.

There is also a “gateway” approach, with OVS in a virtual or physical appliance.  In this approach, the gateway is primarily deployed to integrate with legacy physical networks. This might mean connecting an entire VLAN into the cloud data center on the same virtual network or for connecting virtual networks to the Internet.

Network virtualization allows the flexibility that is independent of topology that includes getting access to storage. Nicira executives explain that this makes the storage accessible no matter where you put the compute. You can move the compute anywhere to access block storage. That’s the advantage that comes with virtual networks.  Just as virtualization changes the ways servers are defined. That same change in definition will apply to network virtualization.

Nicira executives say its competitors will primarily be existing networking providers. But there are a number of startups in the space, including BigSwitch.