Cloud Company Consolidation: Getting Ready for the Next Cycle?
It looks like the cloud computing industry is once again in turmoil. Over the past few weeks there have been a spat of announcements related to a new cycle of cloud technology consolidations and mergers. Is this a sign that cloud computing is entering the next great technology revolution cycle, or is it the beginning of the end of cloud innovation?
The cloud technology acquisitions are falling into two broad categories―pure software companies and infrastructure service delivery companies. So far the majority of the acquisitions fall into the software and tools bucket. This is not overly surprising because these types of mergers tend to be easier to be assimilated into the acquiring company’s product portfolio.
Cisco, IBM, and HP are masters of this approach to building their technology expertise by acquisition. All of them regularly bring in interesting emerging technology companies early in their lifecycle, when acquiring the technology is relatively inexpensive.
Red Hat’s string of purchases―four since January 2014―is a good example of a company that is building their product portfolio by strategic acquisitions. They had already developed a strong cloud platform strategy, signaled by their very active support of OpenStack development since they initially joined the OpenStack Foundation as one of the founding members. Their acquisitions in storage, orchestration, and integration tools nicely fill out their OpenStack product support portfolio of services.
Their storage software story started with Gluster purchased in 2011, followed by Inktank Storage, the driving force behind the Ceph (part of the OpenStack platform suite) development in April 2014. Their acquisition of ManageIQ helped build their orchestration software suite, while eNovance announced in June 2014 they will extend their OpenStack Integration Services. Rounding out their spending spree is their purchase of FeedHenry, an interesting cloud-based mobile application development platform, in September 2014.
Notably, the last of the truly independent cloud platform vendors have finally been subsumed by larger companies. Citrix snapped up CloudStack back in 2011, followed by Oracle’s acquisition of the cloud platform pioneer Nimbula in March 2013, while HP gobbled up Eucalyptus, Open Source Amazon Web Services emulation software, in September 2014. This leaves us with OpenStack, Microsoft Azure, Amazon AWS, and VMware vCloud as the main cloud infrastructure platform options for the enterprise.
All technologies go through innovation cycles, and cloud computing is no exception. However, this time around, the extreme speed of invention has meant that it has been hard for the more established technology companies to buy their way into innovation currency. It remains to be seen if this latest round of acquisitions will achieve that worthy goal. If not, there are surely more merger and acquisition activities to come in the red hot―one might even go so far to say overheated―cloud computing market segment.
