Over the better part of a decade, cloud computing mergers and acquisitions painted a picture where cloud service providers were on the hunt to accumulate as many customers as possible. Thus, you saw massive build-outs of facilities and a haphazard set of mergers and acquisitions that had no real rhyme or reason. We also witnessed incredible price wars when it came to commodity cloud resources in the IaaS and PaaS space. In a nutshell, the cloud service provider market has always about growth by any means necessary.
If you contrast previous years' cloud acquisitions with those that have occurred the latter parts of 2017 and into 2018, we start to see a new pattern forming.
Sure, there are still signs of significant growth in the cloud space for those looking for bleeding-edge services. Yet at the same time, you see a trend towards stability and cloud acquisition dollars trending toward following what the customer wants in a cloud service -- as opposed to the other way around.
If you look at seven of the more interesting IT acquisitions that have happened over the past six months, they each fit into one of three general cloud categories:
Cloud management and interoperability: In this category, the acquisition is of value because the purchased technology helps customers to better manage their cloud resources, or allows them to integrate different cloud resources to add value in some capacity. Here, we can see that the acquisitions aren't necessarily about acquiring new customers. Instead, the focus is on providing better service in terms of management capabilities that they hope will allow the customer to expand the overall amount of services they purchase.
Migrate apps to the cloud or build cloud-native apps: While a large percentage of enterprises across the globe have already migrated apps and data to the cloud, there are still plenty of opportunities left in private data centers. These are the apps and data that are likely to be the most difficult to migrate. So, from a "move to the cloud" perspective, cloud providers are acquiring technologies to either assist with migration -- or they are investing in tools to build new ones from the ground up.
Cloud security: Despite all the interest and movement toward cloud computing, security remains the top concern for enterprise It managers. Service providers continue to invest heavily in acquiring security tools that help to not only squash any concerns that customers may have -- but also as a way to further growth through new revenue streams using the security tools gained. We've already seen several high-profile mergers/acquisitions in late 2017 and early 2018 that are security-focused. Expect plenty more in the future.
Now that we've framed what we feel is a trending toward a maturing of the cloud computing market in 2018, please view the slideshow as we point out acquisitions that have led us to that conclusion.
Microsoft acquires Avere
Most cloud computing plans start with a secure location to store important data. Previously, the market demand largely revolved around the need for high-capacity, low-cost, data archiving space for the mountains of aging data that companies kept in house. Amazon Glacier and Google Nearline/Coldline have been two popular choices for the enterprise. Yet, as cloud usage matures, businesses are now starting to increasingly require high-performance storage options as they migrate or build latency-sensitive apps and data into the cloud. Microsoft’s announcement that they acquired Avere Systems – a cloud-based, high-performance NFS and SMB file-storage platform – shows that cloud providers are looking to give customers the option to move and manage even more apps and data in the cloud.
Cisco acquires Cmpute.io
Ease of management isn’t always about offering more options for customers such as is the case with the Microsoft Avere acquisition. Take, for example, Cisco’s acquisition of Cmpute.io. Here, we see Cisco purchasing a cloud technology that focuses on how to move apps, data, and workloads easily between various cloud service provider networks. Multi-cloud management is a growing concern for companies as they expand further into the cloud and acquisitions like Cmpute.io are an excellent way for enterprises to leverage a benefit that the cloud is not well known for – portability between service providers.
VMware acquires VeloCloud
Over the past couple of years, SD-WAN technologies have been high on CIO’s to-do list. The reason is that businesses that utilize expensive MPLS links can save a great deal of money by leveraging the intelligence of SD-WAN while downgrading many of their WAN links away from MPLS and onto lower cost broadband Internet circuits. SD-WAN was originally deployed on expensive and complicated on-premises hardware. But thanks to an increasing trust in cloud service providers SLA’s, this intelligence and complexity is being offloaded to public cloud providers to manage. Thus, it was no surprise that VMWare announced in December that they completed their acquisition of VeloCloud -- which specializes in cloud-managed SD-WANs.
Apple acquires Buddybuild
Businesses that have committed to the cloud have already migrated their “easy-to-move” apps and data into the cloud. What’s left are legacy applications that either cannot run well – or would be too much work to shift to a cloud provider. Many are left with the choice of either continuing to maintain the apps/data in-house, or build replacement apps from scratch. In 2018, I believe there will be an uptick in the latter – not only because business leaders want to get away from on-premises resources – but also because they want apps accessible from both desktops and mobile devices. Apple’s purchase of Buddybuild in early 2018 shows that Apple believes developers will want easy-to-use tools that provide advanced end-user feedback, debugging and continuous integration/deployment processes built-in. In other words, tools that large enterprise developers would want when rebuilding legacy apps from scratch.
Cloudflare acquires Neumob
Early in the cloud days, Cloudflare burst onto the scene as a way for enterprises, both small and large, to speed up and secure Internet-facing resources (often in the cloud) using their robust CDN. Since that time, the company has been expanding their service portfolio to incorporate more functionality that their current customers are asking for. Thus, we see that Cloudflare announced their intent to purchase Neumob in late 2017. Neumob was a startup with a fresh and unique take on mobile VPN to secure connectivity to cloud resources seamlessly – and more importantly – quickly. The acquisition makes sense because Neumob can essentially plug-in to Cloudflare’s existing CDN network and developers will be ready to build mobile performance capabilities into the cloud-native apps they are building today.
McAfee acquires Skyhigh Networks
Security companies like McAfee have been busy bolstering their multi-cloud security posture. This is being done to ready themselves for the demands of cloud customers seeking to simplify multi-cloud security using an overlay model. The acquisition of Skyhigh Networks in the early days of 2018, allows McAfee to offer security products that push identical security policies across different private and public clouds from a single, centralized location.
Mitel acquires ShoreTel
At first glance, Mitel’s acquisition of ShoreTel may not seem to have much to do with cloud computing. Yet, if you look at how the market for Unified Communications (UC) is trending toward "as-a-service" models, the connection becomes much clearer. Veterans in the UC space -- including Cisco and Microsoft along with newcomers to the space such as Slack, CA Technologies and even Amazon -- are all betting on the fact that enterprise customers trust public clouds enough to handle latency-sensitive services such as voice, video and instant messaging. The Mitel acquisition will help to accelerate their “move-to-the-cloud strategy” that so many customers are now seeking.
While strides are indeed being made in the world of cloud computing, the most recent acquisitions show a marketplace that is beginning to mature. As enterprises begin to trust the cloud with all their compute, storage, and networking needs, their wants and needs change. Thus, we see, and will continue to see, acquisitions that focus on the creation, management and security of enterprise cloud resources.Andrew has well over a decade of enterprise networking under his belt through his consulting practice, which specializes in enterprise network architectures and datacenter build-outs and prior experience at organizations such as State Farm Insurance, United Airlines and the ... View Full Bio