“The first step in SUSE’s inorganic growth strategy”
German open source software firm SUSE has agreed to buy Kubernetes management platform provider Rancher Labs for a reported $600 million, the two revealed today, in an unexpected swoop on the Bay Area-based firm, which was founded in 2014.
“This combination is… a huge win for SUSE’s global partner ecosystem”, SUSE said, pledging to continue supporting multiple K8s distributions and operating systems.
The two expect the deal to close before October 2020.
The deal is a reminder of what a core battleground container management has become in modern IT and suggests that SUSE sees something of a Red Hat/OpenShift-sized market opportunity to muscle further into.
As Sacha Labourery, the CEO of DevOps and CI/CD platform provider CloudBees put it to Computer Business Review: “Rancher was the last independent K8s distribution with adoption. What’s interesting is that now we are facing a match of three Enterprise Software distributions, VMWare, Red Hat and SUSE, vs. three Enterprise Services, Google, AWS and Microsoft. Two completely distinct worlds.
“With the first one advocating to be cloud-agnostic and able to operate on-premises but at a hefty price, while the second one promising the best ROI ever: no management, no upgrade and a close to zero price tag – since you pay for the infrastructure. And with that second group, increasingly offering « remote SaaS » that can be installed on-premises, this is going to be a very interesting situation to watch. On the Linux market, Red Hat – and in a lesser way SUSE – have played that role of an independent player. It is unclear if we are going to see this situation repeats in the cloud era.”
SUSE Hints at More Deals
SUSE — which was sold by Micro Focus for $2.5 billion to a subsidiary of private equity fund EQT in a deal that closed in 2019 — described the acquisition as the “first step” in a new inorganic growth strategy. Watch out for future acquisitions.
Rancher CEO Sheng Liang said: “After the acquisition closes later this year, I will lead the combined engineering and innovation organization at SUSE. You can expect an accelerated pace of product innovation.”
He added: “And given SUSE’s 28-year history building a highly successful open source business, our commitment to open source will remain strong.”
“This is an incredible moment for our industry, as two open source leaders are joining forces”, Melissa Di Donato, SUSE’s CEO said in a canned statement.
She added: “The merger of a leader in Enterprise Linux, Edge Computing and AI with a leader in Enterprise Kubernetes Management will disrupt the market to help customers accelerate their digital transformation journeys”.
Like it or loathe it, Kubernetes has emerged the de factor container orchestration standard and central to the IT strategy of many large enterprises.
As SUSE notes in its release, Gartner predicts that growing adoption of cloud-native applications and infrastructure will increase use of container management to over 75% of large enterprises in mature economies by 2024 (up from less than 35% in 2020).
Rancher’s architecture supports any Cloud Native Computing Foundation-certified Kubernetes distribution including Google GKE, Amazon EKS, and Microsoft AKS.