Docker Inc. owns one of the most prominent names in the cloud container ecosystem. But a recent report from Cowen and Company named a handful of established cloud players as potential acquirers of Docker Inc. Those included Microsoft, Red Hat, and VMware, with the first two deemed most likely to take the plunge.
“Despite its strong name recognition and customer momentum, Docker’s long-term financial success – at least as an independent company – is hardly a fait accompli,” the Cowen and Company report stated. “We do believe that Docker will have to work hard in order to overcome its smaller footprint with enterprise companies.”
While perhaps shallow, that name recognition remains a significant advantage for Docker Inc.’s Enterprise Edition (EE) container platform. The platform is a managed services option with a big focus on the Docker container platform originally designed by Docker Inc. before being moved into the open source community.
Docker Inc.’s EE platform remains the money-making aspect of its business. Docker EE was launched just over a year ago as a company-supported platform targeted at organizations looking to offer container-based applications. The Cowen and Company report stated that the platform has attracted more than 500 paying customers.
“Almost every developer out there is using Docker at some point, and a high percentage of those folks have registered with Docker [Inc.] to use Docker,” explained Dan Kohn, executive director of the Cloud Native Computing Foundation, at last week’s DockerCon 2018 event. “So it’s a numbers game as to what percentage of those can they convert over and then get them to convert to Enterprise Edition to run in production.”
Docker Inc. CEO Steve Singh, during a keynote address at the DockerCon event, said that over the past year the company has attracted more than 1 million new developers and hosted more than 1 million new applications in Docker Hub. That momentum has resulted in 1 billion containers being downloaded every two weeks and nearly 50 billion containers downloaded to date.
Cowen and Company recently highlighted demand it was seeing from enterprise customers using legacy Microsoft Windows Server platforms in wanting to containerize those applications. And as if on cue, Docker Inc. last week launched that ability as part of an upcoming update to its EE platform.
Docker Inc. is a private company, and thus does not release detailed financial results. However, last year it did raise funds that valued the company at around $1.3 billion.
“Someone asked me why they were dealing with all of this enterprise stuff because it’s so boring,” said Kohn. “I said that was where the money is. Getting containers to work on Windows might seem like a hack, but it’s a multi-billion dollar market.”
That level of traction is what’s attractive to potential suitors. Microsoft has been long-rumored to be in talks about acquiring Docker Inc. as a way to boost its container presence.
“An acquisition of Docker would bring a wealth of engineering talent to accelerate [Microsoft’s] Windows container strategy, helping it to close the gap with Linux,” the Cowen and Company report noted. “Perhaps more importantly, it would supercharge Azure’s container credentials and help it to extend its leading mindshare with enterprise IT buyers.”
Microsoft is also not averse to throwing around money in an effort to bolster the position of its Azure cloud platform. The computing and cloud giant earlier this month threw down $7.5 billion to acquire open source development platform GitHub. While not a replacement for what Docker Inc. offers, GitHub has emerged as a central repository for developers working on open source cloud platforms.
A similar bolstering of operations was cited for a possible Red Hat deal, though with the added benefit of taking out a rival. Both vendors are part of the cloud-agnostic container development ecosystem along with companies like Pivotal and Rancher Labs.
Red Hat earlier this year purchased CoreOS for $250 million to boost its position in the Kubernetes space. Red Hat gained CoreOS’ container platform expertise with a specific focus on its Kubernetes-based Tectonic platform.
“Of the two potential bidders, while [Microsoft] clearly has the greater capability, [Red Hat] might be prepared to pay more given its strategic focus,” Cowen and Company wrote.
VMware could be more of a wildcard in Docker Inc.’s future. VMware remains a powerhouse in the virtualization game, but is viewed as being on the outside looking in when it comes to containers. That positioning could be further heightened by an upcoming focus from the Kubernetes community to target the cloud-native infrastructure space.
But, VMware’s management recently made statements that indicated it was perhaps looking beyond the traditional container market and at the serverless computing space. “Functions-as-a-service (FaaS) are the next level of virtualization, even beyond containers,” VMware EVP and CTO Ray O’Farrell said during a conversation with reporters during its recent RADIO conference in San Francisco.
As for Docker Inc. itself, the company’s management doesn’t appear fazed by the rumor mill. Its big push recently to include native Kubernetes support within its EE framework sealed up any concern over its desire to embrace a rival platform to appease customers. And it still has that name recognition that none of its rivals can match.