F5 Networks made a big leap into software for cloud-based applications with its $670 million acquisition of Nginx. The move reinforces F5 Networks’ continued evolution from a hardware company to one oriented around services and software with a broader reach in the market.
Nginx’s open-source web server for multi-cloud architecture powers more than 374 million websites, including many of the most popular sites online today. The San Francisco-based company was founded in 2011 and raised $103 million in venture capital funding before F5 Networks came calling.
F5 Networks plans to keep the Nginx brand alive and fuel further investment in software application delivery and API management. Nginx CEO Gus Robertson and founders Igor Sysoev and Maxim Konovalov will also join F5 and maintain operations in San Francisco.
“We believe every organization can benefit from the agility and flexibility enabled by modern technologies without compromising on security, manageability, and reliability,” F5 Networks CEO Francois Locoh-Donou said in a news release. “The combined company will enable every customer — from the app developer to the network engineer to the security specialist — with the tools they need to ensure their apps are available and secure across every platform, from the enterprise data center to private and public clouds.”
While most enterprises will eventually operate hybrid, multi-cloud environments to bring modern and traditional IT together, DevOps and traditional IT still aren’t familiar with how the other works, according to Zeus Kerravala, analyst at ZK Research. Nginx and F5 Networks have tried to make this happen, but IT professionals are human and they have blind spots, he adds.
“Traditional IT looks at Nginx as too risky and DevOps views F5 as stodgy,” Kerravala wrote in response to questions. “By bringing them under one roof, F5 will now own the whole application experience, from the app server to the user and can expose its audience to Nginx.”
The acquisition could also lead more IT vendors to scoop up open-source companies, according to Kerravala. “If agile and traditional are coming together, then the traditional IT vendors should want open source tools to address the agile audience.”
Bridging DevOps and NetOps
F5 also said it is committed to advancing the open-source technology that Nginx powers, and it will add F5’s security solutions to the mix to position Nginx for more opportunities in the enterprise. Locoh-Donou described the marriage of F5 and Nginx as an opportunity to “bridge the divide between NetOps and DevOps with consistent application services across an enterprise’s multi-cloud environment.”
He expanded on that message during a call with analysts, adding that the business model of Nginx is not purely services. “It’s not just services on top of open-source technology. The commercial part of their business includes significant software addition beyond open source,” he said.
“This acquisition is largely offensive. It’s not so much about what we were missing as to what it opens up for us, specifically API gateways,” he said, adding that web servers and app servers also represent a multi-billion dollar market. “[Nginx has] capabilities that allow us to insert technologies much closer to the application logic and they have access to a new set of buyers, specifically they have a phenomenal brand in the DevOps community.”
The original code for Nginx was written in 2002, open sourced in 2004, and the namesake company was founded in 2011. “Now there are over 374 million sites using our software and nearly 67 percent of the highest-traffic sites on the Internet,” Robertson wrote in a blog post about the acquisition. Popular services like Instagram, Pinterest, Netflix, and Airbnb would not be possible without Nginx and its adherence to open source, he added.
Three of the five largest banks, three of the five largest U.S. retailers, and five of the 10 largest technology companies run on Nginx, according to the company. The deal is expected to close during the second quarter of this year.