Red Hat will gain CoreOS’ container platform expertise, with a specific focus on its Kubernetes-based Tectonic platform. Red Hat has itself been an active member of the container ecosystem, having thrown considerable support behind the space as it has evolved away from bare metal. Red Hat’s current container efforts center on its OpenShift platform.
“We believe this acquisition cements Red Hat as a cornerstone of hybrid cloud and modern app deployments,” noted Paul Cormier, president of products and technologies at Red Hat, in a prepared statement.
Analysts noted the deal could help Red Hat position itself as a differentiated player in the increasingly competitive Kubernetes and container market.
“[Red Hat] wants to differentiate themselves from being just another Kubernetes provider,” said Dan Conde, senior analyst at Enterprise Strategy Group. “Everyone has some sort of Kubernetes offering and they want to make the OpenShift offering something more distinctive than being perceived as a potentially undifferentiated [Kubernetes] offerings by offering technical chops via solutions like Tectonic from CoreOS.”
CoreOS was founded in 2013, with a focus on a lightweight container operating system. The company has since secured around $50 million in funding from the likes of Google Ventures, Intel Capital, Sequoia Capital, and Kleiner Perkins Caufield & Byers.
The company counts around 130 employees spread across San Francisco, New York City, and Berlin. There was no word as of yet on the future of those workers, though Red Hat does plan to continue to honor all current CoreOS contracts and services.
Conde said he was somewhat surprised by the $250 million price tag. “I think Red Hat got a good technical asset,” Conde said. “Given the buzz on containers, it could have been higher.”
As part of the deal, Red Hat noted in a release that CoreOS’ Tectonic platform is destined to run alongside Red Hat’s OpenShift efforts, with cross-over set to bolster the latter. Tectonic is designed as a single platform that can run across cloud and bare metal environments. It supports the running, managing, scaling, and sharing of cloud resources across an organization.
CoreOS’ Container Linux product was also deemed complimentary to Red Hat Enterprise Linux (RHEL), Enterprise Linux Atomic Host, and integrated container runtime and platform management capabilities. However, RHEL will remain standing as the lone Linux offering, while some of the Container Linux delivery mechanisms “will be reviewed by a joint integration team and reconciled with Atomic.”
The deal is not expected to impact Red Hat’s guidance for its ongoing fourth quarter or 2018 full-year results.
Red Hat last month reported robust Q3 2018 results, with revenues of $748 million for the quarter, that failed to impress finicky investors. Analysts noted some of that reaction was due to concern over whether Red Hat could maintain revenue growth that had pushed its stock price to new highs.
During its Q3 investor call, Red Hat CEO and President Jim Whitehurst said that while it’s seeing a lot of interest in the use of containers, actual deployments remain muted.
“What I would say is virtually every major company that we are working with is building a strategy around containers, and they are starting to work due to new app-dev [with] at least a portion of that on containers, with the intention as long-term the majority of their new app-dev will be on containers,” Whitehurst said, according to transcripts. “That said, the majority of applications running right now were written more than a year ago. And so the vast majority, probably 90 percent of our enterprise customers, are starting to deploy containers. But it is a very small percentage of their workloads today because new applications are still a small percentage.”
Red Hat last November released the latest iteration of its OpenShift Container Platform sporting tighter integration with Amazon Web Services (AWS) and its own OpenShift Ansible Broker for provisioning and managing services.