At last week's DockerCon 2016 event in Seattle there was a lot of behind-the-scenes chatter about Microsoft wanting to buy Docker for billions of dollars. Microsoft's bid for Docker was rumored to be as much as $4 billion for the 250-person container technology startup in the last six months, according to multiple sources with contacts close to both companies.

The deal was never completed because the companies could not agree on a price, said several sources under condition of anonymity. The sources said the rumored deal was a hot topic in the startup and venture capital circles several months ago.

The potential deal shows how Docker has emerged as the leader in the hot container technology startup space – and how big technology companies see the space as strategic. Containers are a particular area of focus for Microsoft, which has cut deals with container companies such as Docker and wants to add to the container capabilities of its Azure cloud platform. Microsoft was one of the headline sponsors of last week’s DockerCon and Docker announced a public beta of Docker for Windows.

With its recent deal to buy LinkedIn for $26 billion, Microsoft has made it clear that it sees acquisitions as a path to growth. It’s possible that Microsoft was looking at Docker when it was considering other deals, including LinkedIn, and it may still be considering other acquisitions. Even after the LinkedIn deal closes, Microsoft will have close to $100 billion in cash by the end of the year.

A Docker spokesman said that Docker “does not comment on industry rumor and speculation.” Microsoft did not respond to a request for comment.

Last week at DockerCon, Microsoft’s interest in Docker and other container technologies was discussed among several insiders in the industry, two of which told me they’d heard of Microsoft’s bid. The fact that Docker is a red-hot company in high demand is not a secret -- but the fact that a three-year-old company with only 250 employees would turn down a multibillion dollar deal says a lot about how much momentum exists in the container technology space -- and why large technology companies are interested in it.

"Container [technology] is the future, so Microsoft is very interested in acquiring in this space -- it's ripe for consolidation," said Mathew Lodge, chief operating officer of Weaveworks, which recently raised $15 million in series B funding from GV (formerly Google Ventures) and prior investor Accel. (SDxCentral heard from sources other than Lodge on the specifics of the Microsoft bid for Docker.)

At a DockerCon luncheon for press and analysts last week, Docker CEO Ben Golub said that he sees Docker having at least the same market potential as VMware – which currently has a market cap of $24 billion and annual revenues approaching $7 billion (VMware will soon be absorbed by Dell as part of its acquisition of EMC). Golub said that Docker currently has “six figure” licensing deals. Although the company is not yet profitable, Golub said that “revenues are growing faster than expenses” and that the company should be profitable without another round of venture capital financing. Docker has raised $180 million to date and several reports pegged its valuation above $1 billion after its last round of financing in 2015.

Docker would be an interesting strategic move for Microsoft, both on the cloud level and the operating system level. In cloud services, Microsoft’s Azure competes with Amazon Web Services (AWS) and the Google Cloud Platform, both of which use their own home-grown container management technology –Google developed Kubernetes, and Amazon has the EC2 Container Service (ECS). On the operating side, Microsoft is adopting Docker technology for its Windows Server platform, to compete with the many forms of Linux that are commonly used with Docker and  other container services.