SUSE is acquiring privately held Rancher Labs in a move to bolster its cloud-native credentials and more specifically its position in the Kubernetes ecosystem. The move also continues what has been an increase in acquisitions of Kubernetes-focused vendors.

The deal will combine SUSE’s enterprise portfolio that is focused on Linux, edge computing, and artificial intelligence (AI) with Rancher Labs’ Kubernetes management platform. The combined entity will be able to provide customers with more control of their applications throughout their cloud stack.

Rancher Labs’ Kubernetes management platform includes support for self-hosted Kubernetes deployments, or those that an organization is in full control over, and cloud-hosted clusters that run in a multi-cloud environment.

Specifically for SUSE, it plans to base future versions of its container-as-a-service (CaaS) platform on Rancher Labs’ technology. The companies will also work to further develop open source products for their customers.

“Our vision to enable better futures and measurable value for our customers and partners is what guides our decisions and drives our growth,” explained SUSE CEO Melissa Di Donato. “This acquisition enhances our ability to offer a more comprehensive portfolio, greater customer choice and no vendor lock-in. It will also enable us to play an even more strategic role with cloud service providers, independent hardware vendors, systems integrators, and value-added resellers who are eager to provide greater customer experiences.

Rancher Labs CEO and co-founder Sheng Liang explained in a blog post that the deal will provide “massive engineering resources to strengthen” its products and allow it to maintain its “100% open source business model.”

"In the short term, it’s business as usual," Liang noted in an email to SDxCentral. "This is the start of a long journey that will take some time to complete. Until then, we continue to support our customers in the same way we always have."

Following closing of the deal, Liang said he will lead the combined engineering and innovation organization at SUSE. Rancher Labs' other co-founder Shannon Williams, who also acts as president and chief revenue officer, will assume the role of global COO at SUSE.

Financial terms of the deal were not released, but it’s scheduled to close by the end of October. Rancher Labs had managed to attract $95 million in funding with its latest $40 million round closing in March.

The deal boosts SUSE position in what has become an increasingly competitive Kubernetes space. Significant players in that space include IBM through its Red Hat and OpenShift business that it paid $34 billion to acquire; VMware through its Tanzu platform, which includes the Heptio business it purchased for $550 million; and Hewlett Packard Enterprise with its recent Ezmeral launch.

Di Donato said the Rancher Labs deal was SUSE’s “first step” in its “inorganic growth strategy since becoming a fully independent software company” last year. That independence was gained when SUSE was acquired by Sweden-based private equity fund EQT VIII for $2.5 billion. The deal came with the stipulation that the new owner would remain an independent entity.

Shortly after that deal closed, SUSE re-arranged its management team, naming Brent Schroeder as its new global CTO where he replaced long-time CTO Thomas Di Giacomo, who moved to president of engineering, product, and innovation at the company. It then named Donato as its new CEO, who replaced a retiring Nils Brauckmann. Di Donato had previously served as COO and chief revenue officer at SAP.

SUSE last year changed its internal focus from the OpenStack ecosystem to Kubernetes. This included a push to build its new offerings on its Cloud Application Platform and CaaS Platform products.

Michael Miller, president of corporate development at SUSE, explained that the move highlighted the company’s need to “focus on the growing importance of cloud native and container technologies to meet current and future customer needs and align with technology trends around application delivery, Kubernetes, and DevOps.”

IDC analyst Al Gillen at that time said the move would better tie SUSE into where its customers are heading.

“Digitally determined customers work to achieve differentiation with applications and experiences, rather than through infrastructure deployments,” Gillen wrote in a blog post. “SUSE’s decision to focus its future investments to better enable application delivery moves the company’s value-add higher up the technology stack, to a level where customers want and need tools that empower them to achieve differentiation.”