On December 20th 2012, Red Hat has announced the it has entered into a definitive agreement to acquire ManageIQ. This move has broad ramifications for the virtualization platform business and for the management software business.
Recent Cloud Management Acquisitions
The cloud management space certainly has been a hotbed of acquisition activity recently. Recent deals include:
- VMware’s acquisition of DynamicOps and the subsequent rebranding of DynamicOps as vCloud Automation Center, and the inclusion of vCloud Automation Center in the Enterprise Edition of the vCloud Suite.
- Cisco’s acquisition of Cloupia
- Dell’s acquisition of Gale Technologies
- And now Red Hat’s acquisition of ManageIQ
Clearly it has suddenly become important for a lot of large companies to own a viable cloud management software player and to have a viable cloud management offering. So what is so strategic about cloud management? The answer is that the definition and value of cloud management has undergone a subtle but profound transformation in the last 24 months. Two years ago cloud was all about self-service. Private cloud was all about letting an IT department put up its own competitor to Amazon EC2 so that they could stop leaking transient workloads to out an out-sourced IT department.
Now cloud is all about automation. Automation of the entire lifecyle of the deployment and updating of every application that runs in the data center. Furthermore cloud is not just about the automation of that deployment and update cycle in the internal data center, it is about brokering that deployment across internal and external data centers as appropriate. So Cloud Management has become the crucial layer of software that allows an IT department to become that broker of services to their business constituencies.
Ramifications for the Virtualization Platform Vendors
When VMware acquired DynamicOps, renamed it vCloud Automation Center and then combined vSphere, vCloud Automation Center, vCenter Operations, and vFabric Application Director into the vCloud Suite, VMware ran a Microsoft Office play. The gist of that play is that if all you had was a word processor (WordPerfect) or a spreadsheet (Lotus), all you had was a feature and the vendor of the suite had a solution. This play created the inevitable set of questions at Microsoft and Red Hat. Those questions started with, are we serious about being a virtualization platform vendor? If so, are we then serious about competing head-to-head with the vCloud Suite from VMware? If so, where are our components that match up with the components in the VMware vCloud Suite?
Red Hat has now answered one of these questions. Red Hat’s answer to vCloud Automation Center is ManageIQ. Red Hat has at least two more important questions to answer. One being the answer to vCenter Operations Manager, and the other being the answer to vFabric Application Director. Finally, of course, an answer will also be required as to what Red Hat’s Software Defined Data Center strategy is.
A similar set of questions must now be directed at Microsoft who has neither a Software Defined Data Center strategy, nor another remotely approaching a vCloud Suite. It is highly ironic that at the exact time that Microsoft has arguable achieved parity at the core hypervisor level, VMware has shifted the debate to the SDDC and the vCloud Suite. One detects the fine hand of Paul Maritz’s strategic planning here, and hopes that it will not be missed as he joins the Pivotal Initiative.
Ramifications for the Legacy Management Software Vendors
One of the interesting things about the cloud management business was who these vendors competed with when they were selling their solutions to customers. All of the startups in the space (DynamicOps prior to being acquired by VMware, Embotics, Virtustream, Cloupia, ServiceMesh, FluidOps, and ManageIQ) regularly competed with VMware vCloud Director. After VMware completed the acquisition of DynamicOps, the most frequent competitor for everyone is now VMware vCloud Automation Center. Noticeably missing from most of these competitive situations were the big four – IBM, BMC, HP and CA. BMC was sometimes present in these situations, but was most often quickly rule out due to the complexity and high professional services footprint of its solution.
For the big four to not be present in a market dominated by startups is not a horrible problem. For the big four not to be present in a market where VMware, Dell, Cisco, and Red Hat now all have compelling solutions means another hole in the side of an already sinking battleship.
Ramifications for the Remaining Cloud Management Vendors
While there are clearly now no shortage of large vendors from whom one can buy a first class cloud management solution the game is far from over for the startups. In particular there are four companies who have extremely compelling solutions each in their own right:
- Embotics has focused heavily and specialized in being able to get a customer up and running with a private cloud in less than one hour. This is extremely appealing to the SMB and SME markets where a services heavy footprint does not work either in terms of time to value or cost of success.
- Virtustream is still the only cloud management vendor that can successfully virtualize SAP and provide the customer with a response time based SLA on such a business critical application.
- ServiceMesh has kept a relatively low profile while building an impressive list of enterprise class customers.
- FluidOps has pioneering functionality in the form of its Landscapes that allow for complex multi-tier application systems (like SAP) to be encapsulated, deployed and managed as an entitiy.
The Red Hat Announcement
RALEIGH, N.C. – December 20, 2012 – Red Hat, Inc. (NYSE: RHT), the world’s leading provider of open source solutions, today announced that it has entered into a definitive agreement to acquire ManageIQ, a leading provider of enterprise cloud management and automation solutions that enable organizations to deploy, manage and optimize private clouds, virtualized infrastructures and virtual desktops. With the addition of ManageIQ technologies to its portfolio, Red Hat will expand the reach of its hybrid cloud management solutions for enterprises.
Red Hat has agreed to acquire ManageIQ, a privately-held company, for approximately $104.0 million in cash. The closing of the transaction is subject to customary closing conditions, including approval by the stockholders of ManageIQ.
As an existing member of the Red Hat Enterprise Virtualization Certified Partner program, ManageIQ has worked closely with Red Hat to provide customers with unified monitoring, management and automation solutions that are quick-to-deploy and easy-to-use, which reduce the cost and complexity of enterprise clouds. ManageIQ’s Hybrid Cloud Operations Management technologies complement Red Hat’s existing cloud and virtualization management tools – Red Hat CloudForms and Red Hat Enterprise Virtualization – by providing integrated lifecycle management of activities such as server and storage provisioning, workload optimization, policy-based compliance, chargeback, virtual machine lifecycle management, discovery and control, and analytics across heterogeneous private clouds and virtualized datacenters. With the addition of ManageIQ, Red Hat’s open hybrid cloud management solutions will include:
- Red Hat CloudForms: a hybrid cloud Infrastructure-as-a-Service (IaaS) solution that enables the management, brokering, and aggregation of capacity across various virtualization and cloud providers as well as the management of applications across hybrid clouds.
- Red Hat Enterprise Virtualization: a comprehensive virtualization management solution that is an ideal virtualization substrate for organizations to build cloud environments in terms of performance, security and value.
- ManageIQ’s Hybrid Cloud Operations Management Tools: a cloud operations management solution that provides enterprises operational management tools including monitoring, chargeback, governance, and orchestration across virtual and cloud infrastructure such as Red Hat Enterprise Virtualization, Amazon Web Services, Microsoft and VMware.
By acquiring ManageIQ, Red Hat has thrown its hat into the ring as a vendor of a suite of software comparable to the VMware vCloud Suite. This has broad ramifications for Microsoft and for legacy vendors of management software.