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Kubernetes has emerged as the logical management approach for many businesses transitioning to the cloud and containers. By acquiring Heptio, VMware demonstrates that it wants to be a top vendor in this space -- now, the company must turn that desire into action.
Heptio, a Kubernetes startup, had a small number of customers and only a handful of products. In November 2018, VMware paid $550 million for the company. The race to operationalize Kubernetes is on, and Heptio might play a key role in filling in Kubernetes' many missing pieces.
Businesses increasingly turn to containers for their application needs. According to 451 Research, the market can expect revenue for the technology to increase from $1.1 billion in 2017 to $2.7 billion in 2020.
An unmanageable situation
Containers help developers write applications more efficiently; however, the management infrastructure remains in an early stage of development.
"Kubernetes has emerged as the de facto way for businesses to manage containers," said Gary Chen, research manager of software-defined compute at IDC.
Google developed the technology and then did a good job of shepherding it into the open source community, where it quickly gained support. But the open source standard outlined only the bare minimum needed to manage containers. Kubernetes is like the framing in a house -- Google still needs to do a lot of work before the building is complete.
"Third parties needed to take the Linux kernel and make a complete operating system out of it. And similar developments must occur with Kubernetes for it to manage containers," Chen said.
Required items include deployment tools, load-balancing features, connectivity to other platforms, and backup and disaster recovery capabilities. All of these components must be in place before large enterprises rely on Kubernetes for their business applications.
What is VMware buying?
Heptio is one of the firms building out Kubernetes infrastructure. The company designed software that connects Kubernetes to Docker, but at the time of acquisition, it still had few customers and products. Although Heptio has grown a little since, the company is still quite new.
"Paying $550 million for a startup with very little revenue and a product portfolio that is still in the beginning of its lifecycle always raises eyebrows," said Torsten Volk, managing research director at Enterprise Management Associates.
What VMware gains with this acquisition is a little intangible. First, the company gains credibility. Heptio's founders, Joe Beda and Craig McLuckie, are two of the three original Kubernetes developers. When they speak, the open source community listens.
VMware also acquired potential. The Kubernetes management market generates little revenue now, but observers expect it to become a multibillion-dollar opportunity in the coming years. In addition, VMware is trying to transition from its traditional, on-premises platforms to cloud platforms. Containers have become the foundation for many cloud applications.
However, VMware also purchased uncertainty. In reality, no one can predict how the Kubernetes management market will evolve. VMware has a chance -- but not a guarantee -- to become a leader in that open source market.
What history tells us
VMware does have history on its side. In 2012, VMware paid $1.4 billion for Nicira. When the company made the purchase, the software-defined networking (SDN) market was just emerging, and many firms vied for the top spot. Since then, VMware has positioned itself as one of two top suppliers in the SDN market, which Allied Market Research expects to generate $132.9 billion worldwide in 2022.
Torsten VolkManaging research director, EMA
To carve a similar path with Kubernetes management, VMware must assimilate Heptio with a number of other cloud management products.
"The challenges will be much less about merging code than it will be about facilitating optimal collaboration between Heptio and VMware staff," Volk said.
The company has many customers with legacy on-premises management systems. VMware must make it easy for customers to transition to VMware Cloud Automation Services.
Finally, the company faces stiff competition. In the open source market, Red Hat owns a much larger Kubernetes management market share with OpenShift than Heptio. Public cloud vendors, such as AWS and Microsoft, are also improving their management. Suppliers such as RightScale focus solely on cloud management issues.
In February 2019, VMware took another step with the announcement of VMware Essential PKS. The modular product includes upstream Kubernetes, reference architectures to inform design decisions and maintenance support.
Businesses can take Essential PKS and build on top of it, thereby customizing Kubernetes to their operation. Rather than a one-size-fits-all approach, VMware provides businesses with various options and lets them decide which one best fits their needs.