Suse to Acquire Rancher Labs to Lead Enterprise Kubernetes Management

Suse LLC entered into a definitive agreement to acquire Rancher Labs.

Based in Cupertino,CA, Rancher is a privately-held open source company, providing a Kubernetes management platform.

“This is an incredible moment for our industry, as two open source leaders are joining forces. The merger of a leader in enterprise Linux, edge computing and AI with a leader in Enterprise Kubernetes Management will disrupt the market to help customers accelerate their digital transformation journeys,” said Melissa Di Donato, SUSE CEO. “Only the combination of SUSE and Rancher will have the depth of a globally supported and 100% true open source portfolio, including cloud native technologies, to help our customers seamlessly innovate across their business from the edge to the core to the cloud.”

Unleashing Cloud Native Futures for Customers and Partners
As IT leaders increasingly seek to leverage the cloud to innovate and drive digital transformation, Kubernetes has emerged as a core pillar of IT strategy. Gartner predicts that growing adoption of cloud-native applications and infrastructure will increase use of container management to over 75% of large enterprises in mature economies by 2024 (up from less than 35% in 2020).

Suse and Rancher, Kubernetes Container Management, will deliver computing everywhere with the latest AI and seamless deployment of containerized workloads from the edge to the core to the cloud.

“Rancher and SUSE will help organizations control their cloud native futures,” said Sheng Liang, Rancher CEO. “Our leading Kubernetes platform with Suse’s broad open source software solutions creates a powerful combination, enabling IT and Operations leaders worldwide to best meet the needs of their customers wherever they are on their digital transformation journey from the data center to cloud to edge.”

Following regulatory approvals and the acquisition’s close, customers of both companies will benefit from a broader portfolio as well as from the vastly increased global presence and innovation power. They will benefit from the capabilities of Rancher’s cloud native technologies, named by Forrester Wave as a leader in Enterprise Container Platform Software. Rancher’s customers will on the other hand gain access to Suse’s global support network and broad open source portfolio.

This combination is also a win for Suse’s global partner ecosystem who will now be able to provide a broader range of solutions to their customers with Rancher’s solutions.

Unwavering Commitment to the Open Source Community
With its heritage in open source technology, Suse remains committed to delivering 100% open source technologies with no vendor lock-in. Sharing this ethos, Rancher will continue its strategy to be open and support multiple Kubernetes distributions and operating systems.

Rancher’s infrastructure–agnostic architecture supports any Cloud Native Computing Foundation-certified Kubernetes distribution including Google GKE, Amazon EKS, and Microsoft AKS, as well as projects like Gardener.

First Step in Suse’s Inorganic Growth Strategy
The acquisition of Rancher is the first step in SUSE’s inorganic growth strategy since becoming an independent software company in March 2019. It also follows Suse’s fiscal momentum – most recently with Suse reporting an excellent second quarter of its FY20, which saw ACV (annual contract value) bookings increase 30% and global cloud revenue up 70% Y/Y.

“Our vision to enable better futures and measurable value for our customers and partners is what guides our decisions and drives our growth,” added 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.”

The deal is expected to close before the end of October 2020, subject to customary closing conditions including receipt of regulatory approvals.

Comments

M&As accelerate and There were approximately 15 of them since January 2020.

Docker, cloud providers and the need to orchestrate applications then Kubernetes have triggered a wave of new companies with the ambitions to be instrumental in the new computing model. Kubernetes and containers are changing how applications are designed, developed, built, deployed and managed.

Easily dozens of small entities popped up everywhere. Gorillas were unable to keep up but realized that the market itself will make its own selection. Here are different acquisitions in this space:

Docker Enterprise acquired by Mirantis in 2019

Pivotal acquired by VMware for $2.7 billion in 2019

CoreOS acquired by Red Hat in 2018

VMware acquired Heptio in 2018. The wave is was a tsunami. VMware who refused to adopt it for a pretty long time suddenly embraced it and now promotes it with vSphere redesign, we all know Project Pacific at VMware.

For Suse, this move marks a key milestone, first because the firm does its first acquisition since it became independent in March 2019, and second, it jumps seriously into the container segment.

We can also interpret this move on the Suse side by the lack of internal solution, the absence of recognition as a player on this key segment and the urgent need to control its own destiny and no longer rely on external software available for others as well.

There is also a natural battle with Red Hat, promoter of OpenShift.

Started in 2014, Rancher Labs has raised $95 million in 4 rounds. Sheng Liang will lead a new Suse engineering organization around innovation.

Beyond the orchestrator umbrella, storage container players are the next fundamental item. Containers use by default a stateless storage model. Like OpenStack with its storage plug-in Cinder, the community established a new standard named Container Storage Interface (CSI) to couple persistent storage to container logic. It appears as a proof of maturity.

Here again there are many vendors, among them Portworx, Robin.IO, StorageOS, Storidge, MayaData, Diamanti, Reduxio, EdgeFS or Arrikto in addition to classic storage players. Some leverage Rook. They all offer comprehensive storage oriented features set. The battle is on and some of them are already in M&As lists, wait a few months...

This acquisition illustrates again that innovations comes from small agile companies and teams. More to come.