SUSE Acquires Rancher Labs as Part of Consolidation Wave

SUSE today announced its intention to acquire Rancher Labs, a provider of a framework for automating the management of Kubernetes clusters.

Rancher Labs CEO Sheng Liang says the combination of the two companies will advance SUSE’s ongoing effort to remain the largest open source software company still operating independently. Terms of the deal were not disclosed.

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Expected to be closed by October, the acquisition of Rancher is the first inorganic move SUSE has made to expand its market reach since becoming an independent company early last year. SUSE, headquartered on Germany, was spun out of Micro Focus when it was sold to a subsidiary of EQT Partners, a venture capital firm.

At the core of the SUSE portfolio is a distribution of Linux and a pair of application development and deployment environments based on Kubernetes and a distribution of the Cloud Foundry platform-as-a-service (PaaS) environment. SUSE has also been at the forefront of initiatives to rehost Cloud Foundry on Kubernetes.

SUSE also withdrew its distribution of OpenStack from the market to focus its efforts on emerging cloud-native opportunities stemming from the rise of Kubernetes.

In its most recent quarter, SUSE reported a 30% increase in annual contract value bookings along with a 70% increase in cloud revenue. SUSE also claimed it has seen a 63% increase in customer deals valued at more than $1 million.

SUSE is trying to capitalize on any potential concern IT organizations might have over the acquisition of Red Hat by IBM. The Red Hat OpenShift PaaS is based on Kubernetes, which IBM is now using to anchor its hybrid cloud computing strategy.

Rancher Labs, meanwhile, has been trying to carve out a position as an alternative to Red Hat and VMware. Most recently, VMware acquired sister company Pivotal Software in part to gain access to an application development environment based on Cloud Foundry, which is incorporated into a Tanzu platform based on Kubernetes.

Liang says Rancher Labs is committed to providing a management platform that is applicable to any distribution of Kubernetes running on-premises or in the cloud. Most IT organizations are standardizing on distributions of Kubernetes from a cloud service provider, VMware or Red Hat, says Liang, noting the only exception to the rule is edge computing platforms, where there tends to be no incumbent vendor. The challenge those organizations face is they will need a way to consistently manage multiple clusters based on different distributions of Kubernetes at scale, he adds.

There’s no doubt a wave of consolidations has occurred across a Kubernetes ecosystem that arguably began with the acquisition of Red Hat by IBM. In fact, Liang notes large IT vendors have been moving with surprising speed to address the Kubernetes opportunity. How many more startups in the Kubernetes ecosystem will be acquired remains to be seen. However, in all probability the acquisition of Rancher Labs is only the latest in a series.

Mike Vizard

Mike Vizard is a seasoned IT journalist with over 25 years of experience. He also contributed to IT Business Edge, Channel Insider, Baseline and a variety of other IT titles. Previously, Vizard was the editorial director for Ziff-Davis Enterprise as well as Editor-in-Chief for CRN and InfoWorld.

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