Now, eyes on Mulesoft for an exit

https://www.flickr.com/photos/cote/2384084688/in/photolist-Ld6ak-M4Ngd-B5RBa-KDfXa-4CF2Wm-4CAMs6-4CAMFk-4CF3e1-keQ8V-4CF44f-4CF3HS-4CF4jq-9nBpgC-4CF2KC-4BbsZq

  • “The availability of published APIs means that a software developer can cobble together different mini-services already available—such as Google Maps meshed with Twilio (to add SMS messaging) along with other capabilities—to make something new and different. APIs, in short, let developers use other apps as building blocks for their own applications.”
  • Customers: “Greene highlighted some of Apigee’s more prominent customers, including Walgreens , AT&T , Bechtel, First Data, and Live Nation.”
  • “Mulesoft claims more than 1,000 business customers, including Coca-Cola , Unilever , and General Electric .”
  • “Mulesoft was valued at $1.5 billion after a $128 million funding round in May 2015. Greg Schott has said the company passed $100 million in revenue for its 2015 fiscal year and is on pace to double that amount this year.”
  • From Carl Lehmann’s July 2015 report on MuleSoft: $100m in 2014 bookings; “In Q1 2015, it reported it had 700 paying enterprise customers”

Source: Why Google Is Snapping Up This Startup for $625 Million

VMware’s portfolio mix

Per VMware, cloud management is now a $1 billion business. It claims 1,700 NSX and 5,000 vSAN customers. It end-user computing business also has $1 billion in sales to more than 63,000 customers, including 1,300 of the Global 2000. It further states that 20,000 customers use vRealize. According to the company, 8 out of 10 of its largest deals included both NSX and vSAN management. While the company reports strong growth from these products, adoption is among a fraction of VMware’s 500,000 total customers.

Source: VMworld 2016: embracing Amazon Web Services with Cloud Foundation

Thoma Bravo getting 20-45% returns on taking tech companies private

“The whole entire space is going through a transformation to cloud computing, and it feels like the entire industry is for sale,” Orlando Bravo, a managing partner at [Thoma Bravo], said in a telephone interview.

More:

  • “The firm, Thoma Bravo, said on Monday that it had closed its 12th fund at $7.6 billion, which surpassed an initial target of about $7 billion because of high investor demand.”
  • “Thoma Bravo’s previous funds have generated internal rates of return ranging from 20 to 45 percent.”

And from a press release about raising the recent $7.6bn fund (Fund XII):

  • “Since 2003, Thoma Bravo has completed more than 140 software and technology-enabled service acquisitions, representing about $30 billion in enterprise value.”
  • “Representative past and present portfolio companies include industry leaders such as Datatel, Digital Insight, Entrust, SonicWall, Network Instruments, Hyland Software, Deltek, Blue Coat Systems, Elemica, Riverbed, Compuware and SolarWinds.”

Qlik is one of the more recent buys, for $3bn. Trefis did some good, brief coverage noting that Qlik had a loss for the past three years likely due to the usual focus on top-line revenue growth, that is “due to high Selling, General and Administrative (SG&A) and R&D expenses.”

One would expect the usual course of PE “optimizing,” getting rid of those staff and scaling by coasting on the brand name of steady drip of new features. That is, you move a hockey-stick of expensive growth to a more leisurely hill and take out profits, cleaning up shop to be sold off to someone else who’ll make that hill into a plateau.

See also a 2014 profile of the firm, including some tech investments of note.

Source: Thoma Bravo Raises $7.6 Billion Fund to Pursue More Tech Deals

Container momemtum, according to Huawei

During his talk, Xiong discussed the growing use of containers in China. In 2016, Huawei found that 14 percent of companies were using containers in production, and another 23 percent were using them for test and development. About 44 percent had plans to adopt container technologies within the next six months.

While 14 percent is still fairly low, it is growing rapidly. It is up 250 percent in the past year. “To me, that means the tools are maturing,” Xiong said.

Of those using containers in production, about 42 percent were using a formal orchestration tool, such as Kubernetes, compared to 51 percent who were using scripts and other homebuilt tools.

Source: Huawei Launches a Kubernetes-based Container Engine

Why do you have to burn $4bn to add mobile apps to taxis?

In the first quarter of this year, Uber lost about $520 million before interest, taxes, depreciation and amortization, according to people familiar with the matter. In the second quarter the losses significantly exceeded $750 million, including a roughly $100 million shortfall in the U.S., those people said. That means Uber’s losses in the first half of 2016 totaled at least $1.27 billion.

Meanwhile, revenue:

Bookings grew tremendously from the first quarter of this year to the second, from above $3.8 billion to more than $5 billion. Net revenue, under generally accepted accounting principles, grew about 18 percent, from about $960 million in the first quarter to about $1.1 billion in the second.

It’s expensive to start a global, meat-space business, even if you’re “assetless”:

Uber, which is seven years old, has lost at least $4 billion in the history of the company.

I find the continuous usage of Uber as an example of “the way forward” in business unhelpful. Not because it’s not an interesting business, but because without these kinds of numbers in context, you think it’s easy. If you’re prepared to burn through $4bn before profit, sure thing!

The advantage established businesses should have is less spending to build a market: they just need to do better serving their existing customer base at first, not spend all that money to start from zero. What I find devilishly fascinating is why it’s so hard for those large organizations to take advantage of the assets they already have and why, possibly, it’s easier just to start from scratch, as Uber has been doing with that $4bn.

Source: Uber Loses at Least $1.2 Billion in First Half of 2016

Don’t ever read the comments

In July [of 2016?], NPR.org recorded nearly 33 million unique users, and 491,000 comments. But those comments came from just 19,400 commenters, Montgomery said. That’s 0.06 percent of users who are commenting, a number that has stayed steady through 2016.

“Back in my day,” over on the RedMonk blogs we had some lovely comments from time to time. I hear Horace gets good conversations going. I’m tempted to say that niche topics – like tech industry strategy – get good comments, but of you look at the comments on my Register columns they’re a predictable mixed bag.

At first when I was writing definition pieces in DevOps, which El Reg‘s audience seems to loath, the comments were terrible. But recently – and I’m not sure why, really – I’ve found the discussion between commenters really interesting. They’re full of anecdotes (often goofy, but still helpful) and read like a transcript of IT therapy.

All that said, one of the various ad blockers use turns off most comments, so don’t see them on the web. Based on how many likes and smiles pictures of my kids get in Facebook, I think people just like the speed of Facebook and Twitter liking and reactions. That seems like a good “dial” to put in front of people instead of a keyboard.

Source: NPR is killing off comments. That’s great news!

Good journalism looses money?

Conservatively, counting just the biggest chunks of staff time that went into it, the prison story cost roughly $350,000. The banner ads that appeared on the article brought in $5,000, give or take. Had we been really in your face with ads, we could have doubled or tripled that figure—but it would have been a pain for you, and still only a drop in the bucket for us.

From Mother Jone’s commentary one one of it’s recent mega stories on the prison system.

Yeah: the business model for journalism is not good right now. Put another way: figuring out how to fund reporters lives while they work on The Good Stuff is hard.

The APM market is lively, growing 12% last year

“In 2015, the worldwide application performance management software market grew an estimated 12.1% over that in 2014, in large part because of increased demand for a new generation of solutions designed to support DevOps and multicloud infrastructure initiatives,” explains Mary Johnston Turner, research vice president, Enterprise System Management Software. “This new generation of APM solutions is easier to implement, supports more sophisticated analytics, and is less expensive than earlier offerings. As a result, APM is providing value to a much wider range of developers and IT operations teams that need constant, current visibility into end-to-end application performance and end-user experience.”

The previous y/y was 12.7%, so things are going well in that market I’d say. As I recall, this includes mainframe and other “not normal” revenue. If you look at just the subset market of x86 and web apps, it’s even higher around 17%. That “distributed” APM TAM was estimated at $2.2bn in 2014.

I don’t have access to the full APM report, but the size is around several billion. One Gartner estimate put it around $2.6bn in 2014.

See also this vendor share commentary based on Gartner’s analysis of the APM market.

Source: Worldwide Application Performance Management Software Forecast, 2016–2020

Bigger, better, cheaper: wind power is flourishing in the US

With 73,992 MW, the US is now the no. 2 country in the world in installed wind capacity (after China, which has a mind-boggling 145,053 MW). And we are no. 1 in actual wind electricity generated.

All that wind only provides about 5.6 percent of US electricity, though, which puts us well behind leaders like Denmark (40 percent), Portugal, Ireland, and Spain (between 20 and 30 percent).

Source: Bigger, better, cheaper: wind power is flourishing in the US – Vox

The first time blogging won

Since The Huffington Post was founded 11 years ago, it has become one of the biggest online media organizations, known for its all-caps headlines. In 2011, the publication was acquired by AOL for $315 million, a hefty price tag that signaled the rise of digital media.

The publication won a Pulitzer Prize in 2012 and has expanded globally in the last several years. It has a robust staff that writes original articles, but it is also known for aggressive aggregation, a practice that has at times caused tension in the media industry.

The “HuffPo” and others (many in the AOL/Verizon empire now) formed a sort of apex of blogging, akin to that big wave Hunter Thompson saw out his Vegas hotel window. We don’t really even think of “blogging” much anymore, just publishing.

Source: How the Arab World Came Apart
Arianna Huffington Stepping Down as Huffington Post Editor in Chief

Would you buy auto insurance from Google? The Kids and auto insurance

The young people account for 20% of of the $180bn US auto insurance market. Here’s some trends in their buying behavior a la a BCG infographic:

Infographic on car insurance buying habits.

Some items:

  • That nearly 40% are willing to buy from Amazon, Google, and others should put traditional insurance vendors in full on freak out mode.
  • Once The Kids start the long (up to two weeks!) research process, they’re 70% more likely to switch than The Olds. So, it’s probably a good idea for incumbents to heavily get involved in research, pointing to native content sponsored “third parties” and providing their own research.
  • As one of our Pivotal customers, Allstate, put it: “Everybody is going to disrupt the insurance industry. It hasn’t been disrupted in eighty-plus years.”

Source: bcg.perspectives – How Digital Switchers Are Disrupting US Auto Insurers

Wild Turkey update

Campari seems thrilled — if a bit startled — by the attention Mr. McConaughey has been lavishing on Wild Turkey, which the company bought for $575 million in 2009 and where it has since poured $100 million into operations upgrades.

Also, growth:

For the fiscal first quarter, which ended in March, domestic sales of Wild Turkey increased 7.6 percent from the same period a year earlier.

Source: McConaughey doing ads for Wild Turkey.

From toasters to clouds: ARM chips

Today, ARM Holdings is a $1.5 billion company with +15% year-to-year growth, nice financials (such as 96.7% gross margin), and a 46.7% operating margin….

15 billion ARM-based chips for $1.5 billion revenue means that, on average, ARM gets a licensing revenue of 10 cents per chip, and spends a little less than of half of that, 4.7 cents, to generate such revenue. It sure beats today’s Windows PC business and its measly 5% to 7% operating margins in the best of cases.

Source: A company that doesn’t really make chips dethroned Intel with super savvy business moves

ServiceNow getting momentum in new markets

We’re replacing people staring at spreadsheets all day long.

For a long time ServiceNow has been angling to move beyond it’s initial IT service desk market into new markets that use workflow management at their core. By “workflow management” I mean business processes that have a multistep, often multi-person process of solving some “problem.” Solving IT problems like password resets and on-boarding new employees fits here, but you can also imagine how HR departments would use it on-board new employees for their needs (adding benefits, pay, etc. all with approvals from various staff through-out).

At the last ServiceNow conference, they used drivers license renewal as a good example: there’s a request (I want a new drivers license or to renew one) and a workflow associated with it (verify the requester’s identity, check that they have car insurance, sundry other additional updates and integrations to the government systems, finally, submit some request to another workflow to print and mail a new drivers license).

You get the idea: at the core, there’s pretty much the same software to enable workflows. To grow the TAM they operating in and also their revenue by selling into these new use cases, ServiceNow has aspired to move into these markets for many years (maybe since around 2011 or 2012?).

Momentum expanding out of IT Service Desk

Here’s some recent momentum numbers on that front collected by Stuart Lauchlan and from the earnings transcript:

  • “Emerging products defined as, everything except ITSM, represented 40% of our net new ACV, up from 24% in Q2 2015.”
  • Customer service management: 40 customers, 31% G2,000.
  • Security operations: 32 customers. They recently acquired BrightPoint here.
  • HR: no numbers, but they signed a “$1.4 million HR-led deal for a new public sector customer in Australia.” This was through a Capgemini partnership.

In the most recent quarter, the company reported $341m in revenue, predicting it’d reach “$4 billion in revenue by 2020, a big leap from its $1 billion in 2015 sales.”

ARM deal analysis from RedMonk Rachel & 451

There’s some proper, and surprisingly concise deal analysis over there:

While growth has come from the IoT, ARM’s resurgence in recent years – and Intel’s opposite trajectory – have been the result of the London company’s dominance in mobile devices. (In 2015, “45% of the ARM-based chips went into mobile devices.”) The so-called Wintel monopoly carried both of those parties to valuations that ARM never approached, but as mobile steadily eroded PC spend ARM’s low power designs found success on both of the most successful mobile platforms. Both Apple’s iOS devices and Android’s array of hardware are either exclusively or nearly so ARM-based.

Check out the rest!

Meanwhile, from John Abbott at 451 Research:

  • ARM “generated less than $1.5bn in revenue last year and has only 3,300 employee”
  • “SoftBank will pay 20.9x trailing revenue for ARM. That’s the first time any company has cracked the 20x mark in a $1bn-plus chip acquisition.”
  • ARM “holds a 40% share in consumer goods, 30% in embedded intelligence, 15% in network infrastructure and 10% in automotive.”
  • “Revenue reached $1.49bn in 2015, up 15% from the previous year, with a net profit of $360.7m.”
  • Read more for his overall sentiment, which is basically: SoftBanks’ money and reach can fuel faster marketshare growth in these convert all the toasters to IoT grills times. checks out.

China healthcare IT market to be $6.5bn by 2020

China’s overall healthcare IT solutions market reached a size of US$3.8 billion in 2015. Market size is expected to hit US$6.5 billion, with a CAGR of 11.1% in the 2015-2020 period.

That’s a lot of growth. See the full press release for some details on sub-markets.

Source: IDC: Healthcare Reform and 3rd Platform Technologies Drive Healthcare IT Solutions in China

OpenStack-related business models to exceed $4bn by 2019, 451 Research

New OpenStack market-sizing and -forecast from old pals at 451:

  • Al & Jay say $1.8bn in 2016, going to $5.4bn in 2020.
  • Public cloud dominates now, but is expected to switch – “[public cloud providers are] 49% of total OpenStack revenue in 2015. However, we expect OpenStack private cloud service provider revenue to exceed public cloud providers by 2019.”

How they bucket-ize:

451 Research’s Market Monitor focuses on 56 vendors that provide direct OpenStack offerings, including products, services and turnkey offerings around OpenStack deployment and management, different distributions of OpenStack, service providers and training services. Although we do consider some vendors with integrated hardware, systems and software offerings based on OpenStack, our market-sizing estimate does not include hardware-centric revenue, nor does it include revenue from indirect third-party vendors, such as those in storage or software-defined networking.

Source: OpenStack-related business models to exceed $4bn by 2019