Canonical refocusing on IPO’ing, momentum in cloud-native – Highlights

Canonical Party

There’s a few stories out about Canonical, likely centered around some PR campaign that they’re seeking to IPO at some time, shifting the company around appropriately. Here’s some highlights from the recent spate of news around Canonical.

Testing the Red Hat Theory, competing for the cloud-native stack

Why care? Aside from Canonical just being interesting – they’ve been first and/or early to many cloud technologies and containers – there’d finally be another Red Hat if they were public.

Most of the open source thought-lords agree that “there can never be another Red Hat,” so, we’ll see if the Ubuntu folks can pull it off. Or, at the very least, how an pure open source company wangles it out otherwise.

That said, SUSE (part of HPE/Micro Focus) has built an interesting business around Linux, OpenStack, and related stuff. Ever since disentangling from Novell, SUSE has had impressive growth (usually something around 20 and 25% a year in revenue). All is which to, the Red Hat model actually is being used successfully by SUSE, which, arguably, just suffered from negative synergies (or, for those who don’t like big words, “shit the bed”) when it was owned by Novell.

As I’m perhaps too fond of contextualizing, it’s also good to remember that Red Hat is still “just” a $2.5bn company, by revenue. Revenue was $1.5bn in 2014, so, still, very impressive growth; but, that’s been a long, 24 year journey.

All these “Linux vendors,”like pretty much everyone else in the infrastructure software market, are battling for control over the new platform, that stack of cloud-y software that is defining “cloud-native,” using containers, and trying to enable the process/mindset/culture of DevOps. This is all in response to responding to enterprises’ growing desire to be more strategic with IT.

Canonical momentum

From Steven J. Vaughan-Nichols:

Shuttleworth said “in the last year, Ubuntu cloud growth had been 70 percent on the private cloud and 90 percent on the public cloud.” In particular, “Ubuntu has been gaining more customers on the big five public clouds.”

And:

Its OpenStack cloud division has been profitable, said Shuttleworth, since 2015

Al Sadowski has an extensive report on Canonical, mentioning:

[Canonical] now has more than 700 paying customers and sees a $1bn business for its OS, applications and IT operations software. Time will tell if this goal is realized.

And:

Canonical claims some 700 customers paying for its support services on top of Ubuntu and other offerings (double the 350 it had three years ago), and to have achieved more than $100m in bookings in its last financial year…. [Overall, it’s] not yet a profitable business (although its Ubuntu unit is). We estimate GAAP revenue of about $95m.

Strategy

On focusing the portfolio, shoring it up for better finances for an IPO:

we had to cut out those parts that couldn’t meet an investors’ needs. The immediate work is get all parts of the company profitable.

To that end, as Alexander J. Martin reports:

More than 80 workers at Ubuntu-maker Canonical are facing the chop as founder Mark Shuttleworth takes back the role of chief executive officer…. 31 or more staffers have already left the Linux distro biz ahead of Shuttleworth’s rise, with at least 26 others now on formal notice and uncertainty surrounding the remainder

Back to Al on the Job to Be done, building and supporting those new cloud-native platforms:

Rather than offering ways to support legacy applications, the company has placed bets on its Ubuntu operating system for cloud-native applications, OpenStack IaaS for infrastructure management, and Docker and Kubernetes container software.

And, it seems to be working:

Supporting public cloud providers has been a success story for Canonical – year-over-year revenue grew 91% in this area…. Per Canonical, 70% of the guest OS images on AWS and 80% of the Linux images on Microsoft Azure are Ubuntu. Its bare-metal offering, MaaS (Metal as a Service), is now used on 80,000 physical servers.

On OpenStack in particular:

Canonical claims to be building 4,000 OpenStack deployments a month at some 180 vendors…. It claims multiple seven-figure deals (through partners) for its BootStrap managed OpenStack-as-a-service offering, and that the average deal size for OpenStack is trending upward.

On IPO’ing

The Vaughan-Nichols piece outlines Shuttleworth’s IPO plans:

Still, there is “no timeline for the IPO.” First, Shuttleworth wants all parts of the slimmed down Canonical to be profitable. Then “we will take a round of investment.” After that, Canonical will go public.

However, Al’s report says:

It is not seeking additional funding at this time.

Probably both are true, and the answer as Shuttleworth says is “well, in a few years once we get the company to be profitable.

More

SUSE to Acquire HPE’s OpenStack, Cloud Foundry Portfolio, Boost Kubernetes Investment, TheNewStack

“We see PaaS as a strategic component of our software-defined infrastructure and application platform strategy,” stated SUSE President of Strategy, Alliances and Marketing Michael Miller, in a note to The New Stack, “and Cloud Foundry as the open source project and technology that brings together the best innovation and industry collaboration. We want to leverage that innovation for the benefit of our customers, and we have a vision for the convergence of CaaS technologies [in SUSE’s case, Containers as a service] like Docker and Kubernetes and PaaS technologies like Cloud Foundry that we think will address the real-world needs of our customers and partners. We will now work with the Cloud Foundry community to develop that vision.”

http://thenewstack.io/suse-add-hpes-openstack-cloud-foundry-portfolio-boost-kubernetes-investment/

Things were different back in 2003, but developers still were kingmakers

From Rachel Chalmer’s 2003, coverage of Novell buying “SuSE” (451 client access required):

Historically, Novell’s Achilles’ heel has been its inability to keep its independent developer community happy. Some fled NetWare for OS/2, which IBM botched in its turn. Meanwhile, Microsoft was happy to embrace and pamper NetWare and OS/2 burn victims as independent software vendors for Windows. Now developers are asking themselves whether Novell has learned its lesson, or whether it’s about to make the same mistake again. The provisional answer is that this is not your father’s Novell. Ray Noorda is long gone, and his replacement, Sun veteran Eric Schmidt, has jumped ship for Google. The office of the CEO is now split between two people: Jack Messman, ex-CEO of Cambridge Technology Partners, a career executive with roots in the oil and gas exploration industry; and Chris Stone, ex-CEO of the Object Management Group

It’s amazing how different things were back then, well, platform-wise. Because OS/2!

Things were different back in 2003, but developers still were kingmakers

SUSE sets sights on OpenStack growth, Hyper-V support with SUSE Cloud 2.0

This is my first published piece at 451 Research, a straight-forward write-up of SUSE’s recent OpenStack distro release. It’s for clients/subscribers only, but there’s always the 30 day free trial if you want to take peek ;>

SUSE sets sights on OpenStack growth, Hyper-V support with SUSE Cloud 2.0

SUSE releases latest OpenStack Distro

With a press release quote from myself:

Michael Cote, research director of infrastructure software for 451 Research, said, “There’s a great deal of interest in OpenStack right now with companies hungry to start using the platform in their cloud initiatives. The nature of OpenStack encourages a modular approach, among other things, maximizing choice and agility for each customer. In order to support diverse customer requirements for the applications running in OpenStack clouds, the platform needs to support a wide range of hypervisors, so it’s great to see SUSE pushing this forward.”

SUSE releases latest OpenStack Distro