Where Will Ford's Investment In Pivotal Drive The Software Company's Channel?

Pivotal Software revealed a $653 million Series C financing round last week, establishing Ford Motor Co. as a significant shareholder in the EMC and VMware spin-out -- which is the driving force behind popular Platform-as-a-Service Cloud Foundry.

Not only did the venerable auto manufacturer claim a stake in the open source software startup out of San Francisco by contributing $182 million, but Microsoft also got in on the round, current minority owner General Electric concurrently ramped up its own investment, and EMC converted $400 million in debt to equity.

While Ford's decision to lead the round (not counting EMC's debt conversion) left many in the business world scratching their heads, some Pivotal partners and Cloud Foundry integrators told CRN they see the untraditional investment as an extremely positive sign for Pivotal's channel.

[Related: Pivotal's Latest Cloud Foundry Release, With Help From Netflix, Should Drive Enterprise PaaS Business To VARs]

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With more funding, Pivotal will be more aggressive in sales, marketing and product development. And industrial stalwarts like GE and Ford can share unique industry knowledge while helping Pivotal expand its distribution channels, said Andrei Yurkevich, chief technology officer of Altoros, a systems integrator based in Sunnyvale, Calif., specializing in software development solutions based on Cloud Foundry.

"The commitment from Ford, GE, Microsoft, EMC and VMware will make Pivotal and its suite of products look even more mature," Yurkevich said. "It will not only allow Pivotal and its partners to obtain new customers, but also the whole market for Cloud Foundry and cloud-native development in general will be expanded."

Tim Currie, general manager of cloud management and automation at Ahead, a systems integrator based in Chicago, told CRN that an unorthodox investor like Ford "really validates what Pivotal is doing in how they build, and deliver applications" and is "encouraging to all of us in the ecosystem."

Ford's investment shouldn't come as a huge surprise, Yurkevich said, since the Dearborn, Mich.-based automaker is looking to find an advantage in a competitive car manufacturing market, Yurkevich told CRN.

Ford has been actively pursuing development of connected and self-driving cars -- two technologies that are subsets of the emerging Internet of Things, he said.

And Pivotal offers a complete suite of components for IoT application development: a cloud-native platform for leveraging micro-services, high-performance databases and big data tools.

"Investing into Pivotal, Ford gets an access to the vanguard technologies in app development for connected cars, and gets a possibility to influence the road map of Pivotal making automotive offerings a priority," Yurkevich said.

Currie, at Ahead, said he was surprised Ford made such a bold move -- one revealing the auto company's confidence in Pivotal's market position, and the efficacy of its solution.

"Automotive companies are transforming themselves into technology companies, just like financial services companies did 20 years ago," Currie said. "Everyone is selling technology systems now, not parts and not vehicles."

Yurkevich finds the world's largest software company to be Pivotal's most interesting recent investor.

Competing with Amazon Web Services and Google Cloud Platform in the Infrastructure-as-a-Service market, Microsoft "is looking to acquire more enterprise workloads."

Pivotal’s products are enabling the digital transformation of some of the world's largest companies, which should drive those enterprise customers to adopt products and services in the Azure ecosystem, Yurkevich told CRN.

The two companies, working together on native integration between the PaaS and IaaS layers, "will make Microsoft Azure a natural choice for those who want to run Pivotal Cloud Foundry platform in a public cloud," Yurkevich said.

Microsoft is also making a statement by investing in a leading player in the contemporary Java ecosystem, he said, making clear open source technologies "can be first-class citizens on the Azure cloud."

In a statement, a Pivotal spokesperson said Microsoft invested because of growth in customer demand for Cloud Foundry on Azure.

And GE, which bulked up its investment from three years ago, when it purchased 10 percent of Pivotal, is creating a solid platform for the industrial Internet, Yurkevich said.

The Series C deals are expected to close later this month. Ford's chief information officer, Marcy Klevorn, will join the Pivotal board of directors.

While Pivotal is only 3 years old, its origin distinguishes the company from just about any other startup.

Pivotal's cloud-based development platform for custom business applications has already made major inroads into the enterprise -- almost one-third of the Fortune 100 use its products in their data centers, according to the company.

Ford was previously one of those customers, building a platform it just recently launched called FordPass designed to provide an enhanced digital experience to drivers, linking them to the manufacturer and offering unique services such as the ability to reserve parking spaces.

As an important shareholder, Ford will ramp up deployment of Pivotal's technology to build new software tools, the company said.

Ford's investment might also prove an early example of old-economy companies adopting a new approach to digitally reinventing their businesses and products, Currie told CRN.

"I wonder what's next," Currie said. "I wonder how many types of these invest-build partnerships we'll see down the road."