Red Hat To Buy Google-backed Container Startup CoreOS For $250 Million

Red Hat said Tuesday it had agreed to acquire CoreOS, a pioneering developer in the emerging container technology landscape that's backed by Google's investment arm.

The $250 million deal unites the Raleigh, N.C.-headquartered open source giant with a San Francisco-based startup that asserted itself as an early player in the Docker ecosystem with a lightweight Linux distribution geared for running containerized workloads at scale.

CoreOS, with Google's support, later brought to market the first commercial platform for running Kubernetes—a container orchestration technology that has become an integral part of the Red Hat's OpenShift development platform.

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The companies have worked together in recent years, finding common cause in their early embrace of Kubernetes, said Joe Fernandes, Red Hat's senior director for OpenShift Project Management, in a blog post titled "The CoreOS bet".

"One of those companies that also jumped in with both feet was CoreOS. Their commitment to Linux, to Kubernetes and to containers technology mirrored our own," Fernandes said.

Chris Ciborowski, CEO of container-focused Red Hat partner Nebulaworks, said the acquisition could be the beginning of a wave of consolidation in the container space.

"From system integrators with deep container expertise, like Nebulaworks, to platform providers, we are about to see established ISVs and IT tooling companies begin to round out their container capabilities," Ciborowski told CRN.

CoreOS released Tectonic, its Kubernetes platform, in April of 2015—soon after closing a $12 million funding round led by Google Ventures. Kubernetes was initially developed as an internal project at Google before the Internet giant open sourced that technology.

"They have made substantial contributions to Kubernetes, often working together with Red Hat engineers, and they continue that leadership today in the form of both contributions and leadership across multiple Kubernetes special interest groups," Fernandes said of CoreOS.

Red Hat, the industry's largest open source software and Linux developer, decided to dive into containers four years ago.

"We bet big on containers as the future for how applications would be built, deployed and managed across the hybrid cloud," Fernandes said.

That included a vision for Kubernetes to become the "core" of OpenShift Platform-as-a-Service.

CoreOS was founded by its CEO, Alex Polvi, in 2013, soon after he sold a cloud management startup called Cloudkick to Rackspace.

As an early startup in the Docker ecosystem, the San Francisco-based company looked to facilitate Docker's nascent technology with an operating system stripped down to most-efficiently run containers.

But CoreOS later challenged its partner with the release of rkt—an alternative to Docker's container implementation, or runtime.

That project, pronounced rocket, never really threatened Docker. But CoreOS saw success soon after by being first to bring to the enterprise market Kubernetes, a rival to Docker's Swarm container orchestrator.

With Kubernetes becoming almost an industry standard, Tectonic won brand-name enterprise customers—eBay, Salesforce, Veritas and Verizon all use the platform, according to the company's website.

The union of the two container companies will again pose a threat to Docker by strengthening OpenShift's position against Docker Enterprise Edition, a container management platform which recently introduced support for Kubernetes in addition to its native Swarm orchestrator, said Will Kinard, CTO of BoxBoat, a container focused solution provider based in Washington, D.C.

"RedHat's acquisition of CoreOS is not entirely unexpected given their level of collaboration over the last few years," Kinard said.

Bradley Brodkins, CEO of Toronto-based HighVail Systems, a Red Hat partner specializing in containers, said Red Hat is making a play to dominate the container space—something Fernandes' blog post suggests the company didn't feel it could do alone.

"Will it be positive for Red Hat partners, I’d say yes, very much so as it brings CoreOS into the enterprise space with revenue opportunities that will follow," Brodkins told CRN.

Kinard said it's possible Rocket will see a second act if the container standard gets paired with OpenShift. The recent introduction to Kubernetes of the Container Runtime Interface makes it possible to swap Docker's runtime with an alternative.

"Either way, this new relationship is good for the container market in increased focus on the enterprise to bring container solutions to the forefront of the IT roadmap and budget," Kinard said.

Joe Dickman , senior vice president of Vizuri, a Red Hat Premier partner based in the Washington, D.C. , told CRN the acquisition further strengthens Red Hat's already significant commitment to containers, and Kubernetes in particular.

"It opens red hat up to another large community of organizations shifting towards container adoption and provides them with choice," Dickman said. "With this acquisition red hat has placed a very large cornerstone in the market for building an organization that is cloud-first."