Cloud Consolidation Continues–What The GoGrid/Datapipe Deal Indicates For 2015


Ben Kepes, Contributor

January 21, 2015

Last year saw a significant number of acquisitions in the cloud space as consolidation started to occur – the reasons were twofold. Firstly, every larger legacy vendor needs a compelling cloud story as cloud adoption enters the mainstream. At the same time the sheer number of cloud infrastructure start-ups introduces massive challenges in terms of commercialization. Especially in the OpenStack space, but even in the more general cloud space, it’s hard to differentiate when a dozen or more vendors are doing the exact same thing that you do.

So last year saw, in quick succession, Metacloud acquired by Cisco, Eucalyptus (and its high-profile CEO, Marten Mickos) acquired by HP and Cloudscaling snapped up by EMC. Predictions were rife that more players (Piston Cloud and Nimbula perhaps) would likely follow suit.

The roll up continues with news today that managed services provider, Datapipe, is buying GoGrid, one of the more established names that has lost a modicum of luster over the past few years as new players have risen. GoGrid has something of a big data bent – it recently partnered with Cloudera in an effort to ease enterprise adoption of Hadoop – the idea being that custom tuned infrastructure for big data applications makes doing big data easier. GoGrid is seen as a god way to help Datapipe increase its footprint in the managed services space.

Datapipe is something of a rapacious acquirer – in 2013 it snapped up Newvem, and last year it took in Layered Tech. Newvem gave Datapipe the  ability to analyze and optimize Amazon Web Services usage for its customers, while Layered Tech gave them a leg-up into the government managed services business. With those deal, like today’s, no terms were announced.

Along with its customer base, Datapipe gets an increased data center footprint via GoGrid’s facilities in San Francisco and Amsterdam – these add to Datapipe facilities in Shanghai; Iceland, London; Singapore; and 8 other U.S. locations. It’s likely a good deal for GoGrid who probably weren’t having the best time trying to scale for business, and for Datapipe it makes sense.

More interesting though is that eyes now turn to predictions of who will be next to be acquired. I’m still picking Piston and Nimbula, but there are some other players as well – Joyent (although their capitalization table after many rounds of funding might make any deal problematic), Mirantis (with massive funding, it’d be a huge price tag) are two possible suggestions.

It’s an interesting reflection on the increasing maturity of cloud infrastructure that this level of consolidation is occurring. While there will be some collateral damage as heavily funded companies aren’t able to achieve the multiple they (or their investors) would like, the general trend is positive – smaller companies get acquired by larger ones who then give solutions a seal of approval and an easy path to enterprise adoption. Larger companies get to tell a story that genuinely delivers cloudiness. It’s interesting to have watched the past decade or so and now be entering a natural conclusion, as far as cloud M&A is concerned. Watch this space.

This article was written by Ben Kepes from Forbes and was legally licensed through the NewsCred publisher network.

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