- Analysts predict that there will be a battle between VMware and Red Hat as they race to help customers use Kubernetes, a popular open source cloud project started at Google.
- VMware has been expanding its portfolio of Kubernetes products by making acquisitions such as Pivotal and Heptio.
- Red Hat has a head start in using Kubernetes, although its acquisition by IBM raises some questions for analysts.
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There's a battle brewing between VMware and IBM, and a hot cloud technology started by Google is at the center of it.
Both VMware and IBM are betting on Kubernetes, which helps companies easily manage a technology called 'containers" so they can run applications anywhere from local machines to any cloud. Already, it's used by 54% of the Fortune 500 and companies like Spotify, Lyft, eBay, and even "Pokémon Go" developer Niantic.
Kubernetes, which is just over five years old, is "taking off like wildfire," giving opportunities for companies like VMware and IBM to help customers transition to using it, says Jason Ader, equity research analyst at William Blair. While Kubernetes, like other open-source software projects, is free for anyone to use, customers often go to vendors to help them set it up and manage it.
VMware is growing its portfolio of Kubernetes products. On top of that, it has acquired Heptio and has plans to acquire its sister company Pivotal - companies that both center Kubernetes in their strategy.
Meanwhile, earlier this year, IBM closed its $34 billion acquisition of Red Hat.
"It's definitely not a zero-sum game," Ader told Business Insider. "I think both companies will be successful in helping enterprise customers move towards containers and Kubernetes."
Red Hat vs. VMware
Ader says Red Hat has long been a trailblazer for Kubernetes, with its product called OpenShift. In fact, he says he believes that IBM acquired Red Hat for this product.
"It's a one-stop shop for Kubernetes and containers, and it's designed to help enterprise customers adopt this open source technology, but in typical Red Hat fashion, they really view themselves as someone who can productize and commercialize an open source product," Ader said. "Red Hat has been at the forefront of the whole Kubernetes movement."
VMware got into the Kubernetes game a bit later, but this past year, it made a series of acquisitions to bolster its arsenal. Last year, it acquired Heptio - co-founded by two of the original creators of Kubernetes - and now, it's preparing to acquire Pivotal, which will round out VMware's Kubernetes portfolio with its developer-focused software.
Previously, VMware COO Sanjay Poonen told Business Insider that the company, along with Pivotal and Heptio, plans to "create the largest force working on Kubernetes."
"They're aggressively going after this new space where they have a few products in that particular space," Lauren Nelson, vice president and research director at Forrester, told Business Insider. "VMware wasn't targeting developers, but now that they're acquiring Pivotal, VMware has been successful at that."
Ader says VMware sees itself as a vendor that can help customers navigate through the changes that Kubernetes brings, and it's introducing an entire portfolio of products that make it easier for customers to use it. This will be VMware's next major growth catalyst, he says.
"They really view themselves as a natural choice and a logical choice for customers as they shift to this new application infrastructure," Ader said. "I think VMware has clearly shown they are very serious about trying to establish a leadership position there."
These acquisitions gives VMware a chance to catch up to Red Hat, which had a head start, Ader says. VMware has the advantage of a larger salesforce selling to its longtime enterprise customers.
"From an overall product portfolio and size and channel, there's a lot of muscle behind VMware," Ader said.
A 'relatively friendly battle' is underway
One disadvantage VMware may have, Ader says, is that customers may be skeptical because VMware has long focused on selling its virtualization products, which is seen as the old-school technology that the newer Kubernetes/containers replace.
"The technology is new and there's a learning curve for vendors and for customers," Ader said. "They made some really smart acquisitions that's given them credibility."
As for Red Hat, Ader doesn't see major disadvantages. Red Hat already has a large customer base running OpenShift, which gives the company credibility. However, there are questions now that Red Hat is owned by IBM.
"Red Hat is still independent," he says but its customers may worry that "IBM could potentially muck it up."
Both Ader and Nelson say that they don't see one company winning over another. Instead, both will have plenty of opportunities to win over customers.
Nelson also says she expects to see more companies with Kubernetes offerings, like VMware and IBM, working together and competing at the same time.
"It's a relatively friendly battle that is underway," Nelson said. "They're not the only players in town but for folks doing a migrate-and-modernize journey, they are the two most popular approaches to take there. That represents a large revenue opportunity. We expect a lot of investments from each of them."
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