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Is Paas Becoming Just a Feature of Iaas?

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Is Paas Becoming Just a Feature of Iaas? Is PaaS becoming just a feature of IaaS? Analyst: Jay Lyman 6 Jan, 2014 We've seen consistent M&A involving PaaS vendors over the past few years, driven primarily by polyglot programming and the demand among not only developers, but also IT operations teams – meaning devops customers as well – for multiple languages, frameworks, databases and other pieces. The reason is that today's market demands faster software development and deployment cycles and processes while maintaining quality and uptime, and this means developers, system administrators, productivity teams and business units need the best tools for the job. The challenge comes in supporting all of these pieces, most of which fluctuate in popularity over time and also attract newcomers. Some vendors and customers have touted PaaS as a way to support polyglot programming and we also see significant devops uses on both public and private PaaS. However, as PaaS continues to evolve, the newer trend in consolidation in the space is for larger IaaS providers to be acquiring PaaS vendors. Analysis from ChangeWave, a service of 451 Research, also indicates that while IaaS and PaaS continue to grow in popularity and use, there is greater growth in SaaS. Given we're also seeing more consolidated offerings of IaaS and PaaS by the likes of Amazon, Google, Microsoft, Red Hat and VMware, it is clear that PaaS is facing pressure and potentially being supplanted from below in the IT software stack by IaaS and from above by SaaS. This is not to say PaaS as a set of capabilities and features or as a market will simply vanish, but it does highlight how the definition of PaaS is changing, particularly in the context of IaaS and SaaS. Polyglot past Prior to 2013, the past few years of consolidation in the PaaS market were driven primarily by polyglot programming. That is, different PaaS providers were integrating and acquiring other PaaS providers to extend language and framework coverage, with Java, .Net, Ruby, PHP, Python, Node.js and other technologies driving deals. We saw some early PaaS consolidation with Red Hat purchasing cloud application management vendor Makara for $32m in November 2010. This would partially lay the groundwork for Red Hat's Copyright 2014 - The 451 Group 1 OpenShift, which is now offered as both public and private PaaS. Another large PaaS deal was salesforce.com's purchase of Ruby PaaS provider Heroku in December 2010 for $249m, which highlighted the ascent of Ruby as an application language for enterprises. While we've seen salesforce.com further invest in Heroku and add a dedicated Heroku for Enterprise Java offering, other languages have subsequently caught on in the enterprise, particularly PHP and Node.js. This has further driven the trend of polyglot programming, as well as M&A around it. When salesforce.com bought Heroku, there were expectations that other PaaS platforms, such as fellow Ruby player Engine Yard, would also be acquired. Instead, we've seen continued maturation in the market and a series of smaller deals. Nevertheless, Oracle's minority investment in Engine Yard, announced in November 2012, which includes integration of the two companies' PaaS offerings and polyglot programming support, may be in part a response to salesforce.com's Heroku buy. In May 2011, polyglot programming M&A was again highlighted when dotCloud (now Docker), a small PaaS supplier that has since focused more on its Docker containerization technology, expanded its language and technology coverage by picking up fellow PaaS startup Duostack. The deal expanded dotCloud further beyond Java and other languages to more extensively support Ruby and Node.js, as well. We saw another expansion of language support from Engine Yard in August 2011 when it reached for PHP player Orchestra. A year later, AppFog, which has since been acquired by IaaS player Century Link, further broadened its PaaS language support with the acquisition of Node.js player Nodester. PaaS polyglot deals Date Acquirer Target Value Technology area November 2010 Red Hat Makara $32m Cloud application management December 2010 salesforce.com Heroku $249m PaaS May 2011 dotCloud Duostack ND PaaS August 2011 Engine Yard Orchestra ND PaaS August 2012 AppFog Nodester ND PaaS Source: 451 Group Technology M&A Database Presence of IaaS and SaaS Beginning in 2013, we began seeing a different type of PaaS consolidation that reflects how IaaS is increasingly integrating with and in some cases supplanting PaaS. In June 2013, CenturyLink's Copyright 2014 - The 451 Group 2 Savvis division acquired polyglot PaaS startup AppFog in a move to expand its developer capabilities and the reach of its Savvis Cloud and Savvis Direct cloud strategy and offerings. The deal gave Century Link a multi-language – or polyglot – PaaS to pair with its IaaS-centered technology in a sign that PaaS was beginning to converge with and perhaps get absorbed by IaaS. Although not directly in the PaaS market, the theme continued in October 2013 when IT and cloud outsourcer CSC acquired cloud management vendor ServiceMesh for $158m. ServiceMesh' s software that enables enterprises to provide internal cloud-broker capabilities drove the deal, effectively allowing CSC customers to run clouds internally, some of which may represent private PaaS and most of which are targeted at reining in developers and teams that may be going 'rogue,' bypassing the IT organization and using Amazon, other public clouds and open source software. Another IaaS-PaaS deal came from Century Link again when in November 2013, it acquired .Net PaaS vendor Tier 3 for an estimated $150m. Given our conversations with vendors, end users and investors, we believe this trend is likely to continue and PaaS will increasingly be paired with IaaS. IaaS-PaaS deals Date Acquirer Target Value Technology area June 2013 Century Link AppFog ND PaaS October 2013 CSC ServiceMesh $158m Cloud application management November 2013 Century Link Tier 3 $150m* PaaS Source: 451 Group Technology M&A Database *451 Research estimate There are additional signs that PaaS may be supplanted by IaaS. Large IaaS providers are among those that are most aggressively supporting and spreading their related PaaS offerings. This includes Amazon, Google, Microsoft, Rackspace, Red Hat and VMware, all of which are headed toward PaaS offerings more tightly integrated with their other cloud software. These players may support other infrastructure or even PaaS options, but their message tends to be that PaaS will work best when it's integrated with related pieces from the same provider. We've also seen some PaaS vendors defect from the category to various extents. Examples include dotCloud, which changed its name to Docker with a focus on the popular application containerization technology of the same name. The company still maintains its dotCloud public PaaS, but says its opportunity and future are in Docker. Zend Technologies, an enterprise PHP Copyright 2014 - The 451 Group 3 supporter, has resisted entering the PaaS market despite the prevalence of PHP in PaaS applications and work. Instead, Zend has wisely opted to partner with a number of PaaS providers to better support PHP on all of them. Other research also indicates PaaS may be getting pinched by other cloud categories. Our ChangeWave Corporate Cloud Computing Trends report for example, published in November 2013, encompasses the results from an October 8-30, 2013 survey of 1,159 respondents that are involved in their companies' IT buying decisions. Looking ahead at where companies plan on spending for cloud-related services over the next six months, SaaS continues to register the biggest net increase – 32% expect their company to increase spending on SaaS vs. just a 1% decrease. Both IaaS (23% increase vs. 2% decrease) and PaaS (15% increase vs. 3% decrease) have lower projected spending increases. Outlook We anticipate there may be more deals involving IaaS acquirers and PaaS targets. We may also see additional stand-alone and public PaaS defections. Given the state of IT infrastructure configuration and provisioning, application development and deployment, we also expect the trend of polyglot programming and use of many different technologies and infrastructures to continue. We can also get some perspective on the growth of PaaS in the context of IaaS and SaaS by looking at our Market Monitor market sizing estimates for each. Our Market Monitor research indicates the IaaS market is worth about $4.5bn in 2013 and is poised to grow to a value of more than $6.2bn in 2014 and more than $8bn in 2015. The SaaS market (which measures the infrastructure for SaaS rather than revenue from applications) is estimated to be worth just under $2bn in 2013, more than $2.7bn in 2014 and more than $3.5bn in 2015. As for PaaS, our Market Monitor estimates are $2.3bn for 2013, more than $3.5bn for 2014 and almost $5bn in 2015. Copyright 2014 - The 451 Group 4 Reproduced by permission of The 451 Group; © 2014. This report was originally published within 451 Research's Market Insight Service. For additional information on 451 Research or to apply for trial access, go to: www.451research.com Copyright 2014 - The 451 Group 5.
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