Big Multi-Cloud Moves in Tech M&A


By: R. Scott Raynovich

A recent boom in technology M&A activity in the cloud infrastructure space is reflecting rising interest in platforms and applications for managing multi-cloud data and networking, with billions of dollars in deals among high-profile companies in the space.

In the past month we've seen Google acquired Looker, VMware announced plans to buy Avi Networks, and Intel is acquiring Barefoot Networks.

Google's Fourth Largest Deal

With Looker, Google made its fourth biggest acquisition ever -- at $2.6 billion (all cash), it was only just behind the $3.1 billion acquisition of DoubleClick in 2007 and the $3.2 billion acquisition of Next in 2014. (The $12.5 billion acquisition of Motorola Mobility in 2012 was the largest.) With the deal, new Google cloud chief Thomas Kurian is looking to put his mark on the company that has had disappointing results in enterprise cloud as it tries to gain share against larger rivals Amazon and Microsoft.

Looker is a business analytics tool that allows enterprise customers to gather and examine trends in corporate data stored across databases and cloud services. This targets the increased complexity of data being spread across many clouds and applications. Kurian said Looker would boost Google's hybrid cloud strategy.

VMware Gets Avi

VMware agreed to acquire multi-cloud application services provider Avi Networks for an undisclosed amount. This looks like some of the deals in the software-defined wide-area networking (SD-WAN) space and it my best guess is that it was probably in the $500-$600 million range. Bay Area-based Avi Networks was founded in 2012 and was recently valued at $335 million after a $60 million Series D in June 2018, according to PitchBook.

Avi focuses on delivering software-defined cloud applications for networks, including a application delivery controller (ADC) and web-application firewall. It should make a nice fit with VMware's VeloCloud SD-WAN unit as well as VMware's popular NSX virtual networking software, boosting the number of network functions and applications that can be delivered with cloud management.

The Avi acquisition timing was interesting, coming in the same month as CloudGenix' recent launch of CloudBlades, a product targeted at the similar problem of delivering network applications to enterprises in a more flexible way, using a software-based architecture. We're seeing the next phase of the push into software-defined architectures for networks, including SD-WAN, as the market expands to include not just the networking infrastructure, but a wide range of approaches to build applications that are integrated with the networking and managed and deployed from the cloud.

Tom Gillis, senior vice president and general manager of VMware's networking and security business unit, said that Avi and VMware will work together to advance VMware’s Virtual Cloud Network plan, build out layer 2-7 services, and deliver a seamless cloud experience. Avi already has existing integration with VMware's NSX networking software.

Intel Goes Barefoot

Intel on June 10 announced it would acquire networking chip maker Barefoot Networks for an undisclosed sum. Barefoot has always been a "hot company" since it was founded in 2016 by Stanford professor Nick McKeown, a serial entrepreneur in the networking space who created Nicira, which set off the software-defined networking boom when it was acquired by VMware for $1.3 billion in 2014.

Barefoot makes programmable networking chips which can be adapted to changing application flows in cloud networks, making it a multi-cloud play. The company's P4 open source programmable chipset has been adopted by large networking companies, including switches from Arista Networks and Cisco.

Navin Shenoy, executive vice president and general manager of Intel’s Data Center Group, wrote in a blog post that Barefoot’s datacenter interconnects played a key role in the acquisition. Again, multi-cloud is in play here.

The Barefoot buy is clearly a response to moves by competitors to buy custom, programmable networking solutions targeted at cloud. Intel recently lost a bidding war with Nvidia to buy networking chipmaker Mellanox, which is being acquired by Nvdia for $6.9 billion.