F5 makes agile move with $670 million NGNIX acquisition

App security outfit F5 is buying open-source application platform specialist NGINX to augment its multi-cloud offering.

F5 is hardly the first to notice the importance of the cloud in the evolution of the entire tech industry, nor is it unique in realising that open-source is a great way of making a multi-cloud environment work. But for a company of its size (revenues of $563 million in 2018) this certainly qualifies as putting your money where your mouth is.

“F5’s acquisition of NGINX strengthens our growth trajectory by accelerating our software and multi-cloud transformation,” said François Locoh-Donou, CEO of F5. “By bringing F5’s world-class application security and rich application services portfolio for improving performance, availability, and management together with NGINX’s leading software application delivery and API management solutions, unparalleled credibility and brand recognition in the DevOps community, and massive open source user base, we bridge the divide between NetOps and DevOps with consistent application services across an enterprise’s multi-cloud environment.”

“NGINX and F5 share the same mission and vision,” said Gus Robertson, CEO of NGINX. “We both believe applications are at the heart of driving digital transformation. And we both believe that an end-to-end application infrastructure – one that spans from code to customer – is needed to deliver apps across a multi-cloud environment. “I’m excited to continue this journey by adding the power of NGINX’s open source innovation to F5’s ADC leadership and enterprise reach. F5 gains depth with solutions designed for DevOps, while NGINX gains breadth with access to tens of thousands of customers and partners.”

Open source and DevOps are often referred to in the same breath as part of a broader narrative around ‘agility’. One of the main benefits of the move to the cloud is the far greater choice, efficiency and flexibility it promises, but without a culture geared towards exploiting those opportunities they’re likely to be wasted. With this acquisition F5 is positioning itself as a partner for telcos heading in an agile direction.

Here’s a diagram outlining the rationale of the move.

F5+NGINX

Nokia puts Global Services at the centre of its diversification strategy

Using a mixture of artificial intelligence, automation and consulting, Nokia is hoping its Analytics Services offering will unlock a bunch of new markets.

All the big kit vendors have been trying to diversify for years, as the margins on networking kit are squeezed and the vendor lock-in model disappears into the past. Among the challenges associated with that are picking winners, not straying too far from their core competencies and maintaining their core business at the same time as looking beyond it.

The telecoms industry is littered with failed diversification moves, from Cisco’s forays into consumer electronics to Ericsson’s struggles in the TV industry. Nokia, of course, got out of the smartphone and mapping games to focus on networks and seems to have made a relative success of acquiring another networking player in Alcatel Lucent.

But however much Nokia can now bang on about end-to-end networking solutions, it knows merely supplying and maintaining kit will not result in much growth. The main strategic alternatives, therefore, are to extract more revenue from its core CSP market and to take its core offering to different markets.

This, according to the President of Nokia Global Services – Igor Leprince – who spoke to a small group of journalists at a briefing, lot of the heavy lifting for this diversification is being done by his division and specifically the Analytics Services offering that Nokia has just augmented. In the strategy diagram below, the first point refers to offering more services to CSPs and the other three represent targeted new markets.

Nokia global services 2

Just as important as strategic targeting is changing the way services are delivered, according to Leprince. Here we start getting into familiar buzzwords such as digital transformation and DevOps, but also the use of automation, machine learning and clever algorithms that claim to speed things up, reduce human error and anticipate problems. Supporting all this are things like the Nokia AVA cognitive services platform and the Shannon Intelligence set of predictive and AI tools.

Nokia global services 3

The successful implementation of all this cleverness in a more consulting setting isn’t necessarily a traditional core competence for vendors so Nokia has had to undergo its own cultural transformation and take on talent such as data scientists that it didn’t have on board previously.

The underlying picture Leprince was keen to communicate was one of Nokia Global services using things like AI, automation and consulting to both provide extra value for CSP customers and offer telecoms-like solutions to other verticals. In the latter case the need for agility and a use-case driven, ‘as a service’ delivery model is vital but equally there’s no point in Nokia trying to take on the big IT services players at their own game.