SUSE snaps up Rancher Labs for its Kubernetes smarts

• SUSE has been focused on Linux, edge and AI
• Deal adds Kubernetes management to SUSE line-up
• $600 million price tag rumoured
• Only the start of planned M&A spree

As more of the tech world -- including the telecom sector – shifts to cloud platforms and adopts cloud native practices and functionality, European open source software specialist SUSE has made a dramatic move to ensure it’s in line for a piece of the action and is promising more to come.

The German firm, which has specialized in developing enterprise Linux, edge and AI capabilities and which describes itself as “the world’s largest independent open source company” (now that Red Hat is part of IBM), has struck a deal to acquire Rancher Labs, a California-based independent Kubernetes management platform developer. No financial details were provided, but CNBC reported that the deal was believed to be worth north of $600 million. The deal is set to close before the end of October.

The move, according to SUSE CEO Melissa Di Donato, creates the only company that will have “the depth of a globally supported and 100% true open source portfolio, including cloud native technologies, to help our customers seamlessly innovate across their business from the edge to the core to the cloud.”  

And this is just the beginning of what could become an M&A spree: The company says the Rancher deal is “the first step in SUSE’s inorganic growth strategy,” which is being fuelled by SUSE’s new owner, private equity firm EQT, which acquired SUSE in early 2019 for $2.535 billion. 

But what does this deal do for SUSE? Well it advances its Kubernetes and containerization story for sure, but it is still a minnow in the market: According to research house Omdia (formerly IHS Markit Technology), Red Hat is by far and away the largest container software player, with 44% market share, followed by Docker with 23%, while Rancher held just 3% (these numbers are from 2019, it should be noted).

But SUSE is clearly wanting a bigger piece of the pie, and with its complementary developments in AI and edge asset management, it has a portfolio that increasingly looks suited to the needs of operators that need to develop a distributed cloud platform as part of their 5G strategies.

It’ll be interesting to see what SUSE plans on buying next.

- Ray Le Maistre, Editorial Director, TelecomTV