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F5-Nginx deal reflects mainstream trend toward microservices

F5 snaps up Nginx for cloud-native app support, and analysts predict a microservices gold rush as modern application architectures catch on in enterprise IT shops.

This week's F5-Nginx deal heralds the arrival of widespread enterprise microservices use, and enterprises will soon see a bounty of products, from traditional vendors to startups, that address the convergence of networking and app components.  

F5 Networks Inc. makes application delivery controllers (ADC) that were originally hardware-based but more recently delivered as virtual appliances. Nginx Inc., which F5 acquired this week for $670 million, started out as an open source project in 2004 that resulted in a software-based web and application server now in widespread use, and more recently a paid subscription version, Nginx Plus.

Nginx generated revenue of $26 million in 2018, which represented 65% growth over 2017, and has 1,300 paying customers for its Nginx Plus subscription, F5 execs said in a conference call. The open source Nginx has much wider reach, and is used by 60% of the busiest 100,000 sites on the web, they said.

"F5 had a hard time cracking DevOps, as their brand is associated with traditional IT and network operations buyers," said Brad Casemore, analyst at IDC. "Now they have no choice but to figure it out."

DevOps and modern application architectures, including microservices, force traditionally separate network operations and application development teams to collaborate. Their first order of business is usually to mitigate the strain from microservices, which generate heavy "east-west" traffic between application components, on corporate networks designed for hierarchical intermachine "north-south" patterns.

"Worlds are colliding," Casemore said. "There's always been a clear demarcation of responsibility between network operations and application teams, but now developers and DevOps teams need visibility and some ability to operate the network."

Things like discovery and east-west load balancing are network-borne. ... As people scale [distributed microservices] environments for production runtime and scale, the network really comes into play.
Brad Casemoreanalyst, IDC

Containers and container orchestration, the computing infrastructure of choice for microservices, demand software-defined approaches to network devices, which is where Nginx virtual ingress controllers and API gateways come into play for F5.

"Nginx basically provides the same services for distributed apps that F5's portfolio provides for traditional enterprise apps," said Torsten Volk, analyst at Enterprise Management Associates. "Now F5 is able to cover both sides of the story, the 80% of remaining traditional apps and the 20% of web apps, some of which are microservices-based."

The fact that F5 bought Nginx to speed up its microservices network development indicates that cloud-native applications are headed for the IT mainstream, since networking often trails innovations at the application and compute layer.

"Things like discovery and east-west load balancing are network-borne and need to be considered," Casemore said. "There's been a realization that as people scale these environments for production runtime and scale, the network really comes into play."

Microservices musical chairs will force an industry reckoning

As network and application management worlds collide in IT, a wide array of vendors scrambles to target developers. Thus, as with container management and IT monitoring, DevOps pros will have a bounty of choices among microservices network management products that attack the problem from multiple angles.

Network management competitors to F5, such as Cisco, also offer software-defined network tools and microservices management platforms that incorporate Kubernetes container orchestration. Server virtualization bellwether VMware plans to join its NSX software-defined network IP with Heptio's ingress controller and service mesh capabilities. Meanwhile, DevOps software players such as HashiCorp already offer multi-cloud network abstraction tools that F5 said it plans to deliver through Nginx.

Nginx is also something of an outsider in service mesh, which has generated strong buzz among DevOps early adopters. Nginx released its own service mesh product with its Application Platform in October 2018, but it was overshadowed by other projects, such as Istio, Linkerd and HashiCorp's Consul Connect.

Widespread service mesh adoption is still a ways off, and probably wasn't the main driver for the F5-Nginx deal, Volk said.

"Even if you want to adopt Istio as an enterprise, you still require most of the components that are included in Nginx already to complete your distributed microservices app architecture," he said.

However, as microservices networking moves beyond the ingress controller and into the container cluster itself, it will challenge the new F5-Nginx entity to evolve along with customers, according to IDC's Casemore.

"[F5] needs to address both a distributed model for technical architecture and a buying center and influencer challenge," he said. "Networking ultimately needs to be closer to applications, within [Kubernetes] pods."

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