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Docker Enterprise Edition prospects mull vendor strategy

Uncertain about Docker's future business growth, some enterprise IT pros are on the fence about whether to invest in its container orchestration tools.

Questions about Docker Inc.'s business strategy continue to muddy the waters for prospective users of Docker's Enterprise Edition container orchestration software.

Docker is caught between two conflicting business needs: It must capitalize on the container phenomenon and appease its investors, but also maintain a healthy reputation in the open source community, from which Kubernetes rose to dominance in container orchestration last year.

Industry watchers began to raise doubts about Docker's business strategy in 2016, and that speculation reached fever pitch when Docker integrated its Swarm container orchestration features into the Docker Engine later that year. Since then, Docker has made amends to the open source community with its donation of a low-level container orchestration utility, containerd, to the Cloud Native Computing Foundation. Docker also has pledged to support open source container orchestration with Kubernetes in its Docker Enterprise Edition software, which previously only supported Swarm.

Industry watchers and customers agreed that Docker made the right move with Kubernetes support in Docker Enterprise Edition, as a viable alternative should Swarm somehow vanish.

"If Swarm dies, we go to Kubernetes, and what we've done on container orchestration stays the same," said James Ford, chief strategic architect at ADP, the HR software company based in Roseland, N.J. "Docker still has the best answer on the end user point of view for creating containers -- that doesn't keep me up [at night]."

In the meantime, Docker Enterprise Edition offers enterprise IT shops proprietary security and governance features not available with the open source Docker Community Edition. Docker Secrets came to market before Kubernetes secrets management in 2017, and Docker Notary verifies container image security as containers are shipped between different parts of enterprise DevOps pipelines.

However, uncertainty remains about the long-term revenue impact of ceding container orchestration territory to an open source, and therefore free, alternative.

"If not for Kubernetes, they almost certainly could have owned the space with enterprise add-ons," said Michael Bishop, CTO at Alpha Vertex, a New York-based fintech startup that uses Kubernetes-based container orchestration services from vendors such as Google and IBM. "With Kubernetes, it really puts a monkey wrench in monetizing the tech."

We're kind of in limbo right now ... whether we should re-evaluate our strategy given Kubernetes is backed by deeper pockets.
Nuno PereiraCTO, IJet International

Enterprises that to deploy container orchestration into production this year face a dilemma. They want Docker Enterprise Edition's out-of-the-box security and governance features, as well as support from the experts who created Docker container technology. However, concerns about Docker's future business strategy give them pause.

"We were running a lot of tests with Swarm and when I saw Docker announcing [support for] Kubernetes, I thought, 'Wow, this is something to look at,'" said Nuno Pereira, CTO of IJet International, a risk management company in Annapolis, Md., which uses containers in development but not production, and has yet to choose a primary container orchestration tool. "We're kind of in limbo right now, to tell you the truth, about whether we should re-evaluate our strategy given Kubernetes is backed by deeper pockets."

Scott Johnston, Docker COO
Scott Johnston speaks at Docker Con.

Container orchestration market size unclear

As a private company, Docker's balance sheet is not made public, but Docker Enterprise Edition revenues grew 100% last year, driven by the company's Modernize Traditional Apps (MTA) program in the spring, said Docker COO Scott Johnston. Revenue estimates of $30 to $50 million by analyst firms such as 451 Research and IDC are inaccurate, Johnston said, but he declined to specify the correct numbers.

Docker Enterprise Edition now has 400 paying customers, Johnston said, but that number lacks perspective. Analyst firms have yet to release research data on the size of the container orchestration market or enterprise adoption of container orchestration tools. Nevertheless, Docker is optimistic about its prospects for growth -- Johnston pointed to a Cloud Foundry survey of customers last year, in which only 15% of those that use containers use them with an orchestration tool.

Other industry feedback paints a different picture, however. A study of user monitoring data from Datadog, also released last year, found that 40% used container orchestration, and more among them used Kubernetes than Docker's container orchestration products. A Cloud Native Computing Foundation survey from last year found growth in Kubernetes use between 2016 and 2017, as well as for Red Hat's Kubernetes-based OpenShift Container Platform.

With Kubernetes support in Docker Enterprise Edition, Docker Inc. can now compete in the Kubernetes market, but it must contend with fierce competition. Red Hat's OpenShift has a head start with Kubernetes support, for example, and major cloud providers offer hosted Kubernetes services. In fact, enterprise consultants said clients favor cloud providers' services such as Amazon EC2 Container Service, and few have signed on with Docker Enterprise Edition or Docker cloud offerings such as Docker for AWS and Docker for Azure.

"If they have 400 clients on Docker Enterprise Edition, what would you venture to say Amazon has on ECS or how many shops are on Kubernetes?" said Brandon Cipes, managing director of DevOps at CPrime, an Agile consulting firm in Foster City, Calif. "Docker may be seeing an overall lift, but I'm not sure it's going to save them if they can't get to some kind of critical mass."

Docker exit strategy up for debate

Industry analysts estimate that Docker has taken more than $240 million in venture capital funding to date, and the company acknowledges it sought another $75 million round of funding last year, reportedly based on a valuation of $1.3 billion. Any new funding will be used to capitalize on the momentum the company has seen so far from MTA, Johnston said. He said he believes there's room for Docker to become a "large stand-alone company" in the enterprise IT market, though he stopped short of saying the company plans to file an initial public offering (IPO). He denied rumors that the company will seek acquisition this year, and said that there are currently no talks about an acquisition or plans to seek one.

Still, industry watchers continue to speculate about the possibility of a Docker acquisition.

"There might not be an offer on the table right now, but that doesn't mean that if an appropriate offer came along, they wouldn't have to consider it," said Gary Chen, analyst at IDC.

Docker's core container technology is open source, and Kubernetes support offers some protection to customers should Docker be acquired, but there still could be a perception of bias toward a particular technology stack depending on the buyer. Docker's $1 billion-plus valuation means any buyer would have to be a very large enterprise IT company, such as IBM, Microsoft, Oracle or Red Hat.

"If Docker ended up owned by Oracle or IBM, that would likely seal its fate," Bishop said. "Google, Microsoft or Red Hat might lead to a better-received outcome."

Beth Pariseau is senior news writer for TechTarget's Cloud and DevOps Media Group. Write to her at [email protected] or follow @PariseauTT on Twitter.

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