Ka-pow! News today that Red Hat is acquiring CoreOS for the not unhealthy sum of $250 million – approximately a 5* uplift on the company’s latest funding round.

Red Hat is, of course, best known for its enterprise Linux product but has been trying its hardest, in recent years, to move beyond that. PaaS? Check. Containers? Check. Kubernetes? Check. OpenStack? Check. Nothing much has stuck, though and OpenShift, the company’s PaaS offering (latterly re-messaged as a Kubernetes offering) hasn’t seen the sort of uptake that competing products such as Cloud Foundry have. For its part, CoreOS was a challenger company in the container space and has long been something of a thorn in the side of Docker, the eponymously-named company behind the rekindled industry fascination behind containers.

As well as its Linux distribution, CoreOS has moved all over the place as fashions changed and delivered Tectonic, a container management solution based on Kubernetes. Bear in mind, in light of this announcement, that Red Hat and CoreOS competed in the space of lightweight Linux distros with CoreOS going up against Red Hat Atomic…

Paul Cormier, Red Hat’s president of product and technology, was glowing in his description of the pivotal role that his company and his newly acquired business unit can be central to the new way of doing technology:

The next era of technology is being driven by container-based applications that span multi- and hybrid cloud environments, including physical, virtual, private cloud and public cloud platforms. Kubernetes, containers and Linux are at the heart of this transformation, and like Red Hat, CoreOS has been a leader in both the upstream open source communities that are fueling these innovations and its work to bring enterprise-grade Kubernetes to customers.

Of the $50 million that CoreOS has raised to date, much of it came from Google Ventures and many, this author included, expected that Google would be the eventual acquirer of the company. It would be fascinating to be a fly on the wall of the office of Google’s cloud Tsar, Diane Green.


Congrats to Alex Polvi, CoreOS’ founder on getting the exit. There were many who wondered if CoreOS would, like the OpenStack distributions before it, simply wither into a small cloud of irrelevant dust. The price, in my books, seems very high. Given the competition in the Kubernetes space, and the fact that everyone else is trying to work out how to build a business on top of it (witness Heptio’s announcement of its new thing which, in my estimation, is pretty much just a service offering wrapped up in a veneer of productization), $250M is a sweet, sweet exit. That said, Red Hat can’t rest on its Linux laurels forever and it needs to find some way of retaining relevance.

Lots of question remain, it will be interesting to see how this one beds in.

Ben Kepes

Ben Kepes is a technology evangelist, an investor, a commentator and a business adviser. Ben covers the convergence of technology, mobile, ubiquity and agility, all enabled by the Cloud. His areas of interest extend to enterprise software, software integration, financial/accounting software, platforms and infrastructure as well as articulating technology simply for everyday users.

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