ReadWrite just broke the news that Intel is acquiring API management platform Mashery for an undisclosed amount. Intel was already an a partner with the company and last year announced the Intel Expressway API Manager, a joint solution designed to allow enterprises to leverage the on-premise back-end integrations that Intel already does and use Mashery’s API platform to expose the data by way of APIs to the cloud, to developers and for apps. Mashery is seven years old and had already raised $35M from investors, their last round valued them at $60M making the size of this deal likely somewhere between $120M and $180M. Interestingly Cisco was an investor in previous rounds for Mashery.
For Intel, this comes as something of a Hail Mary pass. As hardware becomes more and more commoditized and undifferentiated, vendors like Intel who have an overwhelming majority of their revenue deriving from hardware sales, bneed to work out how to differentiate what they do. Their situation is not unlike that of networking vendors like Cisco and Juniper who are being disrupted by the dual forces of direct sourcing from Asian OEM manufactures, and software taking over much of their core value proposition.
The future then for both the networking companies and the server/chip companies, lies in building a strong value proposition on top of what they do at a core level. For Intel, I’ve long thought that this means delivering the “software defined server”. Intel has already started down this path having made a couple of unusual, but still interesting acquisitions in the form of McAfee and Sarvega. Anyway – back to what this deal means for Intel – Taking base level silicon but allowing organizations to tailor the specific attributes of infrastructure using software. Much of both the visibility around what needs to happen on this “control plane” level, along with empowering the tailoring, happens via a host of different APIs. This is where Mashery comes in, as a platform it powers and manages the entire API interchange. I’d envisage another acquisition or two would help Intel really build out this “data center control plane” story – perhaps a RightScale, an enstratius or an Opscode. In doing so Intel would be able to maintain its relevance and strength in the data center, albeit moving from hardware to software enabled hardware.
Everyone accepts that software is eating the world. That’s a very uncomfortable statement for hardware vendors – but by taking their “dumb hardware” and smarting it up with software – companies like Intel shore up their existing revenues but more importantly build a layer of protection that makes it harder for them to be disrupted by low cost alternatives. As Mike Maney, a PR pro who watches this space closely said to me:
[this move is] further proof that APIs have moved beyond their app roots and are getting deeper into the network and the enterprise.
I couldn’t agree more – APIs are the lifeblood of a software defined future – we’ll be seeing much more about them in the years ahead.