Which cloud company is next on the auction block?

Would-be cloud buyers and sellers play a high-stakes game of musical chairs. Buyers need technology, developer cred, and customers. Sellers need to be part of a big offering. Not everyone is going to win.

Barb Darrow's latest article for Fortune looks at how leading cloud service providers are making strategic acquisitions so they continue to prevail in the marketplace. 

"Would-be cloud buyers and sellers play a high-stakes game of musical chairs. Buyers need technology, developer cred, and customers. Sellers need to be part of a big offering. Not everyone is going to win", writes Darrow and gives some interesting examples, most of them backed up by quotes from the providers. 
EMC is buying Virtustream for €1.10 billion ($1.2 billion) - that's one less independent cloud infrastructure provider on the market, with numbers falling on a monthly basis.
In the past two years, legacy tech giants IBM, Cisco, Hewlett-Packard, EMC and Datapipe acquired SoftLayer, Metacloud, Eucalyptus, Cloudscaling, and GoGrid respectively to build their cloud stature. 
 
So the big question is: what company is next to go? Here are some likely acquisition candidates Darrow investigates: 
 
Joyent - “Cloud computing is a large market that is disrupting how companies consume technology. There are a lot of cloud companies leveraging differentiated technology to build high growth businesses so the M&A activity will continue", Scott Hammond told Fortune. 
 
ProfitBricks - This company caught attention with price cuts that took on cloud market leader Amazon Web Services last year. It has also differentiated its offer, for example, by offering more massive building blocks dedicated to the task at hand. "ProfitBricks is not for sale. Even as the big three dominate the market and other IaaS providers get snapped up, we believe there remains plenty of room in the market for independent providers, so long as those providers are well engineered and focused on the right markets", ProfitBricks Co-Founder and Chief Marketing Officer Andreas Gauger told Fortune. By 'big three, he's referrings to Amazon, Microsoft  and Google, the biggest (by far) of the public cloud infrastructure providers.
 
Cloud pioneer Rackspace once positioned itself as a competitor in the public cloud infrastructure market but is now apparently transforming itself into a support provider to bigger public clouds. Last year it was on the action block but is now reviewing its options and has recently formed an alliance with Sage, the payroll company to capture the SME markets in the UK and US, as SLA-Ready recently reported
 
New York City-based DigitalOcean advertises itself as the world’s second largest hosting provider and has won customers for its easy-to-deploy and easy-to-use cloud resources. With just over €82.55 million ($90 million) in venture funding it would have a high acquisition price but could be strategic to providers like Amazon or IBM. 
 
The article reports that David Mytton, CEO of Server Density, a London-based server monitoring company, sees DigitalOcean as a good fit for IBM because it would greater credibility to the IBM SoftLayer among the developer community, but IBM still needs to prove its interest in individual developers that fuel the startup economy.
 
Another example cited by Barrow is CloudSigma, a Zurich-based provider with specialty in high-performance computing of the type used by scientists and medical researchers. However, there is no evidence or statement about the direction it may go. 
 
Clearly, the stakes are high in more ways than one. For would-be buyers to stay ahead of the game. For born-to-the-web startups are deploying on Amazon or Microsoft or Google public clouds from the get-go. 
 
The three leading providers offer massive and affordable cloud infrastructure that will be hard to compete with going forward. But the stakes are also very high for the handful of remaining smaller independent cloud players. All of the would-be purchasers have already made one or more cloud acquisitions and are working to integrate them into their core. Barrow concludes by asking how much longer will their appetite for new companies at a fair price will last and where it will leave the independents if it continues. Stay tuned for more musical chairs. 
 
Read more about the inside story from Virtustream's CEO Rodney Rodgers
 
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