Docker has a scalable business plan


Docker Inc. celebrated its 5th anniversary last week. In these five years, Docker has become a catalyst in the process of digital transformation that many industries are going through. It eased their cloud native journey with containers. No matter where you go and who you talk to in the tech industry, the term container will pop up in conversation at some point. Whether you are a new start-up that just sprang to life or a 150-year-old MetLife, you need to have a container strategy in place to succeed.

[Also read: Solomon Hykes leaves Docker]

As a technology, docker containers have been phenomenal. They have matured, stabilized and commoditized, which means companies need innovative ideas to monetize from containers. At one point orchestration was considered the battleground where all wars would be fought – Mesosphere, Docker Swarm and many other technologies popped up. But Kubernetes commoditized orchestration. Even Docker could not escape the gravitational pull of Kubernetes and resorted to offering it along with Swarm so customers could choose the orchestrator they need.

So how does Docker monetize from the technology it championed?

When you have an addressable market that is potentially every application in every global town then you have a fairly sizeable market to attack. – David Messina

Docker’s Business Plans

Docker followed the battle-tested business model popular in the open source world. There is a fully open source edition of Docker (Community Edition) that anyone can use for free, and there is an enterprise version (Docker Enterprise Edition) with commercial support and additional features desired by enterprise customers.

“Enterprises are leaning heavily towards it across the board. When you look at the Docker Enterprise Edition, the enterprise-ready container platform, there are over 450 commercial customers out of the global 10,000 with the likes of names like GE, McKesson, Liberty Mutual, Metlife who have embraced Docker,”  said David Messina, CMO @ Docker, Inc.

Some of these Docker customers have been around for more than 100 years. Docker works with these companies to help drive their digital and cloud initiatives.

“In five years, Docker has had a major impact with its commercial platform in the enterprise space and then more broadly in the industry. I would stack that up against any other commercial vendor that’s selling a container platform in the enterprise,” said Messina.

This five-year-old company has all the reasons to sweat when the 800-pound Linux gorilla enters the ring. But Messina believes that one of the biggest strengths of Docker Inc. against its competitors is freedom of choice and vendor ‘lock-out’.

“This is the only enterprise platform that works on any Linux distribution, on may major cloud and allows an enterprise to have the multi-cloud hybrid, on-prem strategy for how they move their applications forward on a containerization journey,” asserted Messina.

Docker EE supports virtually every platform out there – multi-Linux, Windows, multi-Cloud, Mainframe and what not. Customers have the freedom to run Docker EE on any platform of their choice. Developers have the same choice too; they can run Docker on their development machine irrespective of the fact whether it runs Linux, macOS or Windows.

“The reality is that no other company does that. In the course of 2017, we literally doubled our customer acquisition number,” said Messina.

Collapse of monoliths

Docker EE is not the only product that Docker from which monetizes. Early on, Docker realized that most of the 10,000 global companies have a massive arsenal of traditional applications that have been powering their businesses for decades. The traditional way of dealing with these traditional applications is refactoring them. That’s an extremely expensive and time-consuming process.

Docker Inc. came out with a better and quicker solution called MTA or Modernizing Traditional Apps. No refactoring is needed. During the last DockerCon, we have seen demos of engineers containerizing traditional apps under five minutes. Traditional companies are using MTA to quickly containerize their traditional apps.

I have spoken to both SUSE and Red Hat and no one has dedicated solutions to ease that process and bring traditional apps to the cloud.

“The reality is that only Docker has a complete set of methodologies around taking an enterprise and making them successful in that effort,” said Messina.

While many Docker customers have already migrated hundreds of applications, there are still hundreds, if not thousands of more such applications to be modernized. Messina sees a huge attack surface for Docker.

“I would say that in general, this is where we spend most of our time with CIOs and their team,” said Messina, “We enter the picture as a trusted vendor and partner who has a whole set of strategies and experiences around this. This is where we’re spending time with our customers on this.”

Containing the IoT

Docker sees another growing use case for containers – IoT. “Docker puts a very heavy emphasis on modernizing traditional applications, but within our ecosystem, there is an incredible use case around IoT and edge computing,” said Messina. “So you can certainly expect that enterprises who are trying to invest in a platform that provides them the freedom of choice, enables them to modernized traditional apps and will evolve into something that handles edge computing and IoT for them,” he said.

How sustainable is Docker?

Docker does have a concrete business plan but is it sustainable? Is the company growing? According to Messina, Docker Inc. has almost doubled the customer acquisitions in 2017. The company claims to have more than 450 customers to date, which means it roughly added around 200-225 new customers in 2017. Being a privately held company, we don’t know anything about the revenues of Docker, but I was told that Docker doubled its revenues in the course of 2017. The company has scaled its sales teams by three times over the course of the last year. Docker has also increased their development team.

What we do know is Docker continues to attract venture capitalists. In October of 2017, Docker finished another round of funding and got additional $75 million in funding. According to the numbers I have Docker has raised over $242 million in venture funding till date, which brings the overall value of the company to $1.3 billion.

“Whether venture funded or not, like many other companies out there we are using these investments in growing the opportunity that we see, which is containerization in the enterprise. It’s a worldwide opportunity with a very large addressable market,” said Messina.

The takeaway

At the age of five, Docker is still a relatively younger company that sees great potential to grow, serving existing customers. As new use-cases like Industrial IoT and Edge Computing taking shape, Docker will find new and larger markets to explore and exploit. Microsoft is already betting big on Docker containers for IoT and so are many other companies. Docker sees Red Hat and Pivotal as its arch rivals. Red Hat and Pivotal see each other as arch-rivals too. So in this battle of container warfare, there isn’t going to be the last corporation standing. They will all continue to coexist, chomping at the big chunk of the market that’s laid out for their consumption. I see that Docker has a decent business plan and I also see them grow into new use cases.

“Docker can ultimately address every single application in the enterprise across the global 10,000 companies,” said Messina. “So generally speaking, when you have an addressable market that is potentially every application in every global town then you have a fairly sizeable market to attack.”