Docker has tried to differentiate itself as a Kubernetes competitor, but amid reports of financial headwinds, it should return to its roots in the developer desktop, analysts say.
Uncertainty around Docker Inc.'s business strategy amid executive shuffles prompted renewed inquiries about its long-term future, and industry watchers say an acquisition is the best-case scenario for the container software company at this point.
Docker initially rose to prominence about five years ago, based on its format for LXC Linux container images. As that layer of the infrastructure became commoditized in favor of container orchestration systems, Docker has focused on enterprise packaging for the Kubernetes container orchestrator. However, so far it has struggled to differentiate in a crowded market for Kubernetes management.
Company execs said last year that they plan to keep Docker independent. Still, financial concerns have re-emerged for Docker in the last week, in the wake of a report that Docker's new CEO, Robert Bearden, will seek a fresh round of funding. Bearden, who as CEO of Hortonworks merged the Hadoop vendor with Cloudera, took over at Docker in May. Docker reps would neither confirm nor deny the report, but industry observers say acquisition is the best-case scenario for the company's future.
"They need to seek out an acquirer or start acquiring, preferably a Kubernetes company that needs to round out offerings," said Tom Petrocelli, analyst at Amalgam Insights. "Better yet, a CI/CD player that needs their tech. Consider what Bearden did with Hortonworks before the bottom started dropping out of the Hadoop market -- he sold it to Cloudera."
IT industry analysts say Docker Desktop could actually be the key to the company's value as an acquisition target for a larger IT vendor such as VMware or Microsoft as it deals with cash flow pressure. Docker Desktop Enterprise, announced in December and rolled out in July, integrates with CI/CD pipelines to boost developer productivity and offers centralized management and governance for enterprise teams.
Gary Chen
Docker's original claim to fame was the portability of its container images from developer desktop environments to production enterprise infrastructure without refactoring, a differentiation on which Docker Desktop Enterprise capitalizes, said Gary Chen, analyst at IDC.
"Docker Desktop has been a bright spot for them," Chen said. "They have integration with security features into the desktops of developers that a lot of companies better known for infrastructure are looking for."
'Hope for the best, plan for the worst'
Uncertainty about Docker strategy has been swirling since 2016, when it roiled the open source community with Docker Swarm Engine, which built its container orchestrator into its container runtime software. Once Kubernetes became the de facto container orchestration standard in 2017, Docker fleshed out support for it alongside Docker Swarm in a series of Docker Enterprise updates last year.
Under former CEO Steve Singh, it also developed a focus on modernizing legacy enterprise applications, particularly on Windows. The company secured a $92 million round of funding in October 2018 to further those goals, but so far has been outshined in enterprise container orchestration by competitors such as IBM Red Hat.
"Docker, the company, is an important part of the container ecosystem, but it's been common knowledge for a while they've been struggling with [realizing] the financial prospects for Docker," said Stephen Sadowski, director and senior architect of core engineering at ICF Next, a digital services subsidiary of U.S. government contractor ICF, based in Fairfax, Va. He said he has used open source Docker Swarm, but not Docker Enterprise.
I hope that the fundraising works out, but I'm concerned that it's going to be too little, too late.
Stephen SadowskiDirector and senior architect of core engineering, ICF Next
"I hope that the fundraising works out, but I'm concerned that it's going to be too little, too late, and I'm hoping that there is a firm plan in place to turn the commercial developments of Docker over to the community should it be a financial failure," Sadowski said. "[It's] a case of hope for the best, plan for the worst."
Privately held Docker reported 100% revenue growth in 2018 compared with 2017, though it did not cite specific numbers, and disclosed this year that it has 750 commercial customers worldwide. As he stepped down as CEO in May, Singh said he believed the company would turn "cash flow positive" -- in other words, profitable -- in 2019. Doubts continued about its business strategy as Kubernetes surged, and competitors such as Red Hat also gained customers for their Kubernetes integrations.
Dave Bartoletti
"Docker faces significant competition from at least five other powerful software and cloud platform vendors, all of whom offer similar packaged, secured and developer-friendly container platforms – and all of them support Docker images and Kubernetes orchestration," said Dave Bartoletti, analyst at Forrester Research. "Facing public cloud pressure from AWS, Azure and Google, and on-prem and hybrid cloud pressure from IBM/Red Hat and VMware/Pivotal, the [market] consolidation of the last 12 months put price, sales execution and strategy pressure on Docker to differentiate."
Docker strategy needs clarification, experts say
The transition from Singh to Bearden was not the only executive upheaval at Docker in the last 18 months. Company founder and CTO Solomon Hykes also left the company in March 2018. He was replaced by Kal De, formerly of VMware, in October 2018, along with a new CMO, Neil Charney, formerly of Microsoft.
Amid this shuffling in the ranks, Docker Enterprise 3.0 became generally available in July with a continued focus on modernizing legacy apps and simplifying container management for developers. Scott Johnston, Docker's chief product officer, said in a published interview in September that the company is focused on the developer experience and container integrations for specific workloads, such as CI/CD. But the company's newest execs have yet to publicly articulate how they will pilot the Docker ship long-term.
IT pros say Docker must be more vocal about its strategy going forward to preserve IT buyers' confidence in the company as a strategic vendor.
When a company shuffles execs, it's an opportune time to lay out their vision of the future, so someone else doesn't do it for them.
Jay LymanAnalyst, 451 Research
"There seems to be a general cynicism about Docker right now in my professional circles," said E.T. Cook, managing partner at Etc.io, a Dallas-based consulting firm. "Kubernetes is a competent solution, with significant buy-in, and is arguably the de facto standard. Docker is either doing a poor job communicating their value proposition, or they're not sure of it themselves."
One IT industry analyst echoed this desire for clearer communication from the company.
"Docker still has a great opportunity to add value around Kubernetes, but it doesn't help when people are wondering about their future viability as a company," said Jay Lyman, analyst at 451 Research. "When a company shuffles execs, it's an opportune time to lay out their vision of the future, so someone else doesn't do it for them."
Gary Chen
Dave Bartoletti
