F5-NGINX acquisition removes open source rival

F5 Networks, a maker of software to improve application performance, has agreed to acquire NGINX for $670 million, removing a competitor that had built a business on open source technology used in hundreds of millions of websites.

The F5-NGINX acquisition, announced Monday, is expected to close in the second quarter. F5 plans to continue selling NGINX software under the current brand.

NGINX's namesake product is a web server and application delivery controller that provides Layer 4 and Layer 7 load balancing and other services to bolster application performance. NGINX offers support for an open source version of its software, while also selling a commercial release, called NGINX Plus, which provides additional features.

NGINX competed with F5 as a technology provider for cloud environments. Corporate operations teams, for example, use the NGINX load balancer to improve the availability and scalability of Docker containers, experts said.

A year ago, F5, which has its roots in hardware, launched a multi-cloud version of its technology, called BIG-IP Cloud Edition. The product included a load balancer and security.

However, F5 also added support for NGINX in its BIG-IQ management console -- an acknowledgment that "certain customers recognize the indelible value of NGINX and other open source techs for certain situations," said Shamus McGillicuddy, an analyst at Enterprise Management Associates.

"The logical next step, if you've decided to cohabitate with NGINX in many customer environments, is to own NGINX," McGillicuddy said. "Now [F5] can own a larger share of the customer environment and add value through additional integrations between the platforms."