F5’s $670M Deal for Nginx Expands Firms’ Control of Web Servers, Apps

Internet users are celebrating the World Wide Web’s 30th birthday this week by reminiscing about early Web technologies like America Online and dial-up modems. But users’ Web experiences—from the 1990s to today’s mobile and social media-dotted digital landscape—are only possible with behind-the-scenes Internet infrastructure in place. The value of that infrastructure was highlighted in F5 Networks’ recent announcement that it has agreed to acquire Nginx for $670 million in cash.

F5 (NASDAQ: FFIV) and Nginx’s products and services help facilitate millions of users’ online activities, though it’s likely many people haven’t heard of either company. San Francisco-based Nginx’s application delivery platform, which is built on an open-source Web server, is one of today’s most extensively used Internet technologies. It powers more than 21 percent of all websites, according to a survey Netcraft, a U.K.-based research firm, published in January. F5, which is headquartered in Seattle and focuses on multi-cloud application services, says it has more than 25,000 customers worldwide, including all but one of the 50 largest U.S. companies, as measured by annual revenues.

Nginx co-founders Igor Sysoev and Maxim Konovalov, along with Gus Robertson, the company’s CEO, will all be joining F5 under the terms of the deal, according to a news release. The acquisition, which is still awaiting regulatory approval, is expected to close by the end of June, the companies said.

There is some overlap between the two businesses’ product lines, as Robertson writes in a blog post reflecting on his company’s decision to become part of F5. However, Sidney Rabsatt, vice president of product management at Nginx, says he anticipates the companies joining forces will turn out to be a “good, complementary story.”

“It’s all about the application these days,” Rabsatt says. “F5 is really strong at the applications you have. Nginx is really strong at the applications you’re building.”

Lots of pieces need to be in place in order for computer servers to deliver the content of a software application to a user’s computer or mobile device. One key piece is what’s known as an application delivery controller (ADC), which directs traffic from a server that goes down or becomes overloaded to other servers. F5, which was founded in 1996, built its business in part by developing ADCs and other products to control the traffic entering, leaving, and flowing between servers housed in data centers.

A separate blog post on F5’s website by CEO Francois Loçoh-Donou includes a diagram that echoes Rabsatt’s statement about the company and Nginx offering complementary product lines. The diagram shows some of the services that sit between application and user, with the ADC at the center.

According to the diagram, F5 handles the services between the ADC and the user: application management, application security, and infrastructure security.

Meanwhile, Nginx handles services between the application and the ADC. These include the application server itself, application program interface management, and microservices, which allow users to build applications that can be scaled across the Web, and make up part of the “infrastructure used in some of the most advanced environments in the world,” Robertson writes.

F5’s acquisition of Nginx marks the latest step of the company’s journey, which began with an open-source software project and later saw Nginx evolve into a venture-backed startup. The company, which had its formal launch in 2013 with the introduction of its Nginx Plus product, has helped developers move away from traditional Web application architectures, which can become unwieldy and difficult to change as they are deployed on a larger scale. Many of these developers have transitioned to microservices application design, which splits website functions into simpler and distinct components that can communicate with each other.

Nginx will retain its brand and San Francisco operations after the acquisition. The company’s open-source approach to development and engagement with the open-source community will continue to be key parts of Nginx’s mission, Rabsatt says. F5 has said that open-source is a core part of its multi-cloud strategy, and that alignment was one factor that appealed to Nginx about becoming part of F5, he says.

“F5 has expressed to us its desire and interest in the open-source world,” Rabsatt says. “Not only are they getting cool technology, but they’re also getting access to creative folks who are trying things on their own.”

Trending on Xconomy