April 18th, 2013

Intel Buys Mashery! Is it Because the Cloud Will Have an API Inside?

Intel-MasheryFor close to five years, Intel has had a stake in the API space. All the while, I’ve often asked myself why. Intel originally acquired an API Gateway from a prior Intel Capital investment that never fully blossomed. And despite the oddness of having a tiny enterprise software franchise lost inside a semiconductor behemoth, Intel persisted in its experiment, even in the face of questionable market success and lukewarm analyst reaction. So, why double down on APIs now?

With the steady decline of the PC business, Intel clearly has to look elsewhere for its future growth. The cloud datacenter is not a bad place to start. Cloud server farms clearly consume lots of processors. Still, servers powering Web sites can operate fine without APIs, thank-you. But servers powering mobile is a different story. Mobile apps (whether HTML5, hybrid or native) get the data that makes them valuable from applications that reside in datacenters. And APIs are the key to letting cloud data be sharable with mobile apps.

Clearly, app-centric “smart” phones and tablets and TVs and cars and watches and glasses are changing the way we go about our daily business. And APIs will power these smart devices by giving enterprise and Internet companies a way to push their data to apps. That hope of bridging the cloud with mobile is probably why Intel has kept its current API product intact. Mashery broadens Intel’s API scope by providing a way to not only share data with mobile apps but now also the developers that build these apps. But will this plan succeed?

If it does, it will take quite a bit of time. The reality today remains that Intel – even despite the semi-recent McAfee acquisition – is not oriented to selling software or even cloud services into the enterprise. It’s missing the sales force. It’s missing the history. And in many ways, it’s missing the rest of the software stack it needs to power the networking, infrastructure and application parts that underpin data in the cloud. That will make selling an API platform comprising a legacy API Gateway and newfound API developer platform a harder proposition. It’s kind of out there alone.

Another obvious roadblock to making the Mashery acquisition successful is that Intel’s existing API Gateway and the Mashery API service are designed for two very different audiences inside the enterprise, with un-reconcilable needs. The API Gateway is designed for an IT department that wants to run its API Management layer in its own datacenter. The Mashery offering is designed for a non-IT buyer (a mobile program manager, say) who wants to run everything in someone else’s cloud.

One is technical, the other is not. One is on-premise, the other is SaaS. One sells traditional software licenses, the other pure subscription. The first aims to address internal and external API integration challenges. The latter is only really concerned with the challenge of acquiring external API developers (though Mashery would probably protest this point).

Will the two be a marriage made in heaven? Given that the Intel/Mashery partnership is already a year old and that Mashery was barely able to grow its revenues in that time, the likelihood seems remote. But who knows for sure? And anyway, Intel has probably not bought Mashery for its $12M in revenue but for its long-term potential as a pathway to mobile.

2 Comments »

  1. Good luck dmitri. See you in the market.

    Comment by Roque versace — April 18, 2013 @ 1:22 pm

  2. [...] attempt to bolster its position in the market. You can read Dimitri Sirota's take on that deal here. Dimitri is a co-founder and chief strategy and marketing officer for Layer [...]

    Pingback by The API Economy Meets the Agile Enterprise - and Why We're Acquiring Layer 7 Technologies - CA Technologies Corporate Blog: Perspectives - CA Technologies — May 3, 2013 @ 8:26 am

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