Report: Microsoft may buy cloud monitoring startup Cloudyn for $50-70M

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The consolidation of smaller cloud services through acquisitions by larger could platforms has been a running theme in the enterprise world for a while, and this morning we got a glimpse of what might be the latest development on that front. Israeli publication Calcalist is reporting that Microsoft is in talks to acquire Cloudyn — startup founded in Tel Aviv that monitors and optimizes a company’s cloud storage across multiple vendors — for a price of between $50 million and $70 million.

We’ve reached out to both Cloudyn and Microsoft for comment and have received nearly identical replies in response: “No comment at this time” from a Microsoft spokesperson, and “At this time, no comment,” from Cloudyn’s spokesperson. Separately, a source close to the situation tells TechCrunch that nothing has actually been signed yet so that’s a sign that things could shift.

To date, Cloudyn, which was founded in 2011, has raised $20.5 million according to Crunchbase, from investors that include Carmel Ventures, Infosys and Russia’s Titanium (Calcalist notes a higher funding figure of $22.5 million). This means a $50 million to $70 million price tag is at least more than double, or nearly four times the money raised, and a 10x multiple on revenues, which Calcalist reports at between $5 million and $7 million a year.

Microsoft is one of the biggest players in cloud services by way of its Azure business, which competes against the likes of AWS from Amazon and Google Cloud, amongst many others, vying for business from companies who use the platforms not just for storage, but also to run apps and other services.

As network connectivity has become cheaper and faster, and mobile devices with strong computing power but less storage have become the norm, cloud services have exploded.

Cloudyn, in this context, is an interesting business because it has positioned itself as an agnostic but intelligent companion to how businesses are actually using cloud services today.

In many cases, we are seeing hybrid deployments spanning both cloud and on-premises offerings, as well as businesses that are using cloud services from a range of providers. (As one notable example, you might remember a story from last year about Apple signing on for “some” services with Google, although still using AWS and Azure for others.)

As we have written previously about Cloudyn, the company’s dashboard not only allows companies to monitor how services are being used, but also to optimize this, including increasing capacity when needed.

If this deal goes through, it will be worth seeing how Microsoft implements it. Obviously, the company has a strong mandate in increasing the amount of business on its Azure platform, which has been growing at a steady pace — revenues for the the division last quarter were up 93 percent and compute usage more than doubled, with the annualized run rate at $14 billion.

But more significantly, Microsoft has been making a push to promote the idea of multiplatform services — the message being: Microsoft will be there for you, whereever you happen to be.

(See Microsoft’s app strategy across different operating systems as another example of this, or how the company has implemented Teams, its collaboration product, which clearly favors Microsoft software but does not play in an exclusively walled garden, since many companies do not.)

It is here that Cloudyn could be a more useful (and winning) addition to the Microsoft portfolio: a way to help Microsoft’s customers monitor how their services are working in the cloud, while perhaps in the process also giving Microsoft’s own services a helpful nudge in the mix.

It helps, too, that Cloudyn itself has been amassing a large client list itself. The company says that it works with “thousands” of companies, including “Fortune 500 leaders in all major industry verticals.”

Notably, Cloudyn also is already a Microsoft partner. In March of this year, it announced support for Microsoft Cloud Solution Providers — that is, integrators and other in-the-middle services providers who sit between Azure (or other cloud providers) and enterprises and manage and monitor usage on those platforms on their behalf, perhaps tied to a specific product at the business that the integrator has implemented. Infosys (which, again, invests in Cloudyn), Westcon-Comstor and Insight are already customers.

There have been a number of other acquisitions in the cloud services space of smaller startups by larger platforms as they continue to build out the services that they are offering to customers to increase what are quite thin margins, and to make services more sticky.

Amazon’s AWS, for example, has acquired several companies in the last year, including Harvest.ai, Do.com, Biba and Thinkbox, all to expand what it can offer to businesses on its cloud platform.

 

Featured Image: LIUSHENGFILM/Shutterstock



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