F5 Networks, the Seattle-based cloud services company, has purchasedOpens a new window  web server specialist Nginx – a competitor – for $670 million.
Nginx, founded in 2011, is the company behind the world-conquering, open-source web server of the same name. The software was developed in 2002 and became an open-source software in 2004.
Nginx is the world’s second-largest web server after Apache and is used for more than 374 million websites and nearly 67% of the highest-traffic sites on the internet. The software was originally developed by the technologist Igor Sysoev for the Russian site Rambler. In 2011, Nginx was launched as a start-up company in an effort to monetize the open-source software by offering premium services.
F5 Networks started life selling load-balancing for web servers – directing web traffic between different servers in a cluster to make best use of their spare capacity – and has expanded into wider application delivery software for the cloud and cyber-security projects.
Under the terms of the deal, F5 pays $670 million for Nginx and will keep chief executive Gus Robertson, software author Igor Sysoev and engineering vice-president Maxim Konovalov. Francois Locoh-Donou, the chief executive of F5, said the acquisition would create a combined force to help developers build services in a multi-cloud environment, where companies use a variety of cloud providers for different applications.
“The combined company,†Locoh-Donou said, “will (provide) every customer, from the app developer to the network engineer to the security specialist, with the tools they need to ensure their apps are available and secure across every platform, from the enterprise data center to private and public clouds.â€
Forrester’s principal analyst Ted Schadler, writing in 2013, saidOpens a new window Nginx achieved huge popularity because it is well suited for handling the heavy traffic from mobile apps and mobile websites. “Mobile apps need a Web HTTP Server that can handle millions of simultaneous connections and deliver small amounts of data with a millisecond response time. And that is precisely what Nginx is good at,†he wrote in a blog.
In the sale announcement, Nginx chief executive Robertson discussed the open-source web server: “We wouldn’t have experienced amazing digital experiences like Instagram, Pinterest, Netflix, Airbnb and hundreds of thousands more apps if it weren’t for Igor open-sourcing Nginx back in 2004.â€
The service has been described as one of the most important ingredients of the Internet revolution that most people have never heard about.
Concerns have circulated that the deal could threaten the free, open-source Nginx software. In searching to monetize the software, Nginx in 2013 created a product called Nginx Plus, a for-sale version with additional features missing from the open-source version. These include health checks such as API configuration.
But the sales announcement affirmed the combined company’s commitment to the open-source strategy. “F5,†it said, “is committed to continued innovation and increasing investment in the Nginx open source project to empower Nginx’s widespread user community.â€
The F5 acquisition is the latest example of an open source project getting snapped up by a private company. Microsoft, for instance, bought GitHub, and Oracle bought MySQL. While these businesses have continued with their open-source projects, suspicions have been expressed in chat rooms that they are being gradually watered down by their new owners.
As one commenter on the Nginx websiteOpens a new window worried: “Unfortunately, this is the end for Nginx.†Another said “I feel the same way I felt when IBM announced it bought out Red Hat – not happy and worried.†But another responded: “It makes no sense to acquire a FLOSS (open source) project for so much money and then kill it.â€
The Nginx open source approach will no doubt continue, some observers say, but F5 will need to find ways of squeezing more money from the acquired company to pay for its half-billion dollar acquisition.