Canonical, the developer of Ubuntu, is preparing for an IPO. The company plans to expand in the field of cloud computing.
/ фото (PD) — on the ISS
Discussions about Canonical's IPO have been ongoing since 2015, when the company's founder Mark Shuttleworth first mentioned the possibility of a public offering. The goal of the IPO is to raise funds to help Canonical develop products for cloud and enterprise IoT systems.
For example, the company plans to focus more on LXD container technology and the IoT operating system Ubuntu Core. This direction is driven by the company's business model, which does not involve selling licenses and generates revenue through B2B services.
Canonical began preparing for the IPO in 2017. To become more attractive to investors, the company halted development on unprofitable products, including the Unity desktop shell and the Ubuntu Phone mobile OS. Canonical also aims to increase its annual revenue from $110 million to $200 million. Hence, the company is now trying to attract more corporate clients, introducing a new service package — Ubuntu Advantage for Infrastructure.
Canonical does not charge separately for the maintenance of infrastructure components based on different technologies — OpenStack, Ceph, Kubernetes, and Linux. The cost of services is calculated based on the number of servers or virtual machines, and the package includes technical and legal support. Canonical calculates that this approach will help their clients save money.
Another step to attract clients was extending Ubuntu's support life from five years to ten years. According to Mark Shuttleworth, a longer lifecycle for the operating system is important for financial organizations and telecoms, which tend to transition to new OS and IT service versions less frequently than other companies.
Canonical's actions have helped make Ubuntu more popular among such 'conservative' organizations and strengthen the developer's position in the cloud solutions market. The company's efforts may pay off soon, as there is a possibility that Canonical will go public as early as 2020.
What this means for the market
Analysts , is that with the transition to public status, Canonical could become a full-fledged competitor to Red Hat. The latter has developed and implemented principles for monetizing open source technologies, which Canonical is now also utilizing.
For a long time, other companies with similar business models struggled to grow to the size of Red Hat. In terms of scale, it significantly outpaces Canonical — Red Hat's annual profit alone exceeds that of the entire revenue of the Ubuntu developer. However, experts believe that the funds from the IPO will help Canonical grow to match its competitor.
The Ubuntu developer has an advantage over Red Hat. Canonical is an independent company that allows corporate clients to choose any cloud environment for application deployment. Red Hat, on the other hand, will soon become part of IBM. Although the IT giant promises to maintain the subsidiary's independence, there is a possibility that Red Hat will promote IBM's public cloud.
/ фото ()
It is also expected that the IPO will help Canonical solidify its position in the IoT and edge computing markets. The company is developing new products based on Ubuntu that will help unify edge devices with cloud environments into a single hybrid system. While this direction is not currently profitable for Canonical, Shuttleworth sees it as a promising future for the company. Developing technologies for IoT will be supported by funds from the IPO — Canonical will be able to allocate more resources for developing edge products.
Who else is going public?
In April 2018, Pivotal made part of its shares available on the market. It develops the Cloud Foundry platform for deploying and monitoring applications in public and private cloud environments. The majority of Pivotal is owned by Dell: the IT giant holds 67% of the company's shares and plays a decisive role in decision-making.
The stock market listing was supposed to help Pivotal expand its presence in the cloud services market. The company to spend the raised funds on developing new products and attracting major global companies as clients. Pivotal's expectations were met — after selling shares, it managed to increase revenue and the number of corporate customers.
Another IPO is set to take place in the near future. In April of this year, the startup Fastly filed for an IPO, offering a platform for edge computing and a load balancing solution for data centers. The funds from the IPO will be used to promote their presence in the edge computing market. Fastly hopes that the investments will help them become a more prominent player in the data center services industry.
What's Next
According to (article behind paywall) The Wall Street Journal reports that shares of technology B2B organizations may be more appealing than securities in the B2C IT sector. Therefore, IPOs in the B2B segment typically attract the attention of serious investors.
This trend is also relevant to the cloud computing sector, which is why IPOs for companies like Canonical have a strong chance of success. The revenue from the stock sales will help the cloud industry further develop technologies that are currently in high demand among corporate clients, - and for edge computing.
What we write about in our Telegram channel:
Source: habr.com
