To say it has been a tumultuous two years for Docker Inc. would be an understatement.

The onetime software industry unicorn, which raised nearly $260 million during a frenetic four-year run following the release of its namesake software container technology in 2013, has more recently endured a jolting series of realignments, executive changes and strategic shifts. All that culminated in its surprise announcement last November that it was selling off its entire enterprise business to Mirantis Inc. and would refocus on individual software developers and small development teams.

As the annual DockerCon conference opens online this week, the company and its customers will have a chance to take a temperature check on the last six months’ worth of progress against a new strategy. Docker is hailing big preregistration numbers for the free event as evidence that it’s on the right track. And the numbers are impressive. Some 60,000 people had registered as of Tuesday, compared with the 4,200 who traveled to San Francisco for DockerCon 2019 a year ago.

But the numbers also point to one of the challenges Docker faces as it shifts its focus to buyers deep within organizations. Developers are a notoriously cost-sensitive group who are known for their resourcefulness in getting something for nothing. The fact that many flock to a free event doesn’t necessarily indicate a willingness to write checks for the company’s products.

The trick will be to get the people who manage big development teams to buy in volume, something that hasn’t happened yet. “Skilled developers are hard to obtain and command high salaries,” said Larry Carvalho, research director for platform-as-a-service practices at International Data Corp. “Application development managers would pay a premium for value in terms of improved productivity.”

Back to basics

The new focus is a return to the company’s roots. Co-founders Solomon Hykes and Sebastien Pahl conceived of containers as a way to free developers from the painstaking tasks of configuring infrastructure. Containers are a kind of lightweight virtual machine that share a single operating system kernel and have well-established communication channels. Developers can store preconfigured containers and libraries and spin them up in a few seconds.

With an audience of 6 million registered users of its open-source products, more than 2.2 million installations of the Docker Desktop environment and billions of monthly accesses of its code repositories, Docker has the seeds of what Vice President of Products Justin Graham called a “multibillion-dollar market that’s still at its early stages.”

Redmonk’s O’Grady sees opportunity for Docker in relieving the complexity of working with multiple containers. Photo: Redmonk

Having shed the enterprise container business, Docker believes there’s opportunity in addressing the complexity containers create for developers. “While the company had catapulted containers forward in market, there was still a lot left to be desired about the experience of working with them,” said Stephen O’Grady, co-founder of the analyst firm Redmonk.

“One of the things we’ve been focused on since November is fully embracing the ecosystem,” Chief Executive Scott Johnston (pictured) said in an interview with theCUBE, SiliconANGLE’s livestreaming platform. “We’re a smaller company now and we can’t do it all, nor should we. There’s so much creativity and so much energy outside the four walls of Docker that we’d be silly not to take advantage of that.”

Docker’s developer-focused strategy has two advantages, O’Grady said. “The brand has high visibility with developer populations and there remained a vacuum around the overall experience of working with containers,” he said.

After a year of unrest, Docker wants to project an image of stability. When the company dropped the bombshell about the sale of its enterprise business in November it also replaced its chief executive for the second time in a year.

Rob Bearden, a veteran Silicon Valley entrepreneur, had signed on last May. The move came amid widespread expectations that he would take the company public after two years under the leadership of Steve Singh, who had been brought in to stabilize Docker after a controversial strategy shift led by Hykes.

Bearden instead determined that a business that was trying to serve both individual developers and enterprise customers created “product and financial models [that] were vastly different.” Instead of preparing for an initial public offering, he orchestrated the sale of the enterprise business and its 300 employees to Mirantis and then left to take the top job at big-data firm Cloudera Inc. He was replaced by Johnston, a product executive and longtime Docker employee whose appointment was seen as a bid to soothe a culture that had been rocked by change.

No choice but to divest

The decision to sell the enterprise business was logical, said Redmonk’s O’Grady. Docker had been painted into a corner. Although containers had taken the enterprise information technology world by storm, they didn’t turn out to be the lucrative business opportunity that many people once envisioned.

For one thing, turning a profit on free software has always been a challenge. Docker’s enterprise play was Swarm, an open-source container orchestration manager released in 2014 that offered proprietary extensions it was hoped enterprises would pay for.

By that point, however, competitors had joined the fray with their own containers and cloud providers were offering them free as part of their base service. The turning point was the 2014 release of Kubernetes, an open-source orchestration manager that was an almost instant hit. Kubernetes’ success put Docker on the defensive and forced it into an awkward strategy shift that ultimately embraced both platforms but lacked clarity about its direction.

There was still a lot of value in Docker’s enterprise technology platforms, which included a runtime platform, a registry for storing container images, a cluster manager and a much-loved command-line interface. However, observers said the enterprise business had become more of a distraction than an asset.

Docker didn’t say how much Mirantis paid for the products and the customer base, but on the day of the sale it announced it would take $35 million in new funding, indicating that the proceeds wouldn’t carry its new strategy fully through to fruition.

A clear path forward

The new Docker is intent upon providing the clarity that often eluded the company in recent years. The question is whether it can support a big business. “Docker helped launch the container revolution but questions remain about how to capitalize on the developer community,” said Stu Miniman, senior analyst at SiliconANGLE’s sister market research company Wikibon.

A dramatically slimmed-down product line today consists of Docker Hub, a service for finding and sharing container images among members of a team, and Docker Desktop, a platform for building and sharing containerized applications.

Developers prize Docker development tools for making it possible to set up local environments that are the same as the live server and independent of the underlying operating system and configurations. In the most recent developer survey conducted by Stack Overflow Internet Services Inc., developers rated Docker the “most wanted” and second “most loved” development platform, behind only Linux.

However, the product line is still evolving, and Docker so far lacks the integrated developer productivity suite that enterprises crave. “The Desktop is their strongest product,” said Chris Short, a longtime open-source and DevOps proponent who write the DevOps’ish newsletter. “The idea is to give you the Desktop and drive you toward more ‘Dockery’ things. But what things are there?”

Chris Short: “Stuff I looked at two years ago is just now coming to light.” Photo: Chris Short

Short, who wrote a widely read obituary for Docker in 2017, said the company’s retrenchment was “the only strategy they had” after Kubernetes steamrolled the container business. But he said it remains to be seen whether the company can move quickly enough against numerous competitors. “There’s stuff I looked at two years ago under [a nondisclosure agreement] that is just now coming to light,” he said. “What happened?”

In a bid to reassert leadership, Docker last month released to open source the Compose Specification, which is intended to guide developers building cloud-agnostic and containerized applications. Developed in cooperation with major cloud providers, Compose “promises to bring more customers into the fold since it can be adopted by any other tool removing any lock-in to Docker,” said IDC’s Carvalho.

And perhaps in a nod to those who have criticized the company strategy for being somewhat muddled in the past, Docker also posted a roadmap for its business not on its own website but on the Github open-source software code repository favored by open-source developers.

“That’s something Docker’s never done before,” Graham said. “It’s just that one more proof point that makes Docker more open to our customers.”

The public roadmap has already brought in valuable developer feedback, Graham said. For example, the company’s recently announced partnership with Snyk Ltd. to create a process of identifying and fixing vulnerabilities in containerized applications was a direct result of requests posted to the Github project page. “We’ve been super-clear about the focus and strategy since we sold the enterprise business,” Graham said.

Plays well with others

Although the new Docker is biased toward containers, it isn’t religious about them, Graham said. “If there are new primitives that emerge, we will not hesitate to support them if that’s what our developers and customers ask of us,” he said.

Nor does the company any longer see Kubernetes as a competitor. “Our goal is to help development teams get from source code to production runtime in the best way possible,” Graham said. “If they want to deploy to managed Kubernetes or public cloud or somewhere else, we’ll take the necessary steps to help them do that.”

Developer Janetakis: “Nothing has really pulled it all together like Docker.” Photo: Nick Janetakis

Unlike developer-focused firms that promote a specific tool or technology, Docker aims to support the development process itself. On that front, it appears we found a sweet spot with its audience.

“I’ve worked with many tools over the last decade and in my opinion nothing has really pulled it all together like Docker in a way that makes the whole experience pleasant to use across all major platforms,” said Nick Janetakis, an independent developer who also teaches a Docker video courses.

Janetakis said he has no loyalty to any development platform and the fact that he has been using Docker for more than six year testifies to its continuing relevance. “I can’t think of too many tools I’ve used that long without wanting to find something better,” he said.

The new strategy is based on converting developers one at a time. The current pricing model for its software-as-a-service tops out at $9 per user per month, or a fraction of what most enterprise SaaS applications cost.

The strategy isn’t to be “hyper-focused on large contracts with very large enterprise,” Graham said. “We’re more focused more on individual developers and development teams.” The thinking is that individual developers will graduate to the company’s more advanced and expensive collaboration tools over time and ultimately make them part of the way their organizations build software.

No slam dunk

But that strategy isn’t a slam dunk in a market that’s loaded with competition, including big cloud platform providers and open-source stalwarts such as IBM Corp.’s Red Hat Inc. “Everything I might want to pay Docker for I can get straight from Amazon,” Miniman said.

“It is good that Docker has returned to its open source roots and there is a good structure to the core components that it addresses,” said Bola Rotibi, research director for software development at CCS Insight Ltd. “However, it faces stiff competition.”

Key to making the strategy to work is partnerships with companies that can fill gaps in Docker’s own lineup. “The key thing will be to focus on streamlining the experience, while working with their ecosystem partners,” Rotibi said. Agreed IDC’s Carvalho, “Docker’s overall direction is well-targeted toward developer pain points but needs to attract more partners into the ecosystem.”

To that end, the company’s signature announcement at this week’s DockerCon is an alliance with Microsoft Corp. to integrate the Docker development environment more closely with Azure Container Instances in the Microsoft Azure cloud. The partnership aims tighten Docker integration with Microsoft Visual Studio Code to enable developers to quickly start new language-specific projects using the Compose Specification and deploy to a serverless cloud container service from within the Docker command line interface or VS Code.

While hailing Microsoft as a “great partner,” Graham said there’s nothing exclusive about the relationship and that the company is open to working with any cloud provider. “We will continue to support what customers want in terms of where they run their applications and the tools they want to use,” he said.

Starting small can be an effective strategy in high-growth markets, noted IDC’s Caravalho. Amazon Web Services Inc., for example, “was first popular with start-ups and now gets the big-ticket contracts,” he said. “If Docker can start with small teams building new apps, they could potentially grow to be leveraged by enterprises.”

Precedent says the model can work. In 2008, startup Yammer Inc. began to distribute its enterprise social networking software on a “freemium” basis on a hunch that adoption by small groups of users within enterprises would leave chief information officers with no choice but to sign on for corporate licenses. Yammer never had a chance to see its novel strategy through to fruition because Microsoft Corp. picked it up for $1.2 billion just four years later.

Should the same scenario play out for Docker, it will finally give investors the payoff that has long eluded them.

Photo: SiliconANGLE