Solidifying its place in the API economy, Google has agreed to acquire Apigee in a deal worth $625 million.
Apigee provides a platform for developing, managing and monetizing application programming interfaces, as well as predictive analytics to help developers gain insight into the use of their APIs. The deal is expected to close by the end of this year.
APIs are essentially building blocks for developing software applications.
“Companies are moving beyond the traditional ways of communicating like phone calls and visits and instead are communicating programmatically through APIs,” Diane Green, senior vice president of Google’s cloud business, said in a statement. “APIs allow the company’s back-end services to talk to the mobile and web-based apps used by their customers and partners. Instead of the doctor phoning a prescription into the pharmacy, they can use an app that talks to the pharmacy through an API. Apigee easily enables this by providing a comprehensive API platform that supports secure, stable, multi-language, dev, test, publish and analytics capabilities.”
Chet Kapoor, CEO of Apigee, concurred, noting that the industry has entered into a new era of cloud computing, where companies are running more and more business-critical applications in the cloud and even across multiple clouds.
“Google is the open cloud provider committed to delivering new software for not only hybrid-cloud environments, but also for the multi-cloud world.” Kapoor said in a statement. “With their history of innovation in web and mobile technologies, we believe Google is the partner for companies embarking on a digital transformation. We look forward to being able to accelerate our mission to connect the world through APIs as part of the Google team.”
Al Hilwa, an analyst with IDC, told eWEEK this acquisition is a significant move Google is making in its enterprise cloud efforts and should be seen as an indication of how the company is willing to invest with Diane Greene now at the helm of its enterprise cloud business.
“APIs are at the heart of how mobile apps interact with back-end systems and how modern microservices are constructed,” Hilwa noted. “Scaling and securing APIs is becoming an essential capability in new applications. We should expect Apigee to become an important new ingredient in Google’s Cloud Platform and a competitive lever in the API wars between cloud providers.”
Apigee has hundreds of customers, including brand names such as Walgreens, AT&T, Bechtel, Burberry and First Data. Walgreens, for instance, uses Apigee to manage the APIs that developers use to build apps for the Walgreens ecosystem—including the Photo Prints API and the Prescription API, both of which power mobile applications.
Greene described APIs as the mechanism developers use to interface and integrate with outside apps and services, noting that they are vital for how business gets done today in the digital and mobile marketplace.
“They’re the hubs through which companies, partners and customers interact, whether it’s a small business applying online for a loan or a point-of-sale system sending your warranty information to the manufacturer,” she said in a blog post.
Google to Pay $625M for API Economy Leader Apigee
In short, Greene described the API economy. IBM defines the API economy as a commercial exchange of business functions, capabilities or competencies as services packaged in APIs.
It is a driving force behind much of the digital transformation across industries today, enabling businesses to build new ecosystems and monetize core assets, services and products. The API economy will become a $2.2 trillion market by 2018, analysts estimate.According to Ovum, an IT research and advisory firm, in the next two years, the number of enterprises having an API program is expected to increase by 150 percent.
“The benefits of interacting digitally drives a large market opportunity; Forrester predicts that U.S. companies alone will spend nearly $3 billion on API management by 2020,” Greene said. “The addition of Apigee’s API solutions to Google cloud will accelerate our customers’ move to supporting their businesses with high-quality digital interactions. Apigee will make it much easier for the requisite APIs to be implemented and published with excellence.”
Michael Turits, managing director of equity research on infrastructure software at Raymond James & Associates, called Google’s move a healthy sign for the ongoing consolidation process in software. “API management helps tie back-end infrastructure systems, including cloud, to third-party front-end applications and also helps manage security across these composite applications,” he added.
Charles King, principal analyst at Pund-IT, explained why he believes Google’s purchase of Apigee is notable. First, it underscores the value that APIs provide for supporting a wide range of developers and their projects, he said.
“That’s an especially critical point, given the emphasis organizations are placing on leveraging core processes and applications across new cloud, mobile and social platforms,” King said.
“But Apigee’s impressive list of clients, which ranges from high-tech start-ups to mainline businesses like Burberry, Vodafone and Walgreens, is also important to the deal,” King added. “Google can obviously leverage Apigee’s technologies and expertise to substantially enhance its cloud platform and solutions. At the same time, the company’s existing enterprise clients are just the sort of customers Google hopes to engage.”
Moreover, Greene explained that Google cloud customers already benefit from no sys-ops development environments, including Google App Engine and Google Container Engine. “Now, with Apigee’s API management platform, they’ll be able to front these secure and scalable services with a simple way to provide the exported APIs,” she said.
In the future, Google will add support for the Kubernetes open-source container cluster manager to the mix to help enterprises get better control and visibility into how their internal systems talk to one another, Greene said
“The transition toward cloud, mobile and digital interaction with customers and partners via APIs is happening, and fast,” she said. “It’s happening because customers of every stripe—in the consumer realm and in the enterprise—are demanding it, and because it translates to engaging and valuable businesses.”