Microsoft made another play yesterday to improve what Scott Guthrie, EVP for Microsoft's cloud and enterprise group, describes as its “new cloud currency.”

Guthrie announced Microsoft had entered an agreement to buy San Francisco-based Deis, an open-source software company that has been pushing the boundaries of container development since its founding in 2011.

Microsoft bought Deis from EngineYard, which had bought Boulder, Colo.-based OpDemand, the company behind the Deis platform, in 2015. 

Financial terms of the Microsoft deal were not disclosed.

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Microsoft buys a lot of start ups, so what makes the Deis deal different? 

The acquisition pushes Microsoft deeper into the container market and feeds Microsoft’s cloud ambitions to make Azure a real challenger to Amazon Web Services.

Containers are currently driving cloud enterprise adoption, by enabling developers to build code in a virtual box and share it between apps and different clouds.

Guthrie described Deis in the blog post announcing the deal as "the new currency in the cloud."

“Containers have been at the forefront of cloud transformation in recent years, and for good reason: Container technologies let organizations more easily build, deploy and move applications to and from the cloud,” he wrote.

“With this increase in agility and portability, containers are helping to make applications the new currency in the cloud. At Microsoft, we’ve seen explosive growth in both interest and deployment of containerized workloads on Azure, and we’re committed to ensuring Azure is the best place to run them.”

Angling For a Bigger Piece of the Cloud Market

This touches a sore spot for Microsoft. Windows Servers has acted as the backbone of many — if not most — enterprises for a long time. But with many enterprises moving workloads to cloud and infrastructure-as-a-service providers, Microsoft needs to develop Azure to keep it relevant.

Once Microsoft loses an enterprise to AWS, it will be a hard sell to get them to move to Azure. This, to some extent, explains recent cloud market share figures from the Synergy Research Group.

Published in February and based on findings from the last quarter of 2016, the research shows Amazon Web Services (AWS) maintaining its dominant share of the public cloud services market at over 40 percent.

Learning Opportunities

Microsoft, Google and IBM trail behind. Combined, they have increased their worldwide market share by almost five percentage points over last year and account for 23 percent of the total public IaaS and PaaS market, helped by particularly strong growth at Microsoft and Google.

This represents big money that is likely to get bigger over the coming years. The same Synergy research estimates the quarterly public cloud infrastructure service revenues now touches $7 billion per quarter and will likely grow by 50 percent per year over the coming years.

“While a few cloud providers are growing at extraordinary rates, AWS continues to impress as a dominant market leader that has no intention of letting its crown slip,” said John Dinsdale, a chief analyst and research director at Synergy Research Group said in a statement at the time the figures were released.

“Achieving and maintaining a leadership position in this market takes huge ongoing investments in infrastructure, a continued expansion in the range of cloud services offered, strong credibility with the large enterprise sector, consistently strong execution, and the wholehearted and long-term backing of senior management.”

Open Source & Cloud Computing Drive the Deal 

Deis is part of the Microsoft response. Gutherie writes:

“We expect Deis’ technology to make it even easier for customers to work with our existing container portfolio including Linux and Windows Server Containers, Hyper-V Containers and Azure Container Service, no matter what tools they choose to use.”

With the acquisition, Deis will get a chance to take its open source projects to a much wider audience. Gabriel Monroy, CTO at Deis, wrote that the company plans to continue contributing to the Workflow, Helm and Steward open source projects.

"Over the years, we have worked hard to be open, reliable and dependable open source maintainers. From our new home at Microsoft you should expect nothing less. We will continue our contributions to Workflow, Helm and Steward and look forward to maintaining our deep engagement with the Kubernetes community. The future of open source infrastructure at Microsoft is very bright,” he wrote.

The companies shared no details on when the deal is expected to close.