Adds an important piece to Red Hat's cloud and application stack.

Mitch Wagner, Executive Editor, Light Reading

June 23, 2016

2 Min Read
Red Hat Buys 3Scale for API Management

Red Hat has announced a definitive agreement to add API management to its portfolio by acquiring 3Scale. The acquisition adds an important piece to Red Hat's strategy to build a complete stack for cloud, microservice and other enterprise applications.

3Scale provides tools to allow developers to author, publish, scale and manage APIs. The company also provides a software as a service cloud platform for information, metering and charging for API users, Rich Sharples, senior director of product management, middleware business unit for Red Hat Inc. (NYSE: RHT), tells Light Reading.

"APIs are first class currency for modern application development," Sharples says. "All modern application development involves thinking about APIs and publishing APIs."

APIs are used by cloud services to allow applications to connect to each other. Individual businesses use APIs to connect to applications run by business partners, and business units use APIs to connect their applications to other applications run by other business units within the same company.

For example, a bank might use APIs to allow affiliated businesses to connect to a credit card reward system. Businesses in the hospitality industry use APIs to connect to services such as OpenTable for restaurant reservations, or TripIt to allow travelers to manage their reservations, Sharples says.

In a statement, Red Hat cites a Forrester estimate that 40% of US companies will have API management solutions, spending $660 million, in 2020.

Red Hat has been partnering with 3Scale since last year; the acquisition will give Red Hat "speed and expertise," Sharples says. It gives Red Hat a company that already has a sales force and consultants on the ground -- "a bit of a boost."

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Red Hat will integrate 3Scale's software with its existing software line, including JBoss Middleware, OpenShift and its Mobile Application Platform.

3Scale was founded in 2007, with offices in Barcelona and San Francisco. Its more than 700 customers include Campbell's Soup, Cartera Commerce, CrunchBase and Johnson Controls.

Red Hat expects the acquisition, which will close this month, will have no material impact on revenue for the second fiscal quarter ending August 31 or fiscal year ending February 28. GAAP operating expenses will increase by about $3 million or $0.01 per share in the second quarter and by about $7 million or $0.03 per share in fiscal 2017.

3Scale has raised $5 million in total equity funding in two rounds from seven investors, according to CrunchBase.

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About the Author(s)

Mitch Wagner

Executive Editor, Light Reading

San Diego-based Mitch Wagner is many things. As well as being "our guy" on the West Coast (of the US, not Scotland, or anywhere else with indifferent meteorological conditions), he's a husband (to his wife), dissatisfied Democrat, American (so he could be President some day), nonobservant Jew, and science fiction fan. Not necessarily in that order.

He's also one half of a special duo, along with Minnie, who is the co-habitor of the West Coast Bureau and Light Reading's primary chewer of sticks, though she is not the only one on the team who regularly munches on bark.

Wagner, whose previous positions include Editor-in-Chief at Internet Evolution and Executive Editor at InformationWeek, will be responsible for tracking and reporting on developments in Silicon Valley and other US West Coast hotspots of communications technology innovation.

Beats: Software-defined networking (SDN), network functions virtualization (NFV), IP networking, and colored foods (such as 'green rice').

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