APIs as a driving force for many large acquisitions in the software industry

The value and potential that APIs bring to a business haven't gone unnoticed. Many of the largest software vendors worldwide have made considerable investments to strengthen their API management portfolios in a relatively short period of time. In less than three years, six major acquisitions have taken place:

1. TIBCO acquired Mashery from Intel, which was perhaps expected, as TIBCO, a well-known player in the integration space, did not really have a strong (or at least popular) API pure-play capability.
2. Red Hat acquired 3scale, which was expected to an extent, as the move was perceived as complementary to Red Hat's Fuse and OpenShift offering, the latter also a recent acquisition.
3. Next was the very surprising acquisition of Apigee by Google, which was considered by many as a sound and strategic move by Google to more rapidly penetrate the enterprise cloud software market.
4. More recent acquisitions started with Oracle acquiring the API-design pure-play Apiary, a move also considered interesting and strategic, as Oracle had been investing, and continues to invest, heavily in strengthening its Platform as a Service (PaaS) offering.
5. The Salesforce.com acquisition of MuleSoft was also broadly expected, as both companies had enjoyed a strong partnership for a few years and the MuleSoft Anypoint offering is also seen as complementary to the Force.com platform.
6. Most recently (at least at the time this chapter was written), there was the highly unexpected acquisition of CA Technologies (also a leader in the API space) by Broadcom, which is traditionally a semi-conductor manufacturer.

Figure 1.13: Recent acquisitions in the API market

So, what can be deduced from all of these acquisitions? First of all, of the six acquirers mentioned, three are actually major players in the enterprise cloud space. Therefore, their investment in the API space can be seen as a move to strengthen their PaaS portfolios, which is a multi-billion dollar market on its own. Furthermore, when it comes to cloud, APIs are considered the main means to get access to information and functionality electronically, so offering strong API management capability as part of an SaaS, PaaS, or even Infrastructure as a Service (IaaS) offering is a clear value add.

Secondly, the acquisitions made by TIBCO, Red Hat, and perhaps even Oracle, can be seen as an indication that the integration market is shifting and that more traditional integration capabilities (traditionally based on large-footprint integration middleware backboxes) are being superseded by API-led architectures, where the integration middleware is either very thin or non-existent (as is the case in Microservices Architectures, where event-driven interoperability is favored).

Lastly, although the acquisition by Broadcom was highly unexpected, the market is no stranger to such moves. The purchase is, in fact, comparable to the one made by Intel in 2013, when Mashery was acquired, in theory to strengthen Intel's play in the IoT. However, it's questionable whether the move paid off, as Intel soon after sold Mashery to TIBCO.

However, this last acquisition raises an important point: APIs being an enabler for the IoT. As devices and machines of all sorts, from wearables, to home appliances, vehicles and industrial machines, to name a few, all become smarter and more capable of storing and processing data, the need and demand to access information in real time can only increase. This means that APIs will also (if not already) be implemented to enable IoT. For companies such as Broadcom, and/or many others in the manufacturing/industrial space, this represents a huge opportunity, as they'll be able to expand their existing offerings to also offer digital services (for example, real-time monitoring and alerting, remote and real-time management of infrastructure, predictive maintenance and analytics, to name a few).