Google senior VP Diane Greene has made another strategic move in her leadership of the company's enterprise group with the $625 million purchase of API management vendor Apigee. She described the rationale in a blog post:
APIs — the mechanism developers use to interface and integrate with outside apps and services — are vital for how business gets done today in the fast-growing 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.
Apigee is already used by hundreds of companies, including Walgreens, AT&T, Bechtel, Burberry, First Data and Live Nation. Walgreens, for example, uses Apigee to manage the APIs that enable an ecosystem of partners and developers building apps using Walgreens APIs, including the Photo Prints API (enabling mobile app developers to include the ability for their app users to print photos at any Walgreens store), and the Prescription API (enabling users to quickly order refills of prescriptions right from their mobile app).
API management is an important addition to Google's Cloud Platform technology portfolio, and in purchasing Apigee it has gained a leader in the space, says Constellation Research VP and principal analyst Holger Mueller.
"Google in general is trying to become more relevant for the enterprise and this is a good acquisition for them," Mueller says. Beyond Apigee's core technology, Google will be able to derive insights into what APIs customers are using, and how, he adds.
It will be important for Google to push its own technology into Apigee, particularly the Kubernetes application container control plane, Mueller says. In her blog post, Greene said this is indeed in the works, but provided no time frame.
Apigee plays a critical role in today's networked economy, where companies are partnering with each other but still have disconnected supply chains. "APIs are the way to do business and that's where Apigee comes in," Mueller says.
The Apigee platform serves as a middleman between customers' back-end systems and applications. It includes security, authorization, API monetization and analytics features. A number of other vendors, including SAP, have used it to create their own API management products.
Google already has an API management service of its own, Cloud Endpoints, and recently pushed out new features for it into beta. It's not clear how Apigee and Endpoints will work together but it would seem Apigee, which has been in existence for eight years, has a much more mature and broad feature set.
Another question involves Amazon Web Services, upon which Apigee runs today. "For Google to fully leverage the inegrated benefits of Apigee, it will have to move it over to its cloud," Mueller notes. Don't expect such a move to happen right away, Mueller adds.
It's somewhat surprising that Google ended up being the one to buy Apigee, as a more obvious suitor would have been IBM, Mueller says. Other notable API management players have already been taken off the table, such as with Red Hat purchse of 3Scale in June. Hence the market is ripe for another leading independent to emerge, Mueller says.
In any case, API management is set for much broader adoption in this era of next-generation applications, Mueller adds. "So many more applications are going to have to expose APIs and be built in a modern way."
24/7 Access to Constellation Insights
Subscribe today for unrestricted access to expert analyst views on breaking news.