Container market overfloweth: 451 Market Monitor shows volume of vendors, revenue growth

451 Research's Market Monitor & Forecast service has begun assessing and tracking the size and dynamics of the application container software market. Our initial estimates reflect a market with many vendors centered on Docker application container and related software worth $762m in 2016 and growing beyond $2.6bn by 2020, a CAGR of 40%. The container market sizing has been added along with Private PaaS to our existing and ongoing Cloud-Enabling Technologies (CET) Market Monitor service, and will now be updated and analyzed on a quarterly basis. CET includes foundation and support software for the development and management of private clouds and cloud environments leveraged by providers offering public cloud services.

451 Research Market Monitor & Forecast provides a bottom-up analysis with individual estimates and forecasts for each market participant rather than relying on historical or related data, applying broad assumptions or extrapolating market totals based on input from a handful of large vendors (a top-down approach). Our CET database contains individual models on nearly 300 vendors in the market. Each model includes intelligence specific to companies (i.e. customers, pricing, deal sizes and trends) with a forecast that incorporates the unique traits, strengths and weaknesses of each vendor.

The 451 Take

Two things stand out from our market sizing and other research on containers: the breadth and diversity of vendors either basing their offerings on containers, or integrating and partnering to better support containers in their products, and the speed at which the container software and market are maturing based on production use and revenue growth. We can't help but compare containers to OpenStack, which is also centered on open source software and included participation from startups, as well as established vendors from its start. Based on the number of vendors, containers may be positioned to have a broader impact than OpenStack. Enterprise adoption and maturation appears to be happening more rapidly than OpenStack and other adjacent trends, such as PaaS and DevOps. Going forward, we will be watching to see whether that translates to faster, greater revenue from containers as well.

Volume of vendors

One of the most remarkable things about the emergent application container ecosystem and market is the number of vendors large and small that are meaningfully leveraging or offering application-container technology and support. Our Market Monitor market sizing and estimates include research on 125 individual vendors – and given the quarterly update cadence of our Market Monitor service – we will be adding new market entrants, and yet to be identified container providers, on a regular basis. While we expect the number of vendors under coverage to increase in the coming updates to our analysis, there is a high volume of vendors participating already. This may set the market up for growth beyond our current projections. The more than 100 vendors participating in the application container market is also much larger than the 30-40 vendors considered when we began our OpenStack market assessments in 2013. Today, our OpenStack Market Monitor estimates are based on our research of 91 vendors.

Container market size

For application container software, 451 Research Market Monitor estimates a market value of $762m in 2016. We project relatively rapid growth of 40% CAGR to produce an application container market worth $1.1bn in 2017, $1.5bn in 2018, $2.1bn in 2019 and $2.7bn by 2020. In comparison, we estimate the virtualization market to be worth $11.8bn in 2016 and growing at 11% CAGR through 2020, when it is forecast as a $17.7bn market. For the total CET market – which includes virtualization, containers, Private PaaS, and other automation and management software – we estimate a value of more than $23.1bn in 2016 with 15% CAGR through 2020, when the market is forecast to be worth more than $39.6bn.

We can also compare the application container market to the OpenStack market, which is similarly centered on open source software and began with a much more limited number of vendors than are currently participating. Our Market Monitor estimates for OpenStack are a value of $1.8bn in 2016, $2.6bn in 2017, $3.5bn in 2018, $4.6bn in 2019 and $5.8bn in 2020, a CAGR of 35%.

Going forward, we will be breaking the application container market out into the same categories we identified in our Application Container Market Map: management and orchestration, monitoring, security, data management/services, storage, networking and continuous integration/continuous delivery (CI/CD).

Early days, but advancing rapidly

While containers have enjoyed a great deal of attention and hype in the enterprise, adoption is still just starting and so is revenue. Just as we saw with OpenStack, revenue generation in the early application container market is characterized by some pure plays and larger established vendors generating significant revenue, but most players are just beginning to realize paid engagements.

Though it is relatively early days for containers in the enterprise, we do see a broader enterprise audience of end users and increased movement beyond development and testing to production use. In 2015, we saw significant growth of container applications in production among enterprises we surveyed. The trend continued in our Voice of the Enterprise (VotE) SDI Workloads and Key Projects 2016 Study, which was conducted in April and May, indicating strong growth of production container use. Of the roughly one-quarter of enterprises using containers, 34% of respondents were in broad implementation of production applications and 28% had begun initial implementation of production applications with containers, which is impressive for a technology that has only been in the enterprise for a few years.

In container management and orchestration – where we see a number of competitors, intense competition, innovation and disruption – we've already had some consolidation, including Apprenda's acquisition of Kubernetes-backer Kismatic and Cisco's acquisition of Docker Swarm-supporter ContainerX. Given enterprise interest and the presence of a large number of both startups and established vendors in the container market, we expect more M&A through 2017 across the market segments we've identified, primarily management and orchestration, monitoring, security and CI/CD.



Jay Lyman

Research Manager, Cloud Management and Containers

Greg Zwakman

Research Director, Quantitative Services

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