Orca Security, an Israeli cloud security firm that focuses on giving enterprises better visibility into their multi-cloud deployments on AWS, Azure and GCP, today announced that it has raised a $20 million Series A round led by GGV Capital. YL Ventures and Silicon Valley CISO Investments also participated in this round. Together with its seed investment led by YL Ventures, this brings Orca’s total funding to $27 million.

One feature that makes Orca stand out is its ability to quickly provide workload-level visibility without the need for an agent or network scanner. Instead, Orca uses low-level APIs that allow it to gain visibility into what exactly is running in your cloud.

The founders of Orca all have a background as architects and CTOs at other companies, including the likes of Check Point Technologies, as well as the Israeli army’s Unit 8200. As Orca CPO and co-founder Gil Geron told me in a meeting in Tel Aviv earlier this year, the founders were looking for a big enough problem to solve and it quickly became clear that at the core of most security breaches were misconfigurations or the lack of security tools in the right places. “What we deduced is that in too many cases, we have the security tools that can protect us, but we don’t have them in the right place at the right time,” Geron, who previously led a security team at Check Point, said. “And this is because there is this friction between the business’ need to grow and the need to have it secure.”

Orca delivers its solution as a SaaS platform and on top of providing work level visibility into these public clouds, it also offers security tools that can scan for vulnerabilities, malware, misconfigurations, password issues, secret keys in personally identifiable information.

“In a software-driven world that is moving faster than ever before, it’s extremely difficult for security teams to properly discover and protect every cloud asset,” said GGV managing partner Glenn Solomon . “Orca Security’s novel approach provides unparalleled visibility into these assets and brings this power back to the CISO without slowing down engineering.”

Orca Security is barely a year and a half old, but it also counts companies like Flexport, Fiverr, Sisene and Qubole among its customers.

M&A activity has generally slowed down in the weeks since the novel coronavirus took a grip on the world, but there have been some pockets of activity in the tech industry when the price is right or when the divestment/acquisition just makes sense.

The world of messaging brings us the latest development in that theme: SAP, the CRM and enterprise software giant, is selling its Digital Interconnect messaging business to Sinch, a Swedish cloud voice, video and messaging company.

Sinch said it is paying €225 million (around $250 million) on a cash and debt-free basis for the business, which has 1,500 enterprise customers that use it for various messaging services, such as the now-popular option of running “omnichannel” conversations with customers over SMS, push, email, WhatsApp, WeChat and Viber; and messaging technology for carriers.

The deal will give Sinch, based in Sweden, a bigger foothold in the US market — the Digital Interconnect business is headquartered in Silicon Valley — and more access to a trove of customers using the kind of messaging technology that Sinch develops and sells.

The significance here is that messaging continues to be a very popular and high-volume, but low-margin (or even no-margin in some cases), business. So it makes sense for Sinch to pursue a bigger strategy for more economy of scale, a trend that I think will continue to play out. As a case in point: Sinch has been on an acquisition spree in the last month, and other deals have included Latin American messaging provider Wavy ($119 million, announced March 26), and ChatLayer ($6 million, announced April 20).

“With SAP Digital Interconnect now becoming a part of Sinch, we build on our scale, focus and capabilities to truly redefine how businesses engage with their customers, throughout the world,” comments Oscar Werner, Sinch CEO, in a statement. “The transaction strengthens our direct connectivity globally. Plus, it enables us to expand and accelerate a range of business-critical services to mobile operators, including products for person-to-person messaging, reporting and analytics.”

The news caps off nearly a month of speculation that SAP was gearing up for a sale of the legacy unit as part of a bigger strategy to focus more squarely on its CRM and newer enterprise IT services. It comes amid a particularly challenging economic environment, and that’s before considering all the IT, security and other challenges companies were facing even before COVID-19. SAP also has other fish to fry. It acquired Qualtrics in November 2018 for $8 billion, spearheading a stronger move into employee and customer experience, surveys and research; and other SAP exits this year have included shuttering travel business Hipmunk, which was part of Concur (another acquisition made by SAP), back in January.

Between then and now SAP has also seen a very notable personnel change. Its co-CEO Jennifer Morgan stepped away from the company by mutual agreement with the board, leaving Christian Klein as sole CEO (the two had been in the co-CEO roles for only six months). At the time, the company said that the abrupt change — a mere 10 days between late-Friday announcement and departure — was in response to “the current environment [which] requires companies to take swift, determined action which is best supported by a very clear leadership structure.”

It would appear that this sale is an example of the kind of swift and determined action that the board was hoping to see.

SAP’s messaging unit has been around in one form or another for years. It became a part of SAP in 2010 as part of its acquisition of Sybase, but even before that Sybase acquired Mobile 365, which had developed the messaging technology that ultimately became SAP Digital Interconnect, back in 2006.

At the time, the messaging business was the primary part of Mobile 365, and Sybase paid $417 million for that company. In that regard, it might look like SAP is now selling it for a loss, although you could also argue that 15+ year-old technology in the fast-moving world of messaging would have depreciated at this point.

The business itself is very typical of messaging: huge volumes but not huge revenues.

In 2019, SAP said that the enterprise messaging business processed 18 billion messages, while its carrier services processed 292 billion carrier messages. The Bloomberg report that broke the news about the intent to sell the division said that it made $50 million in EBITDA and $250 million in revenue last year. But actually this is small relatively speaking: SAP altogether had revenues of nearly $30 billion in the same period. In other words, it’s an okay business but not really core to SAP and where it’s going. 

On the other hand, it’s a better fit for Sinch. The company originally spun out from low-cost IP calling company Rebtel, was then acquired by publicly-traded CLX, which subsequently rebranded its whole business as Sinch. It is a much smaller company than SAP — market cap of about $3.1 billion (30.82 billion Swedish krona), versus SAP’s market cap of $139 billion — but is squarely focused on messaging services similar to those that the former SAP division offers.

“SAP Digital Interconnect is a leader in its area showing profitable growth and reaching 99 percent of the world’s mobile subscribers. Looking at Sinch’s innovation and investment strategy in the area of cloud communication platforms, we welcome them as the new owner of SDI. Sinch is perfectly positioned to unleash further growth potential we see in SDI,” said Thomas Saueressig, member of the Executive Board of SAP SE, responsible for SAP Product Engineering, in a statement.

M&A continues on in the wider European region even while so much else has slowed down or stopped in the current market. This deal follows on the heels of Intel acquiring Israel’s Moovit for $900 million this week, and Avira in Germany getting acquired by Investcorp at a $180 million valuation several weeks ago.

At its Think Digital conference, IBM and Red Hat today announced a number of new services that all center around 5G edge and AI. The fact that the company is focusing on these two areas doesn’t come as a surprise, given that both edge and AI are two of the fastest-growing businesses in enterprise computing. Virtually every telecom company is now looking at how to best capitalize on the upcoming 5G rollouts, and most forward-looking enterprises are trying to figure out how to best plan around this for their own needs.

As IBM’s recently minted president Jim Whitehurst told me ahead of today’s announcement, he believes that IBM (in combination with Red Hat) is able to offer enterprises a very differentiated service because, unlike the large hyper clouds, IBM isn’t interested in locking these companies into a homogeneous cloud.

“Where IBM is competitively differentiated, is around how we think about helping clients on a journey to what we call hybrid cloud,” said Whitehurst, who hasn’t done a lot of media interviews since he took the new role, which still includes managing Red Hat. “Honestly, everybody has hybrid clouds. I wish we had a more differentiated term. One of the things that’s different is how we’re talking about how you think about an application portfolio that, by necessity, you’re going to have in multiple ways. If you’re a large enterprise, you probably have a mainframe running a set of transactional workloads that probably are going to stay there for a long time because there’s not a great alternative. And there’s going to be a set of applications you’re going to want to run in a distributed environment that need to access that data — all the way out to you running a factory floor and you want to make sure that the paint sprayer doesn’t have any defects while it’s painting a door.”

BARCELONA, CATALONIA, SPAIN – 2019/02/25: The IBM logo is seen during MWC 2019. (Photo by Paco Freire/SOPA Images/LightRocket via Getty Images)

He argues that IBM, at its core, is all about helping enterprises think about how to best run their workloads software, hardware and services perspective. “Public clouds are phenomenal, but they are exposing a set of services in a homogeneous way to enterprises,” he noted, while he argues that IBM is trying to weave all of these different pieces together.

Later in our discussion, he argued that the large public clouds essentially force enterprises to fit their workloads to those clouds’ service. “The public clouds do extraordinary things and they’re great partners of ours, but their primary business is creating these homogeneous services, at massive volumes, and saying ‘if your workloads fit into this, we can run it better, faster, cheaper etc.’ And they have obviously expanded out. They’ve added services. They are not saying we can put a box on-premise, but you’re still fitting into their model.”

On the news side, IBM is launching new services to automate business planning, budgeting and forecasting, for example, as well as new AI-driven tools for building and running automation apps that can handle routine tasks either autonomously or with the help of a human counterpart. The company is also launching new tools for call-center automation.

The most important AI announcement is surely Watson AIOps, though, which is meant to help enterprises detect, diagnose and respond to IT anomalies in order to reduce the effects of incidents and outages for a company.

On the telco side, IBM is launching new tools like the Edge Application Manager, for example, to make it easier to enable AI, analytics and IoT workloads on the edge, powered by IBM’s open-source Open Horizon edge computing project. The company is also launching a new Telco Network Cloud manager built on top of Red Hat OpenShift and the ability to also leverage the Red Hat OpenStack Platform (which remains to be an important platform for telcos and represents a growing business for IBM/Red Hat). In addition, IBM is launching a new dedicated IBM Services team for edge computing and telco cloud to help these customers build out their 5G and edge-enabled solutions.

Telcos are also betting big on a lot of different open-source technologies that often form the core of their 5G and edge deployments. Red Hat was already a major player in this space, but the acquisition has only accelerated this, Whitehurst argued. “Since the acquisition […] telcos have a lot more confidence in IBM’s capabilities to serve them long term and be able to serve them in mission-critical context. But importantly, IBM also has the capability to actually make it real now.”

A lot of the new telco edge and hybrid cloud deployments, he also noted, are built on Red Hat technologies but built by IBM, and neither IBM nor Red Hat could have really brought these to fruition in the same way. Red Hat never had the size, breadth and skills to pull off some of these projects, Whitehurst argued.

Whitehurst also argued that part of the Red Hat DNA that he’s bringing to the table now is helping IBM to think more in terms of ecosystems. “The DNA that I think matters a lot that Red Hat brings to the table with IBM — and I think IBM is adopting and we’re running with it — is the importance of ecosystems,” he said. “All of Red Hat’s software is open source. And so really, what you’re bringing to the table is ecosystems.”

It’s maybe no surprise then that the telco initiatives are backed by partners like Cisco, Dell Technologies, Juniper, Intel, Nvidia, Samsung, Packet, Equinix, Hazelcast, Sysdig, Turbonomics, Portworx, Humio, Indra Minsait, EuroTech, Arrow, ADLINK, Acromove, Geniatech, SmartCone, CloudHedge, Altiostar, Metaswitch, F5 Networks and ADVA.

In many ways, Red Hat pioneered the open-source business model and Whitehurst argued that having Red Hat as part of the IBM family means it’s now easier for the company to make the decision to invest even more in open source. “As we accelerate into this hybrid cloud world, we’re going to do our best to leverage open-source technologies to make them real,” he added.

It’s fair to say that even before the impact of COVID-19, companies had begun a steady march to the cloud. Maybe it wasn’t fast enough for AWS, as Andy Jassy made clear in his 2019 Re:invent keynote, but it was happening all the same and the steady revenue increases across the cloud infrastructure market bore that out.

As we look at the most recent quarter’s earnings reports for the main players in the market, it seems the pandemic and economic fall out has done little to slow that down. In fact, it may be contributing to its growth.

According to numbers supplied by Synergy Research, the cloud infrastructure market totaled $29 billion in revenue for Q12020.

Image Credit: Synergy Research

Synergy’s John Dinsdale, who has been watching this market for a long time, says that the pandemic could be contributing to some of that growth, at least modestly. In spite of the numbers, he doesn’t necessarily see these companies getting out of this unscathed either, but as companies shift operations from offices, it could be part of the reason for the increased demand we saw in the first quarter.

“For sure, the pandemic is causing some issues for cloud providers, but in uncertain times, the public cloud is providing flexibility and a safe haven for enterprises that are struggling to maintain normal operations. Cloud provider revenues continue to grow at truly impressive rates, with AWS and Azure in aggregate now having an annual revenue run rate of well over $60 billion,” Dinsdale said in a statement.

AWS led the way with a third of the market or more than $10 billion in quarterly revenue as it continues to hold a substantial lead in market share. Microsoft was in second, growing at a brisker 59% for 18% of the market. While Microsoft doesn’t break out its numbers, using Synergy’s numbers, that would work out to around $5.2 billion for Azure revenue. Meanwhile Google came in third with $2.78 billion.

If you’re keeping track of market share at home, it comes out to 32% for AWS, 18% for Microsoft and 8% for Google. This split has remained fairly steady, although Microsoft has managed to gain a few percentage points over the last several quarters as its overall growth rate outpaces Amazon.