Will Microsoft Buy Mesosphere?

Rumors have been circulating that Microsoft (NASDAQ:MSFT) could acquire cloud computing startup Mesosphere.
According to The Information (subscription), two people briefed on the buyout talks said that Mesosphere was approached about a month ago. The report adds that it is unclear whether talks are still taking place.
Mesosphere makes it easier for companies to use mesos, an open source technology, to automate tasks, manage data and deploy complicated applications more easily. The Mesosphere Datacenter Operating System spans all of the machines in one’s data center or cloud, and works on any cloud platform.

According to Zacks, acquiring Mesosphere could help Microsoft become more competitive in the cloud — while Microsoft’s cloud computing business is its fastest-growing segment, the company still hasn’t managed to surpass its competitors in that space.
“Cloud computing is currently one of the most promising and flourishing areas in the ever-evolving technology sector,” the news outlet states, noting that growth in cloud computing is six times higher than growth in the broader IT market.
Similarly, Alex Konrad at Forbes has suggested that acquiring Mesosphere could give Microsoft “instant credibility in the new wave of infrastructure computing.”
Furthermore, within the cloud computing sector, “container” technologies (made popular by Docker) are also growing in importance. Konrad notes that Google (NASDAQ:GOOGL) and IBM (NYSE:IBM) are working with Docker, Mesosphere and other companies to move towards a container standard, but Microsoft hasn’t gotten involved yet.
Interestingly, Konrad also reminds readers that rumors surfaced in June about Microsoft acquiring Docker.

As mentioned, it’s unclear whether or not Microsoft is still looking to buy Mesosphere. However, the $1-billion figure reportedly being considered highlights the rapid growth potential in the technology sector — Mesosphere was launched fairly recently, in 2013. Certainly, that’s an important point for investors to note. Mesosphere raised $36 million in a series B funding round in December 2014,
In that light, it’s definitely worth it for investors to keep an eye on smaller, and/or newer players in the cloud computing space.
Company news
Callidus Software (NASDAQ:CALD) reported that UK technology services firm Excitech has picked CallidusCloud Configure Price Quote to help its team automate and accelerate the sales quote process. “Businesses like Excitech are discovering CallidusCloud’s power for improving sales efficiency, accelerating the sales cycle and improving customer experience,” said Christina Kemper, senior vice president of EMEA at CallidusCloud, in a statement.
NetApp (NASDAQ:NTAP) reported net revenues of $1.34 billion in its Q1 2016 results. The company highlighted its new AltaVault solutions and services, which allows customers to quickly back up data to the cloud.
 
Securities Disclosure: I, Teresa Matich, hold no direct investment interest in any company mentioned in this article.