Microsoft Acquisition of Apiphany Portends Rise of API Economic Zones in the Cloud

Michael Vizard
Oct. 28 2013, 08:00AM EDT

If two is a survey and three is a trend then API management has arrived. With the acquisition of Apiphany last week by Microsoft many of the independent providers of frameworks are being gobbled up as leading vendors vie for control of an emerging API economy. Those acquisitions include deals that saw Layer 7 Technologies get picked up by CA Technologies while Mashery was acquired by Intel. Previously, Axway acquired Vordel and, of course, everyone from traditional enterprise vendors such as IBM and TIBCO Software to comparitive upstarts such as Apigee and MuleSoft have all unveiled their own API management platforms. In the case of Apiphany, Microsoft immediately turned off the API management service; at least in terms of signing up new customers. Given that the acquisition of Apihany was led by the Microsoft Azure group the expectation is that the Apiphany technology will one day reemerge as a service on Azure. In fact, Microsoft’s end game appears to be effort to develop an API ecosystem around Azure that will attract enough applications to give the cloud platform the critical mass it needs to compete with rival public cloud services from Amazon and Google. As cloud computing and the API economy increasing converge, major cloud platform providers are trying to ensure their long term viability by creating zones they can dominate within the larger API economy. Relying on developers to create critical mass for a particular platform is nothing new for Microsoft. In essence, Microsoft is relying on the same playbook it used to drive Windows adoption to ensure the success of Microsoft Azure. Of course, in the age of the cloud, developers are today far more likely to hedge their bets. They may very well adopt Microsoft Azure. But the cost of deploying applications across multiple clouds is dropping. Each of the major cloud platforms is essentially creating an economic zone where there are certain performance and integration benefits to be gained by being co-resident with other applications on the same cloud platform. The challenge developers will face over time is finding a way to federate the deployment and management of those applications across multiple clouds in order to participate fully in multiple ecosystems. The bigger challenge right now, notes Alex Bakker, senior research analyst with Saugatuck Technology, is that emerging technology APIs are still relatively brittle and often inconsistently applied. “APIs are really about fulfilling the original promise of Web services,” says Bakker. “It’s just now APIs allow organizations to share data as a more granular service.” While API management products are clearly aimed at integrating disparate cloud and legacy enterprise applications with each other; longer term it’s clear that some vendors are starting to realize that the API economy is going to be driven by integrating applications and data in ways that create new digital routes to market, also known as channels. “This is really about delivering everything as a service as part of an API economy,” says Bakker. “A big part of that is going to be data and cloud integration.” Microsoft clearly wants to make sure that it is at the hub of one of the largest API ecosystems in the cloud to not only drive developer adoption of its technologies, but also ensure its relevance in the coming age of digital business. The only challenge now is that instead of trying to take out Novell, Borland and Lotus, major players in the cloud including Amazon, Google, IBM and Salesforce.com already hold as much or more economic sway as Microsoft.

Michael Vizard

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