NGINX, the open source alternative to Apache web server, today announced their plans to start a commercial company around their software. Yesterday, they announced a $3 Million Series A funding round and how they are planning to monetize their open source software. As an analyst focussing on both open source and cloud computing, this is an interesting news and I will put forward my thoughts on the news. With Redhat becoming the first billion dollar open source company and cloud computing adding another channel to open source software, we will be seeing more open source software taking the commercial route.
What is NGINX?
NGINX is an open source web server cum caching proxy cum load balancer. It was written by a Russian engineer, Igor Sysoev, in 2004 as a modern alternative to legacy web servers like Apache, IIS, etc.. Soon, it took off big time and it is now powering 8% of the top 1,000,000 sites and 20% of the top 1000 sites. Companies like Groupon, LivingSocial, Playdom, Zappos, Hulu, TechCrunch, Dropbox, Yandex, WordPress and web hosting/cloud providers like DreamHost, Media Temple, CloudFlare, Engine Yard and Linode use NGINX. This is quite popular because of the smaller footprint, robustness and scalability.
NGINX’s clever architecture ensures that it uses very low memory and optimized CPU compared to, say, Apache. As a system admin in the past, I know pretty well how difficult it is to manage the processes even for a moderately successful internet sites. Trying to control the load caused by Apache processes is akin to controlling a mad bull in a bull fight (disclaimer: I strongly discourage bull fighting but I just wanted to give an idea of difficulty faced by the system admins). NGINX optimizes the usage of the operating system and the hardware resources with its modular, event-driven, asynchronous, non-blocking architecture. Another difference from legacy web servers comes from how it handles concurrent connections. Instead of using the traditional process based or thread based model for handling the concurrent connections (which not only uses large amounts of resources, it also locks out the resources for the life of the connection), NGINX uses two types of processes in memory, a worker process and a master process that controls the worker processes. This architecture allows each worker to process thousands of connections concurrently. Such a smart architecture using much lower resources comes very handy to pack higher density in the servers (like in virtualization and cloud).
Why their commercialization plans are interesting?
In my opinion, their commercialization plans are a good case study offering glimpses about the opportunity and potential difficulties. NGINX is not just an open source project trying to commercialize but it is also a narrowly focussed software no evidence for monetization in the past. Like many other open source companies in the past, they are shifting to an open core model and they are planning to develop proprietary components around NGINX suitable to meet the needs of larger service providers and enterprises. Sometime in the middle of next year, NGINX will offer a commercial-grade connection processing and optimization software platform, which will enable advanced performance, traffic management, extended configuration and security features for hosting, cloud and enterprise server infrastructure. NGINX will also offer flexible options to upgrade existing web installations to modern and efficient high density web software.
As I told before there is both opportunities and difficulties ahead for the company. As more and more companies move into the cloud era and as they also want to use social and collaborative features in their applications, we are going to see an emergence of ever increasing greenfield cloud era applications. As they take advantage of the cloud and the economic benefit it offers, they will want to use less resource hungry platform elements for their applications. This offers a great opportunity for NGINX as theirs is a lean web server offering cache and load balancing features. The opportunities are not just with the service providers and smaller ISVs but also with enterprises looking forward to shed their legacy software and develop more modern ones. If they execute it right, NGINX can capture this market and have success.
As far as the difficulties for the company, they are trying to monetize an open source web server. With Apache being a household name and it is the default web servers in most of the Linux distributions, they have a tough fight ahead in not just the adoption but also in the monetization. Monetizing an open source product itself is difficult but doing it on a highly verticalized software going against a well established leader is not an easy job. Also, with PaaS seen as the future of cloud services, even the middleware itself becomes invisible for developers. Many will not even worry about infrastructure software like a web server. It will be seamlessly handled by PaaS provider. As enterprises begin to take PaaS seriously, this becomes even more difficult. However, PaaS hasn’t taken off yet and NGINX has some time to successfully monetize themselves and look beyond the web server.
I really like their confidence in trying to monetize with NGINX and I want them to really succeed because I am an unabashed advocate of anything open source. However, the difficulties are realistic and it all depends on how well and how fast they execute their strategy. It will be interesting to see how they fare in the coming years. My prediction: they will take off very well but they will get absorbed by a big vendor trying to put together their PaaS piece (Citrix?). Let us wait and see.
- NGINX web server company gets $3M funding (h-online.com)
- Nginx, Inc. announces its Series A funding (nginx.net)
- Nginx gets commercial backing (infoworld.com)
- Apache and IIS’ Web server rival NGINX is growing fast (zdnet.com)
- Nginx Gets Commercial Backing (pcworld.com)
- Will Nginx Be to Apache What Chrome is to Firefox? (opendotdotdot.blogspot.com)
- Nginx Tearing Up the Charts, Gets Funding (readwriteweb.com)
- Russian Nginx Raises $3 Million From International Investors (techcrunch.com)