Last week, Flexera announced intent to acquire Spot by NetApp to the tune of $100 million, a considerable drop from the $450 million that NetApp paid to acquire Spot (and that does not account for NetApp’s CloudCheckr acquisition that followed shortly). Both Spot and CloudCheckr are included in the Flexera deal, which is expected to close in March 2025.

From a FinOps lens, news of the acquisition is surprising. As recently as mid-2024, NetApp had hinted at a forthcoming Spot/CloudCheckr offering, one that did not rely on weak integrations between the two portals. This was on the heels of a years-long effort for the data infrastructure company to insert itself into the public cloud narrative through a string of cloud operations-focused acquisitions: Spot.io (2020), CloudCheckr (2021), and Data Mechanics (2021). As organizations made the frenzied rush to public cloud during the pandemic, NetApp joined the long list of on-premises infrastructure providers that were attempting to insert themselves into the public cloud narrative.

NetApp is heading back to its infrastructure roots.

NetApp’s journey into cloud cost management never really fit with the storage and data infrastructure focus of the company, nor did it achieve the synergy needed to maintain its acquisitions. Though Spot has released some tantalizing capabilities with Ocean’s workload migration for Kubernetes or Elastigroup and Ocean’s automated reverting of reserved instances and savings plans to Spot instances. On the CloudCheckr front, the solution’s innovation stalled even before its NetApp acquisition. At the time of acquisition in 2021, it was missing key commoditized capabilities, such as Google Cloud optimization, that all leading cloud cost management and optimization (CCMO) solutions had developed. The promised convergence of CloudCheckr and Spot from 2021 never materialized, and the brief foray into cost management didn’t seem to pan out.

While the company has reported on-target revenue growth, as a percentage of revenue, its free cash flows have been declining, which may be related to trimming underperforming assets in the portfolio. As NetApp refocuses on its core strengths, a quick divestment from Spot and CloudCheckr to a more aligned FinOps owner in Flexera makes a lot of sense.

In recent years, NetApp has worked to bridge the gap between the intelligent services portfolio and its storage offerings through Instaclustr. These services more closely fit into NetApp’s original mission to simplify the deployment of infrastructure and make it easier for businesses to deliver value on top of deployed infrastructure. Through Instaclustr, NetApp is making a bet that the on-demand deployment of software services fits into a future of data-focused infrastructure enabled with AI.

Flexera is doubling down on FinOps.

Flexera has been a market leader in the CCMO space and has gained significant traction through the combined offering of its asset management capabilities with its CCMO solution. Still, the company has stayed steadily out of the number one spot, with a smaller market presence and less advanced capabilities than its competitors. The company did make inroads through partnerships with Kubecost as an add-on container cost management function and with IBM as a market reseller. But both access to the IBM audience and Kubecost’s capabilities were lost when IBM acquired Apptio, rendering Flexera’s partnership to an asset management play, and when IBM acquired Kubecost, thus nullifying most of Flexera’s container cost management capabilities.

The Spot acquisition is a boon for Flexera both in market presence with CloudCheckr’s dominant channel presence and with the added capabilities of Spot’s Eco (purchase commitments), Elastigroup (spot automation), and Ocean (container management), which all fill major gaps. Plus, the price point is a nice bonus, having acquired the combined Spot and CloudCheckr solutions for less than a quarter of their NetApp purchase prices.

What does this mean for Flexera and NetApp customers?

Flexera customers can expect to gain in capabilities and a richer portfolio, such as a whole slew of advanced purchase commitment automation and container cost management and optimization capabilities. They should also expect price hikes and slowed innovation for at least a couple years as Flexera works to integrate Spot and its recent Snow acquisition into its Flexera One offering. On the plus side, customer support and implementation will increase by inheriting CloudCheckr’s channel presence, though much of that presence is due to the $0 CloudCheckr price tag. Questions remain whether Flexera will continue to support that price point.

NetApp customers taking advantage of both its Data Infrastructure Insights (DII) and Spot solutions have a continued commitment from both companies to continue to support the joint solution. We expect that customer support will continue with little disruption, as both companies stand to gain from growing this customer base. Beyond support, NetApp customers should expect accelerated innovation as NetApp refocuses on its original offerings.

What does the future hold?

From NetApp, expect greater integration and cohesion between the various elements of the NetApp portfolio. Some examples might be direct integrations between Instaclustr and tools such as BlueXP; leveraging DII for specific on-demand services from Instaclustr and connecting those services to NetApp storage; or leveraging data classification services in ONTAP or the universal metadata layer.

For Flexera, expect a more dominant position in the CCMO market. It may have lost a few steps with IBM acquisitions, but Spot seems to have put it in lockstep with its biggest competitors.