Recently several large infrastructure providers have announced acquisitions or strategic directions. Saugatuck perceives these announcements from two perspectives: they underscore the commitment of multiple large vendors to OpenStack; and they suggest a question about the functionality and/or the maturity of OpenStack. The announcements that Saugatuck views as significant are:

  • HP Buys Eucalyptus. On September 11, 2014, HP announced that they would be acquiring long-time AWS emulator Eucalyptus. Marten Mickos, CEO of Eucalyptus and long an OpenStack holdout will now be HP’s SVP of their Cloud division. Eucalyptus’ expertise with AWS APIs makes them especially attractive to HP’s Cloud efforts as it will likely bring HP the ability to offer AWS compatible, OpenStack based Cloud which could be a boon, as usage of hybrid Cloud environments increases. However, Saugatuck also sees this acquisition as suggesting that OpenStack is lacking in a key area – which can be solved using selected functionality from Eucalyptus. Saugatuck’s assessment is that area is most likely in accurately billing for high volumes of provisioning changes that occur in a Cloud supporting numerous users.
  • Rackspace remains an independent company. Rackspace, one of the early adopters and main contributors to OpenStack, has been looking for a buyer for quite some time, but gave up on that vision this week with the promise to become the top player in the “Managed Cloud” space. Though Rackspace continues to be an OpenStack shop, they have recently changed their positioning – reflecting a service and support focused strategy, rather than try to compete with the hyper-scale commodity vendors like AWS, Google, and Microsoft Azure. It is likely that they will face competition in the enterprise OpenStack space from HP and IBM, both companies with significant professional services and hosting experience.
  • Cisco buys Metacloud. Cisco acquired private-cloud enabled Metacloud to help flesh out their complete Intercloud offering, which depends on interoperability with multiple vendors, based on an OpenStack backbone. Cisco has been a long-time contributor to OpenStack and was a founding member of the OpenStack Foundation in 2012.
  • Canonical and AMD create “OpenStack in a Rack.” Canonical, the maker of Ubuntu (the most popular OS on OpenStack) and chip maker AMD have teamed up to create a pre-built OpenStack Cloud in a rack. The cloud, already completely operational is targeted at those who want to deploy an OpenStack private Cloud without the significant effort required to order and install and integrate the components.

Why is it Happening?

Put simply, OpenStack is gaining traction among buyers and developers, which drives vendor/provider interest. And the more influential providers buy into OpenStack, the more market activity we will see. The OpenStack Foundation boasts many major names in enterprise tech; among the platinum members are Rackspace, HP, IBM, RedHat, ATT, NASA, and Canonical (for a complete list see

Despite the Foundation membership mix – or possibly because of it – OpenStack is generally known as a complex system that is somewhat difficult to get up and running without help. And complicating this is the fact that, in attempts to create competitive advantage, some vendors have been working steadily on their own distributions of OpenStack to deliver their own Infrastructure as a Service (IaaS) offerings. This should create even more opportunities for integration services providers, as well as opportunities for OpenStack appliances that bridge and enable interoperability between disparate systems.

What remains to be seen is how well large enterprises (the prototypical customers of the OpenStack Foundation Platinum members) are able to capitalize on OpenStack in their own private Cloud efforts. The efforts we have seen so far in Enterprise Private Cloud usually rely heavily on script and configuration management tools, along with automation layers and virtualization layers from commercial vendors. Where OpenStack differs, and the ultimate test lies, is that OpenStack is not (yet) backed by any support or professional services organizations.

These four events outlined above though, are clearly targeting that need.

  • Rackspace hopes to be the de facto provider for OpenStack in the public and managed private Cloud space. They offer a wide range of configurations, products, servers, and operating systems, backed by the support and managed services that they are betting the company on.
  • HP would like to be the ultimate provider of Cloud infrastructure, both hardware, and through OpenStack, Software. They have products designed to be installed in a customers’ data center, or hosted in their large public or Managed private Cloud space.
  • Cisco is also targeting the Private Cloud space with the Metacloud acquisition, designed to help them deploy their OpenStack distribution into a customer’s datacenter to become part of their Intercloud system, or, to help customers rapidly deploy their own OpenStack instances across multiple datacenters.
  • Canonical and AMD are offering OpenStack Private Cloud as an “appliance” as a way to get around the complexity of setting up new OpenStack clouds. This provides a framework for smaller companies or LOBs to start using and deploying OpenStack when they are resource constrained, yet limited by regulations or data residency requirements where public Cloud offerings don’t make sense.
  • Click here to read the Market Impact.

Originally published on Saugatuck Lens360 blog, September 19, 2014.

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