In his post Potter talked up the notion of co-opetition, the idea that companies can simultaneously compete and cooperate. Potter points to Sendgrid which, a full three years after AWS introduced a competing service, is still going strong and continuing to thrive. Potter gives three pieces of advice to companies who find themselves suddenly in competition with the AWS crushing machine:

• Give your target customer better options. Potter points out that AWS tends to start out with lightweight offerings that, while appealing to a broad base of users, don’t meet the needs of customers with very specific use cases
• Create a better user experience. Again, Potter suggests that since these services are but one from a massive portfolio of offerings, the minnows have the ability to focus on providing a user experience specifically focused on the particular problem space they’re addressing
• Price based on value – and communicate it Potter advises these companies to articulate a value proposition rather than a cost saving one pointing out correctly that Amazon will always be able to beat them in a price war

This is Not a Battleground of Equals

Many in the cloud space point to the example of OpenStack as an initiative that sees many companies compete for the same customer, yet co-operate on the project itself. While that is true, it is also a fact that, at least to some extent, there is a level playing field in the OpenStack community – sure an OpenStack member such as HP has far more money to throw at the initiative than a smaller player like Rackspace, but this disequilibrium is made up in other ways. When it comes to mindshare in the cloud area, for example, it’s fair to say that Rackspace has the lead on HP. In this way the different OpenStack players achieve a degree of equilibrium which sees them compete fairly equally.

AWS Can Compete on All Levels

Back to the AWS versus the world of startups topic, the equilibrium that exists in the case of OpenStack clearly does not come into play. AWS can out-develop, out-invest and out-perform whomever it wants. It also has the vast majority of mindshare in the cloudy world. Thus a young company in whichever area AWS choses next to enter is presented by a company with the ability to crush it on most axes of engagement.

So, Should These Minnows Go Home?

Now I’d never suggest that a small company that has the misfortune to be competing with AWS should simply close the doors and go home. Our industry was built on the legends of Davids battling the Goliaths and coming out on top. But much of the advice that Potter gives to companies is, in my view, flawed. In most cases AWS can provide better options, nail the user experience, and drop prices such that value is a moot point. Rather than compete in these areas, a company in this situation needs to think of itself as an underdog, and target customers and opportunities that play to its smaller size and agility. Look for the smaller use cases that won’t be attractive to a player like AWS. Target the customers whose location, industry or existing technology stack makes it unlikely that they’ll be an AWS customer anytime soon. Maybe even partner with AWS competitors to gain some “strength in numbers”. Don’t fool yourself that you can beat AWS at its own game, change the game instead.

Dell – Taming the Complexity

As Barton George from Dell wrote in his blog post announcing the move away from their own public cloud, Dell doesn’t believe it can contain all different use cases within its own stable. As he said:

we’ve come to realize that the greatest way we can provide value for our customers is to focus our investments on more strategic components of the cloud and provide our customers with maximum choice and flexibility. As a result, rather than building out and supporting our own multi-tenant public cloud, we will partner with companies in order to provide customers access to the cloud(s) of their choice

It’s an interesting perspective, particularly since Dell was one of the early backers of OpenStack. Here we have a vendor known traditionally as a supplier of hardware, deciding to move away from offering a service built on top of that hardware. But we also see a company coming to a decision based both on fear of a backlash from its customers, and a realization that competing with the massive public cloud players is a road to pain. In making this decision, Dell has had to look for opportunities that avoid it alienating its existing independent IaaS customers (no one wants their supplier to compete with them, a fact not lost to the commentators when it comes to Amazon competing with massive AWS customer Netflix). At the same time it wants to be able to sell a value-added product rather than plain storage and compute which is fast becoming, if not a commodity, at least a diminishing margin product.

Instead Dell has decided that its best opportunity lies in creating the orchestration layer that sits atop of heterogeneous infrastructure – it’s an approach that I’m pretty positive about – I often talk about the big opportunities in the cloud resting on these type of “fabric” plays – platforms that span a number of different solutions (be they infrastructure, platform or software) and tie them together under the “single pane of glass”. For this reason, and given Dell’s situation, backing away from the public cloud at the same time as acquiring enStratius makes perfect sense.

So under the same lens, is the VMware hybrid cloud destined to failure? Not so fast.

VMware – Delivering on a Roadmap for Customers

VMware is a company that is often derided as the creator of enterprise FUD – this was clearly evident in CEO Pat Gelsinger‘s recent presentation to partners where he made them tremble with the assertion that a workload lost to AWS is a workload lost forever. But if we look beyond the sabre rattling, there is a definite method to the madness.

The bottom line is that while cloud vendors are quick to write case studies about the large enterprise customers using their services, there’s a massive amount of enterprise IT still sitting on “old tin”. People like to chuckle about the critical airline systems still running on mainframes – but it’s a fact – the life cycle for critical enterprise technology is surprisingly long and if you’re an enterprise decision maker – deciding to leave something alone that is still working is a no brainer – if it ain’t broke, don’t fix it.

In this situation, CIOs aren’t looking for case studies and solution sets that see them move everything en masse to this fabled cloud thing. What they’re looking for is a vendor who can support their existing technology landscape, but still give them a compelling story around moving appropriate workloads to the cloud. Of course it seems a little funny hearing this conservative message from VMware the company that is, after all, the home of virtualization and hence the disruptor of many bare metal use cases. It’s of the nature of things however to see companies attempt to gain maximum leverage out of previously innovative products – this is a topic that my friend Simon Wardley has written about at length.

VMware’s strategy one which makes sense for its current technology portfolio and customer spread – but it too needs to be mindful of the concerns of its partner channel who will undoubtedly feel a little uncomfortable with the idea of VMware, or particular partners, competing with them. The devil here is in the detail and we’re yet to see a clear indication of how VMware will navigate this path.

Summary

Interesting times in IT land – and two companies showing different, but interesting strategies. Shawn Douglass, CTO of ServiceMesh, hit the nail on the head when he commented about the dual announcements saying:

we see a pattern emerging of traditional IT Management vendors looking for new ways to ensure they have a ‘play’ as the hybrid cloud evolves and emerges. Beyond ensuring their own livelihood, however, what will be important to watch is how this evolves with management and compliance in mind. After all, the value is not in the virtualization of disk, compute and storage but in orchestration of those resources in the context of the application lifecycle, provisioning on the right infrastructure at the right time and place, in consideration of power, cooling and cost to meet service level objectives and governance requirements of the business

We’ve only just started moving along the continuum of legacy vendors reinventing themselves for the modern world – expect to see more interesting decisions coming in the weeks and months ahead.

At the OpenStack summit Cloudscaling announced the latest version of its product and also signaled a partnership with Juniper to integrate that company’s virtual network control (VNC) technology into OCS. It’s a logical step, Juniper gets to be an integral part of a logical and compelling cloud OS, while Cloudscaling gets a big dose of credibility with larger organizations. Cloudscaling also announced that it was joining Seagate’s Cloud Builder program, and was looking at developing an optimized storage solution for OpenStack powered clouds. The round included previous investor Trinity Ventures and, not surprisingly given the existing partnership arrangements, also included Juniper and Seagate.

Since time immemorial (or at least for a number of years) a bit of an inside joke amongst the cloud cognoscenti has been the fact that almost every vendor under the sun uses Korea Telecom (KT) as a case study for its technology. KT has seemingly done a PoC trial with every vendor out there and, frankly, the general consensus is that any vendor who is still using KT as a proof point is missing something. Cloudscaling has been guilty, in the past, of talking up KT as a customer but has now secured a bunch of extra successful customers including LivingSocial, EVault, Ubisoft and DataFort.

These customer wins, the new found industry focus on private and special use-case clouds and the not insignificant wins Cloudscaling has had in recent months bode well for the company’s future.

…a merry-go-round of conflicting views from the HP execs attendant, finally closed off on the most unfortunate note by one executive who told us that HP cloud will succeed simply because it is built on HP hardware? SHOOT ME NOW! If only all the execs in the room had come out with a simple and concise message, we would have all bought into it.

Perhaps HP has begun to listen as it is today releasing versions of its operation and automation tools that are designed to provide a comprehensive, and most importantly integrated, portfolio to automate the complete life cycle of IT services. According to the release, the new tools will:

• Drive business growth by quickly deploying innovative IT services on a massive scale with HP Operations Orchestration (OO) 10, which automates the execution of up to 15,000 simultaneous operations
• Lower IT costs by efficiently delivering computing capacity with HP Server Automation (SA) 10, which automates server life cycle management to increase utilization, while reducing manual administration
• Increase employee efficiency with HP Database and Middleware Automation (DMA) 10, which automates manual database management tasks
• Accelerate time to value of IT services with HP Cloud Service Automation 3.2, which provides service life cycle automation, utilization and financial management capabilities to accurately and efficiently manage and scale cloud services

There’s a veritable cacophony of marketing buzzwords and lingo in there so let’s see what it means. The Operations Orchestration tool takes the notion many in the cloud world will be familiar with from Chef and Puppet and creates “runbooks” (otherwise known as recipes). These runbooks automate the provisioning of infrastructure so deployment can be both faster and more automated than previously. OO10 now supports Amazon S3 Storage, HP ArcSight, HP Fortify, OpenStack and SAP applications meaning that automation can be applied to core business processes.

SA10 is a server life cycle management platform that creates a “single pane of glass” across heterogeneous infrastructure to make it easier to manage servers – both virtual and physical. The product also comes as a virtual appliance.

DMA10 automates the administrative tasks around database management – it handles provisioning, patching, upgrading and code release functions and coversDB2,Oracle, SQL Server, Sybase and WebSphere databases.

Finally CSA is HP’s cloud management platform that aims to ease the building, brokering and management of cloud services.

MyPOV

Anyone else seeing a problem here? HP is touting this portfolio as creating an integrated, holistic management platform. And yet we have multiple products with multiple names and questionable deep integration. It feels very much (and I suspect this is because it is) several distinct applications that have had a bit of a lick of paint in terms of some superficial integrations and are being launched together in order to tick a box for an enterprise that wants truly integrated IT operations.

It seems like this launch is an example of the troubling situation at HP whereby different divisions are busily beavering away on their own solutions – without a staunch leader who can break down those silos. When HP appointed Saar Gillai as general manager of the pan-HP cloud division, many of us hoped that this indicated that there was a mandate to break down these silos. Gillai has been in the job now for eight months and quite possibly the tone of this combined release is a result of pressure from him. However I’d expect significantly more and hope that, if not by HP Discover in June, then at least by their December event, that HP will have a far stronger story to tell that once and for all breaks down the walls that would appear to exist between the various units.

While the OCP has made great inroads at opening up many parts of the data center operation, one area they’ve seen little impact is the world of networking. This is largely due to the fact that networking disruption lags behind other parts of the datacenter. While commodity hardware and open source software for compute is a well accepted and recognized approach, the same for networking is unheard of in the public arena. This despite the fact that many webscale operators design their own networking gear – in particular Google is rumored to do so.

Networking kit accessible to the general populace on the other hand tends to be highly proprietary hardware/software combinations that give customers very little flexibility. Traditional vendors like the fact that new technologies require updating both hardware and embedded software – awesome for their profit margins, but wasteful and expensive for customers. Which is where the Open Compute Project’s announcement comes in. The aim is to product an operating system agnostic, open source switch that, in the words of Frankovsky “can be treated just like a bare-metal server when it comes on the network”. The reference for the switch would create a piece of hardware onto which customers can load their own operating systems – in much the same way as customers load OpenStack onto standard servers. In doing so the initiative opens up the opportunity for organizations to take advantage of commodity hardware directly from OEM providers – and neatly sidestep the network giants in the process.

If this initiative gains traction, it raises some real concerns for the traditional networking companies – Big Switch Networks and VMware have put their names to the initiative but so to has Cumulus Networks, a stealth company that was founded by JR Rivers, a long time Cisco veteran and a former Google networking engineer. Google doesn’t talk about it’s forays into a new type of networking device but if the rumors are true, then Rivers was likely involved in taking commodity hardware and rolling it out within Google – taking that experience and applying it at a startup raises some interesting prospects. The fact that Cumulus has joined the OCP initiative raises them even more. Anyway – the initiative looks to get going immediately There is an OCP meeting at MIT next week and word is a number of companies with an interest in disrupting the networking status quo will be there.

Of course we already have OpenFlow, a protocol that allows users to manage their hardware. But this initiative is going further and covering any operating system that may be uses. In terms of how it will work, the projects aims to create a switch that has within it a “boot loader” that will let software be installed onto the device, across the network. And therein lies the opportunity for another open source software play – currently networking OSes are proprietary to specific vendors – Cisco, Juniper and Arista – imagine a networking OS built on top of Linux for example – it’s a prospect that has these other vendors quivering in their boots.

Change is something that has been lacking in the networking world – it looks like very soon it will be the new normal

@benkepes How long do you do CPR Ben?

— Jo Maitland (@JoMaitlandSF) May 6, 2013

That’s a pretty harsh comment and needs to be seen in the light of a couple of interesting pieces of news for one of those companies, Dell, in the past couple of days.

Yesterday came the news that Dell was acquiring Enstratius, the cloud orchestration vendor that has been seen for years as the home of the most innovation, the highest degree of thought leadership and the epitome of what a modern and progressive vendor needs to do to stay relevant. Now some might characterize the acquisition as simply a last ditch effort, but it needs to be seen in light of all the other similar software-based moves Dell has made in recent times. As my friend Alex Williams pointed out:

The acquisition gives Dell another way to provide end-to-end-cloud solutions. Offering enterprise solutions is part of Dell’s larger plans to transition from its dependence on personal computer sales and move deeper into the myriad opportunities that are coming as companies recalibrate their data centers to more automated, elastic infrastructures

The Enstratius deal filled up the tweet stream of most of the cloud insiders. art of this is, of course, because Enstratius has, over the past year or two, sucked up much of the cloud talent – big hitters like James Urquhart, Bernard Golden, John Willis et all have joined the company and created something of a dream team. But it’s not all inside baseball causing the excitement – Enstratius have built a truly compelling offering. At an NDA analyst session at the OpenStack summit a couple of weeks ago, one huge profile company was there to talk about it’s use of OpenStack but spent more time talking about how great Enstratius fits what they’re doing. This is a theme that is repeated elsewhere. As Gartner’s Lydia Leong said:

When I discuss AWS deployment for large user base with a customer, I almost always recommend they look at Enstratius for mgmt, governance.

— Lydia Leong (@cloudpundit) May 6, 2013

So, yes, partly the Enstratius deal is exciting because it means some of the Clouderati get a good exit, but it’s also a genuinely smart move on Dell’s part and the way they’re talking about the company, and the benefits it brings to Dell, indicates a real understanding of what their future needs to look like:

As enterprises increase their use of public, private and hybrid clouds, the need for controls, security, governance and automation becomes more critical. Dell, together with Enstratius, is uniquely positioned to deliver differentiated, complete cloud-management solutions to enterprise customers, large and small, empowering them with the efficiency and flexibility in the allocation and use of resources.

Yes, that’s marketing talk. But it’s not talk that even remotely related to a legacy hardware business. Dell has done a lot of work moving to a software world – Project Sputnik, Crowbar, the acquisitions of Quest and Gale – all point to Dell strongly realizing where its future really lies. And today we see that story told again with the release of the latest version of the Boomi integration platform that Dell acquired a year or two ago. Already a strong provider of integration services, Boomi is now moving into the API management space that is white hot at the moment – in the past couple of weeks alone we’ve seen massive action in this space with Mashery being acquired by Intel, Layer7 by CA and a big funding round for 3Scale, and now Boomi moves further into the space as it recognizes that application integration is only part of the integration solution moving forwards and that a broader API management layer is going to be increasingly important.

As one would expect of an API management layer – the API aspects of Dell Boomi allow customers to monitor, measure, secure, throttle and scale their enterprise APIs – essentially it allows enterprises to control the plumbing behind application integrations to both protect against denial-of-service attacks but also to shape the way their API load is borne. It allows them to shape quality of service behind the actual integrations that Boomi enables.

Of course the API management space is busy, and there have been cases of vendors rolling out solutions that for whatever reason haven’t really succeeded in the marketplace ( most notably Alcatel Lucent) – Dell Boomi and its API play may not prove successful – but in the context of Maitland’s assertion that Dell is dead, it counters that view and shows a company that understands that it needs to provide a holistic offering totally apart from its traditional hardware business. It’s not all going to be plain sailing for Dell – but I’d be reluctant to write them off just yet. Final word to Simon Wardley, an individual who spends his time looking at innovation in the context of organizations and their lifecycles:

Dell is a company who if they did nothing would die because the market is fundamentally changing. We all suffer from inertia to change but many companies are disrupted not by random and unpredictable market changes but instead highly predictable ones which can be planned for and inertia resolved. Dell, had all the hallmarks of a company which was going to be disrupted by predictable changes. It acted in a way (as many do) that the changes around cloud were somehow unexpected. It’s inertia was compounded by a lack of preparation.  In recent times they have seemed to act in a manner which suggests a greater realisation of the war that is occurring. Whether they will survive this depends upon the ability to act, how courageously they act, how willing they are to deal with inertia in a short period of time, their situational awareness of the environments and most importantly their strategic game play.

As they say, watch this space.

We’ve been hearing through the back channel for quite some time that AppFog has been struggling to gain marketshare and revenue. Despite some high profile funding, and being in the sexiest of spaces, the company hasn’t managed to leverage its position to scale. I’m led to believe that the company was facing a cashflow cliff, in actual fact it has seriously downsized its headcount in recent months.

Given this email then, I see that there are two possibilities here:

1. It’s simply a cost cutting measure designed to extend the company’s short cash runway. As someone said to me on twitter, “Extensive resource and low take up (high cost and low revenue?) isn’t good for a volume play like #PaaS“
2. CEO Lucas Carlson has managed to find some money somewhere and whomever that money came from has a real commercial reason to shut off the Rackspace tap

This story will be updated as more news comes to hand.

Fist pumping however isn’t enough – the analysts attending the event needed to see some proof that OpenStack was generating excitement beyond the vendor community. The motivation for the vendors to talk it up is obvious – quite simply, every traditional (and cloud for that matter) vendor feels sheer terror at the massive elephant in the room. Amazon Web Services is innovating at an incredibly fast rate and also owns the lion’s share of current cloud adoption. Recently VMware CEO Pat Gelsinger very publicly showed just how worried he is about the threat of AWS when he told partners that a workload lost to the Seattle-based giant is a workload lost forever – this sentient is one that is shared by vendors from across the spectrum – the old faithful’s like HP, IBM and Dell who were caught napping and need to move fast to make up for lost time. But also the public cloud vendors who, despite trying every approach they know, have yet to make real inroads to the hegemony they face in the form of AWS.

So if AWS’ competitors need to have a credible proposition in the face of AWS dominance, what is the value proposition for customers who don’t have the same commercial drivers that technology vendors do? Quite simply, the success stories from the likes of Netflix, Zynga and other adopters of cloud have shown them that the economics, gain in agility and technology benefits that cloud brings do in fact have validity for their particular situation. They may not have an appetite to consume technology in the way that pleases the public cloud fanboys, but fundamentally they want to start using “this cloud thing”.

Indeed this market opportunity – the enterprise customers who wants cloud, but in their own terms – has finally hit home as the direction to head – and the truly horrible to watch, but telling in its message, rap video from the first day of the summit tells it all – enterprise is the future for OpenStack. My assessment is that for vendors other than AWS (and perhaps Google as well), enterprise is their Hail Mary pass.

Of course talking up a focus is one thing, delivering wins in that direction is another. It was interesting that the metrics OpenStack chose to crow about to the analysts were, as my friend Paul Miller points out, somewhat softer ones that customer wins:

The message was one of steady progress (a 26% increase in patches to the code since Q4 of last year), broadening community (a 27% growth in participating companies), and growing interest (a doubling in website traffic)

In OpenStack’s defense there were some interesting case studies (Best Buy, Bloomberg, Comcast, the National Security Agency and one really interesting brand that we’re not permitted to name) but these case studies tended to still be either in lab-trial form, or else were small deployments across limited parts of the customer organization. Indeed much of the hubbub around the ill-advised and ill-timed “announcement” by Mirantis’ Boris Renski that Ebay was moving off VMware and on to OpenStack (an on-again, off-again story that would seem to have been largely fiction beyond Ebay having a bit of a play with OpenStack) was from the analyst community that is just dying to see some real-life production success at scale for OpenStack.

Josh McKenty, the ever debonair CEO of Piston suggested that there were “around” 400 production deployments of OpenStack, plus perhaps 20 times that number of pilots – while that’s positive to see, the community needs far more, far larger and far more public success stories soon. On the morning of my departure from the event I went for a short jog with Luke Tymowski an engineer from one organization using OpenStack in the wild, Canadian academic network provider Cybera. Cybera have an interesting OpenStack history, they’ve built a range of projects on OpenStack – digital sandboxes, a learning management cloud and a space weather modeling platform being some examples. Interestingly enough, a couple of their projects were built on VMware and Eucalyptus backends and both have been rebuilt on top of OpenStack – in the case of Eucalyptus because of core functional lackings, and in the case of VMware unsurprisingly because of cost. It was awesome to have a chat with him about what success they’ve seen using OpenStack but, again, as positive as the story is, it’s not the sort of thing that garners attention in the way that AWS’ alleged $600M CIA cloud does.

But there’s a bottom line here that we all need to be aware of. No matter the share it has of hip young startups, no matter how rapidly it innovates and no matter how much attention AWS gets with its spy-cloud, AWS isn’t an enterprise company. While in a recent exchange with Rackspace executive Lew Moorman, Benjamin Black, founder of Boundary and proponent for all things Amazon pointed out the fact that Amazon is moving fast and out-innovating the other players. But the very real point he ignored is that enterprises would rightly forego a significant amount of “bleeding edge” for robustness, reliability and maturity. AWS has a history in super low-margin, super low-touch service provision. There is an entire ecosystem around OpenStack that realizes that what enterprises really want is very different from that – they want rock solid guarantees, they want a traditional support model and they want a roadmap that is clear and palatable.

It is a subject of much debate of course – noted Clouderati and AWS pinup boy via his role as Netflix cloud architect Adrian Cockcroft is adamant that Amazon gets this enterprise cloud stuff:

@zalez how’s the AWS enterprise sales stuff going? @benkepes isn’t sure if AWS “gets” enterprise. I figure they hired you, so they do now.

— adrian cockcroft (@adrianco) April 22, 2013

I’m yet to be convinced – but will be watching with interest to see how AWS develops its enterprise mojo over time.

Either way, we need to accept that for enterprise, yes, their sales cycle is significantly slower than a Netflix or an Instagram. Which is just the paradox that we need to remember when opining on the chances or otherwise of OpenStack. Sure we’d all love to be able to write about massive production deployments of OpenStack today – but enterprise doesn’t work like that. What we are seeing is a slow, but steady maturing of both the product and the initiative as a whole. It’s not over, as the saying goes, until the fat lady sings. But I sense that the OpenStack summit attendees who were watching carefully saw a larger woman warming up in the wings. Watch this space

Today at the OpenStack summit in Portland (disclosure, the OpenStack foundation, a consulting client, covered my T&E to attend the event), GreenButton is announcing that it now supports OpenStack and hence extends their cloud fabric platform across many more infrastructure vendors. Essentially the platform allows big data and big compute workloads to now be dynamically deployed to any OpenStack powered cloud where GrenButton is running – the application itself needs no changes for this to occur.

It’s a compelling proposition for the likes of big pharma companies who might want to run workloads on their own private cloud but then outsource the massive number crunching that is often involved in pharmacological research – these companies no longer have to change the application in any way to take advantage of the performance and cost benefits the public cloud can bring. GreenButtons own Mission Control management and governance product allows customers to obtain a single pane of glass view across all their public and private clouds – essentially GreenButton provides a combined multi-vendor computational platform alongside a multi-vendor management one.

Alongside the compute offering, GreenButton is utilizing NoSQL initiaitve Cassandra and OpenStack Object Storage to store metadata and the inputs and outputs related to customers workloads.

This announcement now means that GreenButton supports the major cloud players – AWS, Azure and vCloud – meaning that most use cases and technology portfolios should find a solution for their big compute projects under the GreenButton portfolio. Key features of what GreenButton and this announcement enables include:

• Supports running Big Compute and Big Data workloads, such as Hadoop, on customer’s private and public clouds
• Supports and broadens the scope of cloud service providers that can leverage GreenButton
• Enhances GreenButton Mission Control governance tools for customers running multiple private clouds or leveraging a public cloud
• Leverages the Cassandra Project and OpenStack Swift for storage of job metadata
• Easy enablement with GreenButton’s SDK

Cross platform is increasingly the route of choice as organizations see the best solution for each particular workload and use case. Solutions like GreenButton make realizing the cross-platform dream more feasible – I’m looking forward to seeing some customer case studies of organizations using multiple OpenStack providers as well as multiple cloud vendors across other operating stacks.

Part of the reason for this is the comparative capital situation of the two companies – AWS enjoys the cash from its mother ship, Amazon, while Rackspace needs to fund all its own expansion internally. A new initiative the company is launching aims to reduce this capital constraint. Rackspace is going o expand its global footprint through a program that will see the company build and run clouds for third party service providers (telcos and the like). Built to the same specification as Rackspace’s own cloud and, obviously, on top of OpenStack, these cloud will wrap up the technology layer (the cloud operating stack itself, custom tuning for the service providers particular situation and support on the non-technology parts, in particular sales and support.

MyPOV

For Rackspace, if they can make this stick, this is a no-brainer. Capital constraints and the realities of building a global network of data centers have meant that building a competitor to AWS of similar scale has been difficult. With this move the company can leverage the investment other organizations already have in infrastructure and re-purpose that infrastructure to create a virtual global footprint. I t would be interesting to know what this means for Rackspace’s own global expansion ambitions and in particular for the footprint it already has globally – there is potentially an interesting dynamic between a Rackspace owned data center in a foreign location and a Rackspace-built one owned by a third party.

For the service provider this also makes sense – depending on the economics, they are able to leverage a technical partner, a service & support partner and, perhaps most importantly, tap an existing global customer base. Part of the reason we haven’t seen mass scale migration of service provider’s facilities to cloud is that part of the process is a relearning exercise – both internally and externally. This new initiative allows them to use Rackspace’s skills for the all-important internal educational aspects, while also helps them to ease the medium-term customer churn pain. They’re able to gain customers directly from Rackspace. Ultiately it helps them move from traditional to cloud models and beefs up their resource utilization en route.

Of course this all relies on the economics and commercials being right, and we, as yet, have no visibility about how that will look. CEO of Rackspace, Lanham Napier is, of course, talking the partner interest up saying:

We have had interest from service providers on nearly every continent to extend Rackspace’s proven OpenStack powered public cloud solutions and expertise to their customers. It is important to broaden the adoption of open-source technologies through partners around the world. The creation of this network allows for different providers, in different regions, with different service characteristics to link together to better serve the cloud users around the world with a fully interoperable global ‘cloud of clouds’.

Lots of questions remain, and the proof of the initiative will be seen over time but, at face value at least, this looks like a good program – good for Rackspace, good for the service providers and ultimately, good for global customers who want more granular options over data location.