Ruven Cohen published an article on Forbes pointing to Paypal's plan to move a large part of its servers from VMware to OpenStack.
This is aligned also with what seems to be a general trend where enterprises use OpenStack to reduce their VMware cost. They often start with a hybrid approach in which they move the less mission critical apps to OpenStack and keep the rest for VMware. I assume that this is only a transitional stage until we will see almost all the workload moving to OpenStack as soon as the organization will feel confident with the technology.
Paypal is not the only one who's moving away from VMware; Koby Holzer from Live Person will be speaking on how Live Person uses OpenStack internally to reduce their VMware cost during the upcoming OpenStack Israel event. I'm sure that there are many others who have already taken that path, but were not as public about it.
While the article focuses on the general trend, I thought that there is a bigger opportunity here worth noting.
The Opportunity
Clearly a failure of one player (VMware in this specific case) is an opportunity for others.
The opportunity is for OpenStack providers, such as HP, Redhat, Rackspace and IBM, to take-on VMware directly rather than focus on winning on Amazon.
Why?
- VMware has a huge enterprise footprint
- Private and hybrid clouds are at the heart of enterprise cloud strategy
- OpenStack is well positioned for the private cloud, given its open source foundation
- Having organizations such as HP, Rackspace, Redhat, Mirantis and recently IBM behind OpenStack should also provide enough comfort that the gaps that still exist will be bridged shortly in a way that will fit the enterprise requirements.
Timing is Everything..
OpenStack was created initially by Rackspace and NASA as a response to the strong dominance of Amazon as the leader in the cloud space. At that time, Amazon was the benchmark and the reference for the OpenStack project.
Many things have changed since OpenStack was first born that, IMHO, need to change some of the fundamental strategies for many of the OpenStack players.
- Amazon was quick to realize the threat and moved remarkably fast up the stack, leaving enough of a gap to preserve its leadership position.
- VMware's response, on the other hand, was fairly poor, despite various attempts to move up the stack, including major acquisition of SpringSource in 400M$, followed by a few other failed attempts, such as VMforce which was later forked into CloudFondry which recently moved out to a new pivotal fork under EMC. Now VMware seems to be taking another turn with its continuously changing cloud strategy, but without real substance. This creates lots of skeptisim in the market over their ability to execute their plans, as noted in Bernard Golden's report: VMware Tantrum Shows It's Not Connecting With Cloud Buyers or Sellers
Like VMware, many of the traditional enterprise players are now threatened by Amazon and need to fight back to defend their current position in the enterprise space.
From a technology perspective, the gap between OpenStack and VMware's offering is much smaller than with AWS. Most of those gaps can be easily bridged by the likes of HP, Redhat, Ubuntu, IBM and Rackspace.
All this makes VMware the right target for OpenStack providers rather than Amazon, at least at this point in time. With that in mind, the right strategy for OpenStack providers is to offer a VMware alternative based on OpenStack and have both a private and public offering of OpenStack that can be easily plugged together as a single compute cloud.
