OpenStack is hot. IBM is going to acquire Blue Box and Cisco is acquiring Piston. You could look at this as a kind of consolidation signal, but I think it has other implications. In fact, it might signal some SDN maturity, some NFV questions, and some cloud directions.
OpenStack is obviously the premier approach to cloud deployment, despite the fact that the project has been growing like crazy, changing often, and generating a little angst on the part of vendors and users for limitations in functionality and perceived lack of stability. One thing that’s clear from the two OpenStack M&A deals is that big-time cloud pressure is going to land on OpenStack and that it’s going to get a lot better. Of course, if OpenStack is already winning, what would all that betterness mean?
From a competitive perspective, obviously it would mean a lot. OpenStack would crush alternative approaches, frankly, and that’s what is likely to happen very quickly. If you have a cloud product or a cloud strategy, it better be based on OpenStack at this point. I’d guess that CloudStack, Eucalyptus, Nimbus, and OpenNebula proponents have six to nine months to prepare some graceful shifts in strategy, after which time they’ll end up being even more hurt by OpenStack momentum than they’ve been so far.
For vendors who have already accepted OpenStack as the cloud answer, this is good news in one sense and a warning of risks to come in another. Obviously Cisco and IBM are in this camp, but so are giants like Alcatel-Lucent and HP. The problem they all face is that differentiation of cloud strategies will now become more important and more difficult at the same time. Nobody wants to be selling exactly the same product as a competitor, and so all the OpenStack-committed players are going to be casting around for something that makes them different, better.
For the cloud industry, public and private, a clear OpenStack victory may be important primarily for the fact that it will push OpenStack and Amazon’s AWS/EC2 into a clear face-off. Competition between Amazon and OpenStack clouds will be driving down basic IaaS pricing, which I think is going to create a public-cloud focus on things that can extend profits. That will be true for both Amazon, whose AWS services already include a lot of optional value-added features, and for OpenStack which has been slow to develop any specific PaaS or SaaS extensions.
The impact on the industry overall is complicated. It’s even more complicated when you consider that SDN’s OpenDaylight is also generating a lot of M&A interest too. Maybe all these acquiring vendors see the future. Maybe they are all just knee-jerking to the same doctor’s mallet. Whatever the case, I think what we’re seeing has a common theme and that is the notion that the future will demand more agility, more personalization than the present.
Wireline networking isn’t going to change very quickly because what you network with it is either branch offices or homes. Nobody is going to build either of these just to consume more efficient connectivity, so it’s fair to say that favorable pricing and features won’t build new customer connections. You’d have to sell more services to the same location.
Location services that we know about are bulk transport. That’s not going to be more profitable for operators in the future, so it won’t be profitable for vendors to support it. What we’re looking for is stuff that’s above the connection/transport zone, and that means features and applications. Networking these things is different from networking branch offices and homes, because there’s a variability in higher-level service relationships that branches and homes don’t generate. The cloud and NFV justify SDN.
Mobility is the instrument of personalization, and also what justifies the cloud, and that’s the causal chain that ultimately changes everything. A hundred workers sitting in a branch office present a fairly consistent network requirement. If that same hundred workers runs out into the wide world and connects via mobile networking, it’s a whole new ball game. Even if those workers did the same jobs, they’d need a different level of support from networking in the form of connectivity, and from IT in the form of productivity enhancement. This is what injects change, in the form of dynamism, into the network market.
It’s also what’s injecting the motivation for M&A. I think vendors are starting to see that things are changing. Yes, they’re into denial. Yes, they see the symptoms and not the sweep of the future. But they see something, and they’re reacting to it. Most of the moves so far are tactical in nature; “We’re hearing a lot about OpenStack lately, so maybe we should do/know something there.” It would be dangerous for us to assume that Cisco had suddenly changed its view of the future because it bought an OpenStack player, or that IBM did that.
Cisco probably does see that there are going to be a lot of clouds, and that services and applications are probably going to have to span them. “Intercloud” is Cisco’s cloud strategy so that’s probably good at one level, but they have to make Intercloud more than a title on a PowerPoint. Piston might help in that regard.
IBM probably realizes that private cloud is as likely (or more likely) to be driven by business operations as by the CIO, and that they need a nice wide on-ramp with an easy gradient if they want to succeed in private and hybrid cloud. There are much broader implications to the notion of business-driven cloud than the ease of using the cloud stack software, but IBM would have to change a lot to address these. So they’ll focus, via Blue Box, on what they feel they’re ready to accept.
If you have a sense of déjà vu here it’s not surprising. We have at the same time a vision of a radically different future and a bunch of people who are tying themselves to the starting gate in the race to own it. This isn’t a great surprise, of course, but it does raise the question of whether these early movers in OpenStack are really attacking anything or simply preparing a defense. That would raise the question of who the attacker might be. Amazon might yet end up a winner here, simply because a drive toward OpenStack and OpenDaylight by major vendors, driven more by turf protection than opportunity realization, might well stall OpenStack progress completely.
There’s also the impact on NFV. I said years ago, in the ETSI NFV dialogs leading up to work on the specs, that if all NFV proposed to do was to deploy VNFs they might as well simply reference OpenStack. There’s a project within OpenStack to telco-ize the model, and if enough vendors jump to support OpenStack that project might get enough backing to tap off the opportunity for “limited-scope” NFV. That would force differentiation to address higher-level orchestration and management issues, which most vendors are still dabbling in.
What this means is that all this OpenStack stuff could be very important indeed, and something we’ll all have to keep an eye on.
