OpenStack Innovator Nebula Ceases Operations: Is OpenStack in Trouble?

By Sean Michael Kerner  |  Posted 2015-04-02 Print this article Print

A host of OpenStack startup companies have also emerged over the last four years. Kemp's NASA co-worker Joshua McKenty started Piston Computing, though McKenty left Piston for Pivotal in September 2014. Rackspace alumni helped to found SwiftStack, which announced back in October 2014 that it had raised $16 million in new funding to fuel its efforts.

Then there is Mirantis, which in October 2014 raised $100 million in funding for its OpenStack efforts. Alongside the new players, HP, IBM, Red Hat, SUSE and Canonical have all been pushing their respective OpenStack efforts.

Simply put, there is a lot of competition in the OpenStack market in 2015, and there is a lot of invested capital. A 2013 forecast by the 451 Group had projected that the OpenStack cloud market would generate over $1 billion in revenue by 2015.

So what happened to Nebula? Why did it fail?

For one, running a startup is hard. Although OpenStack is open-source software, Nebula's operations required capital, as the Nebula One controller is hardware. Nebula, like all startups, also needed capital for engineering, sales and marketing staff. Growing a sustainable sales pipeline is never an easy task and is made even more difficult in the face of intense competition.

We don't know the full details of Nebula's operational costs or sales at this point, but the fact that the company was forced to cease operations implies that its cash flow and sales pipeline weren't enough to fund ongoing operations and there wasn't new funding (venture or otherwise) to fall back on.

While Nebula's demise is unfortunate, it does not imply that OpenStack itself is at risk. What Nebula's demise does indicate, however, is that while OpenStack represents a great opportunity for many vendors, it doesn't represent a great opportunity for every vendor.

Given the continued interest and demand that many other vendors see in OpenStack, I strongly suspect that the skilled and talented staff at Nebula will be quickly re-employed. As for Kemp, I can count on one hand the number of IT executives of his caliber. He is a true gentleman, technologist and all-around exemplar of the human species.

As Kemp himself tweeted on April 1, "Ad astra per apsera," Latin for "through hardships to the stars."

Sean Michael Kerner is a senior editor at eWEEK and Follow him on Twitter @TechJournalist.


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