What's Behind the Surge in OpenStack Consolidations

By Sean Michael Kerner  |  Posted 2015-06-04 Print this article Print

The irony of Piston's acquisition by Cisco though is that it occurred on the same day that IBM bought Blue Box. The first time I met with McKenty, he told me his goal was to be big enough to buy IBM. And I had long thought that Piston's technology would make sense for IBM, but IBM had other plans.

IBM instead bought Blue Box Cloud, a company that was founded by Jesse Proudman and has raised $26.6 million in funding. I remember well the first time I met Proudman—at the 2013 OpenStack Summit in Hong Kong. At that point in OpenStack's evolution, I was getting more pitches from vendors than I cared to look at, including Blue Box. Proudman was relentless, however, and tracked me down at a hotel bar, where I got my first Blue Box Cloud briefing. Proudman is a true entrepreneur, and at the recent OpenStack Summit he detailed how he used every avenue possible to build his company.

Blue Box Cloud isn't about technology but rather about managing technology. That is, Proudman's basic premise is that OpenStack is complex and so requires expertise to manage. The promise of Blue Box is managed OpenStack either as a hosted or on-premises model. Proudman positions the Blue Box Cloud on-premises model, announced on May 18, as a VCE vBlock-type of idea for the cloud.

That's an idea that apparently resonated with IBM too. IBM is also increasingly moving into the services-based model, and Blue Box cloud fits well within that strategy.

The parallels across Blue Box and Piston are that both had some form of differentiated service that the big vendors did not have but wanted. On their own, neither Piston nor Blue Box could likely ever have achieved the scale and the sales channel reach that Cisco and IBM will now provide.

That's not to say that independent vendors won't continue to be a key part of the OpenStack market. SwiftStack, which focuses on storage, and Tesora, which focuses on databases, are two prime examples of OpenStack vendors that I suspect will remain independent for some time. And Mirantis, which has emerged as the largest of the independent OpenStack vendors, is positioning itself for a future IPO. All of those vendors have strong support and service elements, which is where revenue can be found.

In the final analysis, what's driving OpenStack consolidation is the need for operational scale. Deploying OpenStack and building a proper sales channel takes time and resources that are not as large at startups as they are with the big vendors. For those OpenStack vendors that have the financial wherewithal to sustain ongoing operations through cash flow, they will remain independent, unless of course a big vendor comes knocking with an offer that they can't refuse.

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


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