OpenStack Cloud Business Tops $600M in 2013, Over $1B by 2015

The open-source cloud platform is big business already and set to get even bigger in the years ahead.

After just three years in the market, the open-source OpenStack cloud platform is already maturing rapidly and generating revenue for its backers. A new market sizing report from analyst firm 451 Research pegs the OpenStack market as being on track to generate $600 million in revenue in 2013, with more than $1 billion in revenue forecast by 2015.

OpenStack got started in 2010 as an open-source cloud computing project led by Rackspace and NASA. The initiative now includes some of the biggest names in the IT industry, including IBM, Cisco, Dell, Hewlett-Packard and AT&T, among others. The OpenStack Havana milestone update was released last week, furthering the technological capabilities of the platform and the ambitions of the vendors that support it.

Service providers are a key group that can benefit from OpenStack. According to the 451 Research report, service providers will account for $486 million of total OpenStack market revenue in 2013. And that number will grow to $680 million in 2014, according to 451 Research forecasts. In 2013, OpenStack co-founder Rackspace represents approximately 70 percent of the total OpenStack 2013 market share.

"Given that Rackspace has had its OpenStack powered cloud products available in the market for over a year and well before any other OpenStack product/service was available, it makes sense that a research firm estimating market size would conclude that Rackspace has a large share of market," Scott Sanchez, director of strategy at Rackspace, told eWEEK.


Following the service providers in terms of revenue are the OpenStack distributions. 451 Research estimates that OpenStack distribution vendors will bring in $82 million in 2014.

"Distributions account for 8.4 percent of the 2013 total and 9.2 percent in 2014 based on bottoms-up estimates," Al Sadowski, research director at 451 Research, told eWEEK.

There are a number of vendors in the OpenStack distribution space, including Canonical, SUSE and Red Hat. Stephanie Wonderlick, director of corporate communications at Red Hat, told eWEEK that it's still in the early days of commercial OpenStack deployments, particularly for enterprise customers.

"Based on the strong interest we've seen in both Red Hat Enterprise Linux OpenStack Platform and Red Hat OpenStack Cloud Infrastructure Partner Network, we believe the commercial market for OpenStack will continue to grow," Wonderlick said. "Our recently released OpenStack survey results reinforce this, showing that enterprises are planning for and moving to OpenStack—an overwhelming 84 percent of survey respondents said that OpenStack is part of their future cloud infrastructure plans."


451 Research also breaks out its forecast for a group that it calls "IT Services and Turnkey Vendors." That group includes Nebula and Piston Cloud Computing, two companies founded by former NASA employees that helped to start OpenStack. The forecast for the entire OpenStack IT Services and Turnkey Vendors group is for 2014 revenue to come in at $50 million.

Big hardware vendors including Cisco are also active in the OpenStack market, though it is difficult to specifically quantify the associated revenue.

Sean Michael Kerner

Sean Michael Kerner

Sean Michael Kerner is an Internet consultant, strategist, and contributor to several leading IT business web sites.