Which of the cloud companies will be the next to go?

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Credit: Golden_Ribbon

Two years ago one of my favorite VC sources could barely contain his frustration. “There’s just not room for 90 different OpenStack cloud vendors,” he ranted.

Well guess what? If you look back at the last year, it’s clear major consolidation is on. Here’s a recap:

  • In June, Red Hat paid about $95 million for eNovance and its OpenStack integration chops.
  • In May, [company]Rackspace[/company] put itself on the market, and this week took itself off the market. (Which begs the question, is anyone really ever off the market?)
  • Last week, [company]HP[/company], an OpenStack shop without Amazon Web Services API compatibility, bought Eucalyptus, a non-OpenStack shop with AWS API compatibility. The speculation is HP will a: bring AWS API compatibility to the HP Helion cloud or b: take one of the few private clouds with AWS compatibility off the market.
  • And just days ago, [company]Cisco[/company] an OpenStack backer without a ton of traction but with grand plans for a federated OpenStack cloud built on (it hopes) Cisco gear, bought Metacloud, which offers fully managed OpenStack services.
dark clouds

So that leads to questions about the future of the remaining smaller, independent OpenStack players. Cloudscaling? [company]Piston Cloud[/company]? Mirantis? Blue Box? Insert-your-favorite-vendor-here. My guess is that most of them are doing their best to find a bigger company to take them aboard. Or if they’re not they probably should be.

Of course some of those remaining OpenStack independents agree that consolidation is going to happen, just not to them. Boris Rensky, EVP at [company]Mirantis[/company], said the company is doing just fine and will continue to forge its own, independent, way forward. [company]Cloudscaling[/company] did not respond to requests for comment. I’ve been trading email with Piston founder and CTO Joshua McKenty and will update this once he’s off the plane. But till then here’s his tweet:

But, Chris Kemp, founder and chief strategy officer of Nebula said with [company]Amazon[/company] Web Services, [company]Google[/company] and [company]Microsoft[/company] duking it out for public cloud dominance and five big IT incumbents — [company]HP[/company], [company]Dell[/company], [company]Cisco[/company], [company]IBM[/company] and [company]VMware[/company] tying to establish hybrid cloud world view, there is huge value in some of the smaller OpenStack players. There is another tier of legacy players still scrambling for cloud credibility that will likely be in the market as well. Oracle, I keep hearing, may be on the look out for more OpenStack skills for its distribution. Oracle tested the waters with its acquisition of Nimbula last year.

With the giants fighting over what he called trillions of dollars in potential business, and with OpenStack established as the open-source standard, small vendors with that OpenStack expertise are attractive buying options. He placed Nebula, Piston and Mirantis in that category.

I would agree, although it’s unclear how much buyers will be willing to spend.  But in any case, it looks like the M&A will carry on with more acquisitions or, more likely, acqui-hires to come. Stay tuned.

Disclosure: Piston is backed by True Ventures, a venture capital firm that is an investor in the parent company of Gigaom.

Feature photo courtesy of  Flickr user Golden_Ribbon

Note: This story was updated at 2:52 p.m. PST with reference to Oracle’s acquisition of Nimbula.

3 Comments

frank chen

OpenStack could be the Connector+Coordinator+CPU of Cloud, the game is just start

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