Cloud Wars: Rackspace Seizes OpenStack, Is Dell Next?

In perhaps their boldest acquisition to date, Rackspace has purchased Anso Labs and are now firmly in control of OpenStack.  Anso Labs is the brains behind Nova, a key component of OpenStack that was originally built for NASA’s Nebula private cloud platform; NASA eventually contributed Nova to the OpenStack project.  Rackspace now controls 3 out of the 4 board seats for OpenStack, virtually owns 2 key software pieces the OpenStack code, and has cornered the market on OpenStack brainpower.

It’s no secret that OpenStack is a blazing hot open source project, but what is Rackspace’s true motive for this acquisition?  Some have speculated that Rackspace could move OpenStack toward an “open core” strategy, opening the door for a paid commercial version of the software.  However, that would be contrary to Rackspace’s DNA and is highly unlikely yet not out of the question.

What’s more likely, is Rackspace’s growing reliance on OpenStack represented too high of a risk for a company that has its eyes set on dominating Cloud computing.  I have always contended that Open Source is a development strategy not a business model.  Therefore, Rackspace’s business model was at risk because their open source development strategy hinged on the talents of Anso Labs.

Additionally, Anso Labs brings Rackspace new Cloud services capabilities in the areas of consulting, training, support, integration, and customization of both OpenStack and Nova. Imagine Rackspace offering their customers the ability to build their own private clouds while augmenting them with their public and/or hybrid cloud offerings.  In essence, OpenStack to Rackspace becomes Eucalyptus to Amazon.

Where there is brilliance in this acquisition there are also risks.  Will the team at Anso Labs accept their new owner’s vision and/or plans? What happens to OpenStack’s growing community of participants and contributors?  Will the bright lights of the free spirits of Anso Labs be extinguished by the weight of a public company?

Finally, an unintended consequence of seizing control of OpenStack may be making Rackspace a M&A target themselves.  While Lanham Napier, Rackspace’s CEO said, “We have not built our company to sell it” the market may think otherwise.  If JMP Securities analyst Patrick Walravens’ observation that investor’s main issue with Rackspace is “the capital-intensive nature of their business…capex guidance is up 41% from a year ago…” then an acquisition by an infrastructure provider may make perfect sense.  Is Dell Next?

Can Cisco Eat their EMC and Have Their NetApp To?

With 2010 nearing a close, could Cisco be contemplating another major acquisition to complete their next generation datacenter portfolio?  The last glaring hole within Cisco’s portfolio is their reliance on outside vendors for storage solutions.

Over the past few months, Cisco has patiently watched as HP purchased 3Par, EMC purchased Isilon, and Dell is acquiring Compellent.  Meanwhile, EMC’s arch nemesis NetApp continues to grow and innovate in a tough economy.

Further complicating matters, is Cisco’s reliance on the VCE, a partnership between VMware, Cisco, EMC, and Intel.  It is no coincidence that the current Vblock VCE Reference Architectures specifies EMC storage offerings (CLARiiON, Symmetrix, and Celerra).

Not to be left out of the party, NetApp entered into  ‘collaboration’ with Cisco and VMware creating FlexPod that delivers ‘leading computing, networking, storage, and infrastructure software components’.  It seems that Cisco isn’t the only one hedging their bets as VMware exerts a rebellious streak against their parent (EMC).

Cisco’s future hinges around UCS being adopted as a true next generation computing platform without legacy baggage.  Cisco did not go to war with HP while potentially jeopardizing their relationship with IBM only to be saddled with the competing interests of three large companies.

In the past, I have speculated that Cisco should simply purchase EMC thereby owing a majority stake in VMware.  However is NetApp a better choice?  After all, does VMware need to maintain a ‘Microsoft’ level of independence from the server vendors?  Would HP, IBM, Dell, etc. be inclined to sell a product that lines the pocket of Cisco?

Only Chambers (ok perhaps Ellison as well) would be as bold to acquire an enemy of one of their strategic partners.  By acquiring NetApp, Cisco would be able to offer innovative solutions such as storage blades for UCS or even accelerate the adoption of FCoE.  Imagine a new Cisco Architecture with Cisco UCS, Cisco Nexus, Cisco MDS, Cisco FlexPod, and Cisco Management with the availability of VMware, Citrix, Red Hat, or Microsoft virtualization.

In the end, Cisco could offer a true end-to-end solution as they continue to lead within the edge and core routing markets with near dominance in the switching market.  Furthermore, Cisco would stand alone as the only integrated next generation data center provider that does not develop or sell enterprise class applications such as SAP, Oracle, Microsoft, etc.  In effect, they become the Switzerland of computing against their rivals.

The only question is how long will Cisco be able to ‘Eat their EMC and have their NetApp to’? Don’t look now, but perhaps Larry (Oracle) will crash this party and make the decision for then.