As Cloud Wars Heat Up, Server OEMs Bet on OpenStack


The largest server vendors are now embracing a movement that at one time represented a threat: cloud computing. In doing so, these OEMs (original equipment manufacturers) are getting into the same business as some of their largest customers, which can be a risky proposition in the IT world. But in recent years, large cloud players have used their leverage to squeeze  margins, threatening to commoditize servers. As margins have narrowed, cloud has altered the economics of the server world, and leading marquee server brands have been emboldened to launch their own cloud offerings.

HP, Dell and IBM have all turned to public clouds based on OpenStack to remain relevant and position themselves to capitalize on enterprise hybrid strategies. The move by the “Big Three” also is certain to add momentum for OpenStack, the open source cloud computing infrastructure project which grew out of a collaboration of Rackspace and NASA, and has quickly built a stable of support that includes Red Hat, Intel, Dell, Cisco, AT&T, Canonical, and SUSE.

The server vendors are seeking to build offerings that differentiate them from the public clouds offered by market leader Amazon Web Services (AWS) and Internet titans Google (AppEngine) and Microsoft (Windows Azure). In rolling out their own offerings, Dell, HP, and IBM are setting up a play for a hybrid sale in which they sell gear and run an open cloud. They’ve followed slightly different paths:

  • Dell has been part of the OpenStack community since its creation, and has worked closely with a number of key OpenStack partners, including Rackspace, Citrix, Opscode, Canonical, Intel, and others. Dell is also one of the industry’s most experienced partners to top global cloud services providers, including Facebook and Microsoft Windows Azure. It has also built out a global network of data centers to support its public cloud infrastructure.
  • HP announced its plans to support Open Stack in 2011. sees this “converged cloud” project as an opportunity to enable customers, partners and developers with unique infrastructure and development solutions across public, private and hybrid cloud environments.
  • IBM developed SmartCloud before OpenStack was founded two and a half years ago. A year after joining the OpenStack community, IBM made a splash, announcing it had moved into open cloud architecture, which included a new cloud offering based on OpenStack. The company sees open standards as an opportunity for businesses to take full advantage of the opportunities associated with interconnected data, such as mobile computing and big data.

“History has shown that standards and open source are hugely beneficial to end customers and are a major catalyst for innovation,” said Robert LeBlanc, IBM senior vice president of software. “Just as standards and open source revolutionized the Web and Linux, they will also have a tremendous impact on cloud computing. IBM has been at the forefront of championing standards and open source for years, and we are doing it again for cloud computing. The winner here will be customers, who will not find themselves locked into any one vendor — but be free to choose the best platform based on the best set of capabilities that meet their needs.”

Competing with AWS

The three server vendors are fighting incumbent cloud player Amazon Web Services with standards. They all see hybrid cloud as the endgame and want to retain their position in the enterprise as this evolution occurs. While it might seem that OpenStack has the lead in the cloud world based on the headlines, the fact of the matter is that AWS owns the lion’s share of the cloud market, more than two-thirds by most accounts.

AWS had a head start in cloud computing and is aggressively pursuing the enterprise As AWS continues to add enterprise-friendly features, it’s a very real threat to these OEMs. Features like Availability Zones and Autoscale Groups make AWS very compelling to enterprises. The previous response by the server vendors was to simply attack cloud as not enterprise-ready, but now there’s a realization that cloud, in some use, is inevitable. OpenStack is a way for OEMs to partner against AWS dominance.

Chris Kemp, CEO of Nebula and former NASA CTO, would disagree that OpenStack is competing with Amazon Web Services, mentioning in a keynote during an OpenStack event that both have completely different use cases in the industry. However, having a public cloud offering to complement private cloud is a necessity – and while the use cases might be different now, AWS is going after all cloud business.

Pages: 1 2

Get Daily Email News from DCK!
Subscribe now and get our special report, "The World's Most Unique Data Centers."

Enter your email to receive messages about offerings by Penton, its brands, affiliates and/or third-party partners, consistent with Penton's Privacy Policy.

About the Author

Jason Verge is an Editor/Industry Analyst on the Data Center Knowledge team with a strong background in the data center and Web hosting industries. In the past he’s covered all things Internet Infrastructure, including cloud (IaaS, PaaS and SaaS), mass market hosting, managed hosting, enterprise IT spending trends and M&A. He writes about a range of topics at DCK, with an emphasis on cloud hosting.

Add Your Comments

  • (will not be published)

One Comment

  1. These recent developments have been interesting, we've been keeping a keen interest as we're involved in OEMs and the like.