Cisco on Monday announced it will invest $1 billion over the next two years to develop what it says will be the world's largest cloud.
The company's "Intercloud" project will endeavor to join, figuratively, the major providers that offer public cloud services, including Microsoft, Amazon Web Services, Hewlett-Packard, Salesforce.com, VMware, Rackspace and IBM. The Intercloud will essentially be a cloud of clouds that is aimed at letting enterprise customers move workloads between private, hybrid and public cloud services.
Cisco is not the only provider with such a product. However, Fabio Gori, the company's director of cloud marketing, said Cisco is offering standards-based APIs that will help build applications that can move among clouds and virtual machines.
"This is going to be the largest Intercloud in the world," Gori said. Cisco is building out its own datacenters globally but is also tapping partners with cloud infrastructure dedicated to specific countries to support data sovereignty requirements. Gori said Cisco will help build out those partners' infrastructures to spec and those providers will be part of the Intercloud.
Asked how Cisco's effort is different from that of VMware, which is also building a public cloud and enhancing it with local partners, Gori pointed out that Cisco's service supports any hypervisor.
Gori emphasized Intercloud will be based on OpenStack, the open source cloud infrastructure platform that many cloud providers, including Rackspace, IBM, HP and numerous others, support. But there are key players like Microsoft, Amazon and Google that don't support it. Gori said Cisco can work around that by using the respective providers' APIs and offering its own programming interfaces for partners to deliver application-specific offerings.
Core to this is the Intercloud fabric management software, announced in late January at the Cisco Live! conference in Milan, Italy. The Intercloud fabric management software, now in trial and slated for release next quarter, is the latest component of the Cisco One cloud platform that's designed to securely tie together multiple hybrid clouds.
Among the cloud providers now on board are Telstra, Allstream, Canopy, Ingram Micro, Logicalis Group, OnX, MicroStrategy, SunGard Availability Services and Wipro.
Gori said Cisco is lining up many other partners, large and small, from around the world. The company expects to announce more partners and deliverables at its Cisco Live! conference in San Francisco in May. Whether Microsoft will be one of those partners remains to be seen, Gori said.
"Microsoft is a very big player and is going to part of this expanded Intercloud," he said. "We are going to do something specific around the portfolio."
Posted by Jeffrey Schwartz on 03/24/2014 at 1:42 PM0 comments
As it eyes an initial public offering, Cloudera this week raised $160 million in funding from some big-name investors. The company plans to invest much of the proceeds in engineering resources to extend its contributions to the Apache Hadoop community.
Cloudera, the leading provider of Apache Hadoop, an open source framework for storing and processing in real-time large-scale unstructured datasets using commodity hardware and cloud infrastructure, received the huge infusion from T. Rowe Price, Google Ventures and an affiliate of MSD Capital, the private investment firm for Michael Dell and his family.
With this week's investment, Cloudera now has $300 million in venture funding. Speaking Thursday morning on a panel at the GigaOM Structure Data conference in New York, CEO Tom Reilly said the funding will give Cloudera the capital needed to extend its contributions to the open source Apache Hadoop community, as well as investments for its ISV partner ecosystem.
"Our funding is going to allow us to put more resources into the community," Reilly said. "While we have the founders and the innovators behind a lot of the projects, we see a lot of emerging projects we want to support, we want to integrate with [and] we want to bring it to our distribution."
Reilly made no secret that in addition to competing with other key Apache Hadoop distributors Hortonworks and MapR, Cloudera, with its new Enterprise Data Hub, is looking to challenge the key data management platform players, notably IBM and Pivotal. More than 200 ISVs already integrate with Cloudera's Hadoop-based Enterprise Data Hub and the company is in the process of certifying 105 of them, Reilly said.
"Both IBM and Pivotal do have distributions of Hadoop. They compete with us at that level, but then they have a stack of products that are very good products that they build on top," Reilly said. "We have a different view. Our Enterprise Data Hub is not only open at the core of Apache but it's open-architected." With the ISV integrations, he added, "that gives our customers a lot of choice and flexibility versus a stack approach." Though it competes with IBM on the stack side, Reilly noted Big Blue's Watson technology is complementary.
"We're building up our partnering team. We are putting engineers dedicated to each of our critical partners," Reilly said. "Whether it's an ETL partner, our data warehouse, database partners, our BI, our analytic partners and making sure that the integrations are working, increasingly a lot of partners want their compute engine running inside our Enterprise Data Hub inside a cluster, so we're making that work more effectively."
Reilly was forthcoming about Cloudera's goal for an IPO but said, "We still have a lot of work to do to get ready to be a public company." For example, Cloudera still manages its financials with QuickBooks, though it plans to move to an ERP system. It is also putting numerous new processes in place and just recently hired a general counsel.
"We do not need to depend on an IPO for a financing event," Reilly said. "Rather, we want to go public to bring transparency into our business, to give our customers confidence that we're a long-term, sustainable business."
Posted by Jeffrey Schwartz on 03/20/2014 at 12:42 PM0 comments
A growing number of traditional enterprises are showing an increasing willingness to deploy modern cloud-based architectures that are open and enable real-time streaming of data, even if it means discarding legacy systems.
That's the observation of Pivotal Software CEO Paul Maritz, who said a third of all companies realize if they don't take major steps, they risk being obfuscated by upstarts and competitors who have done so.
"There are some old-line enterprises who are realizing that if they adopt the data-centric view of the world, they can literally rethink their businesses and tap into all new sources of revenue," Maritz said, speaking at the GigaOM Structure Data Conference in New York on Wednesday. "We are starting to see some players [realize] some new opportunity or some competitive threat they need to respond to. They're willing to build afresh. They're going to literally leave their IT legacy behind and create a new platform because they're realizing that either the opportunity or the competitors that they're going to face are going to use techniques that the consumer Internet giants have pioneered."
Maritz said much of this shift has occurred over the past year. It was a year ago on the very same stage that he announced Pivotal, spun off from various assets of EMC and its subsidiary VMware, which Maritz headed as CEO for five years. They spun off assets from both companies including Cloud Foundry, Greenplum, SpringSource, Gemstone and Cetas with the goal of creating an open source application infrastructure based on cloud architectures to help organizations develop systems that can leverage streaming big data. Last May, Pivotal announced that General Electric had taken a 10 percent stake in Pivotal with a $105 million investment.
Indeed, GE is an example of the old-line company Maritz was speaking about. Maritz related that GE CEO Jeff Immelt realized the evolution of the so-called "Internet of things" was a threat to many of the industrial conglomerate's business, where any upstart or established rival had the capability to respond better thanks to machine-generated data. As a result, GE revealed last year it would deploy software and sensors on its machines that would be the basis of what it calls the "Industrial Internet."
"They created a whole new capability to allow them to build new generations of applications that can take the telemetry off all of their machines and do interesting things with it," Maritz said. "It requires somebody in the organization that has the conviction and strength to really do that."
Organizations are still in the early stages of making these moves, but as Maritz puts it, many have taken steps. "We are in the first third of the journey still."
Image credit: EMC World 2013/Gopivotal.com
Posted by Jeffrey Schwartz on 03/20/2014 at 1:36 PM0 comments
Amazon Web Services customers will no longer have the ability to retrieve keys to their root accounts effective April 21.
While Amazon announced the pending change last summer, it issued a reminder this week.
"Just as AWS doesn't allow you to retrieve your password if you forget it, you will no longer be able to retrieve the secret access keys for your root account," said Kai Zhao, AWS product manager for Identity and Access Management, in a blog post Monday.
To prepare for the change, Zhao advised customers to visit the new AWS security credentials access page here or via the AWS Console. Customers should go to the legacy security credentials page and retrieve the access key or keys prior to the deadline, Zhao advised. Once the deadline passes, customers will no longer be able to retrieve pre-existing secret access keys, though they will be able to rotate them, he said.
Amazon recommends creating user account access keys rather than having them for root accounts, as the latter provides complete access to all resources in an AWS account. "We've seen a couple cases where customers accidentally uploaded their root access keys to public code repositories, so we recommend minimizing your security surface area by deleting (or not creating) root access keys altogether," Zhao noted.
While this will undoubtedly be an inconvenience for some, it looks like a prudent move to ensure better security.
Posted by Jeffrey Schwartz on 03/13/2014 at 12:35 PM0 comments
Microsoft on Thursday said Windows Server-based virtual machine images of Oracle software are now available on Microsoft's cloud offerings, following nine months of development.
The agreement between Microsoft and Oracle to run the Oracle database, WebLogic middleware and Java on Windows Azure was announced last summer, despite a bitter, years-long rivalry between the two companies. However, tensions have eased in recent years as Oracle CEO Larry Ellison had bigger fish to fry -- like IBM, SAP and Salesforce.com.
According to Thursday's announcement, licenses are included with the VM images and can be accessed in the Windows Azure Management Console. When logging in, administrators can click New, then select Compute, followed by Virtual Machine and then From Gallery, which lets them choose images. Among those now available:
- Oracle Database 12c Enterprise Edition on Windows Server 2012
- Oracle Database 12c Standard Edition on Windows Server 2012
- Oracle Database 11g R2 Enterprise Edition on Windows Server 2008 R2
- Oracle Database 11g R2 Standard Edition on Windows Server 2008 R2
- Oracle WebLogic Server 12c Enterprise Edition on Windows Server 2012
- Oracle WebLogic Server 12c Standard Edition on Windows Server 2012
- Oracle WebLogic Server 11g Enterprise Edition on Windows Server 2008 R2
- Oracle WebLogic Server 11g Standard Edition on Windows Server 2008 R2
Combined Oracle Database/Weblogic VM Images
- Oracle Database 12c and WebLogic Server 12c Enterprise Edition on Windows Server 2012
- Oracle Database 12c and WebLogic Server 12c Standard Edition on Windows Server 2012
- Oracle Database 11g and WebLogic Server 11g Enterprise Edition on Windows Server 2008 R2
- Oracle Database 11g and WebLogic Server 11g Standard Edition on Windows Server 2008 R2
- JDK 7 on Windows Server 2012
- JDK 6 on Windows Server 2012
- Java Platforms, Standard Edition
Although Windows Azure already supported Java, Microsoft CEO Satya Nadella, who was president of Microsoft's server and tools business last year at the time of the announcement, had pointed out its Java support was based on the OpenJDK. For those who wanted to use Oracle's Java license, the partnership offers a fully licensed and supported Java on Windows Azure.
"We think this makes Java much more first-class with Oracle support on Windows Azure." Nadella said at the time.
While Microsoft had made the Oracle software available on Oracle back in September, Thursday's announcement makes it available on the Windows Server stack, as well.
Posted by Jeffrey Schwartz on 03/13/2014 at 3:17 PM0 comments
SolidFire, a startup that provides flash storage for enterprises and cloud service providers, on Thursday said the next release of its Element OS that powers its arrays will fill some key gaps.
The new platform, called Carbon, will gain Fiber Channel connectivity and real-time replication to public clouds.
The company is one of many new providers of storage arrays that support flash-based solid state drives, which are gaining ground in organizations that require higher performance than traditional disk drives provide.
A relatively new entrant, SolidFire argues it offers a flash-based platform best suited for multi-tenant architectures with software designed to ensure performance doesn't degrade due to so-called "noisy-neighbors." The company emphasizes its scale-out architecture, high-performance virtualization and ability to provide guaranteed-performance quality of service.
While enterprise flash-based storage has taken off in recent years, it's still a relatively young market, said Forrester Research analyst Henry Baltazar, who estimates it accounts for less than $1 billion of the $30 billion external storage industry. "Enterprise players such as Violin, IBM FlashSystems and PureStorage have a head start relative to SolidFire -- and XtremIO has the benefit of EMC's powerful sales capabilities," he said. "That being said, the entire all-flash array space is still in the early stages. We are literally at mile one of a marathon."
Baltazar said SolidFire's software upgrade should improve the appeal of its flash storage platform to enterprises and cloud service providers. "The replication fills a major gap since customers require this to protect against disasters and site outages," Baltazar said. Likewise, the 16 Gbps Fiber Channel support will let enterprises connect it to their existing storage networks.
Today SolidFire only supports 10 Gbps iSCSI, which is also widely used, but Fiber Channel remains more prevalent. "If you want to take advantage of the scale of the guaranteed performance and the automation of our storage system, you can do so without the need to move onto iSCSI and leverage the Fiber Channel protocols that enterprises use today," said Jay Prassl, SolidFire's VP of marketing. Most large organizations still rely on Fiber Channel and are reluctant to add iSCSI to their infrastructures, he said.
The mixed cluster support allows organizations to combine different storage nodes within a single cluster. That's important, he said, because of the quick shifts in flash technology both in terms of rapidly declining costs and increases in capacity that are enabling organizations to add more nodes. The software will support multiple nodes, irrespective of capacity and protocols, and treat them as one, Prassl said. It will also support the addition of new nodes as SolidFire releases them.
"We will bring a new platform to the market at some point and customers can integrate it directly into the existing clusters that they have," he said.
Real-time replication will allow organizations to use the company's arrays for disaster recovery by creating additional remote copies of data without adding additional third-party hardware or software, the company said. Administrators can pair each cluster with as many as four other clusters to bi-directionally replicate data.
SolidFire says Carbon lets enterprises and cloud service providers back up thousands of hosts using its new native snapshot capability and can backup to any Amazon Web Services S3 or OpenStack SWIFT-compatible API. Customers can back up up volumes on their SolidFire arrays to any object system that supports those API calls.
Carbon will be available next quarter.
Posted by Jeffrey Schwartz on 03/13/2014 at 1:07 PM0 comments
Acronis has relaunched a simpler but more complete suite that it says more readily spans data protection across the physical, virtual and cloud computing spectrum.
As well as a simpler user interface and a claimed 50 percent hike in performance, the newly dubbed AnyData lines offers both disk, VM, file, single-pass and sector-by-sector backups, full or fast incremental or differential backups and allows for the exclusion of files during backups. On the storage side, it offers a unified backup format, universal restore, deduplication, backup and staging to cloud (as well as tape), encryption, staging to tiered storage and multi-destination staging and retention.
CEO Serguei Beloussov explained in a recent press briefing that the new software was designed to address growing data volumes. Acronis' re-branding and new product suite comes nearly a year after Co-Founder Beloussov returned to Acronis. Beloussov, who is also chairman and onetime CEO of Parallels, took the helm at Acronis following a revolving door of chief executives over the years. The most recent before Beloussov was Alex Pinchev, a former Red Hat president who Acronis tapped in January 2012 and only lasted 14 months.
As part of its new focus, Acronis has four business units: personal, business, mobility and cloud. The personal unit offers backup and storage solutions for individuals, the business group is focused on backup and recovery for small- and medium-sized enterprises, mobility provides secure access, file synchronization and sharing tools, and cloud targets managed service providers, telecommunications carriers and hosters with backup and storage software.
Beloussov said despite the new products and company imaging, Acronis business is strong, saying the last quarter was the best in the company's history with a 50 percent year-over-year increase in large purchases and 70 percent EBIDA growth. While he wouldn't disclose actual revenues, Beloussov indicated the company only had $100 million in revenues a few years ago and now it's up to "several" hundred million.
The suite includes software that protects both data and applications running on clients and servicer in virtual, physical and cloud environments, offering data backup, bare-metal restore capabilities, migration and system environments. It supports Linux, Windows and is compatible with all major file formats including ReFS, FAT16/32, Ext2/3/4, ReiserFS3, XFS, JFS, among others.
AnyData supports all the major virtual platforms including VMware, Hyper-V, Citrix XenServer, Red Hat Enterprise Virtualization and Parallels. It can migrate virtual to virtual, virtual to physical, physical to virtual and physical to physical. It runs agentless in VMware and Hyper-V, supports VMware vCenter integration, simultaneous virtual machine backup, change block tracking, Hyper-V cluster support, any-to-any migration and simultaneous backup in virtual environments.
Acronis is also offering application-specific modules include Exchange, SQL Server, SharePoint and Active Directory.
While Acronis boasts large customers such as Chevron, Ford, Intel, Honeywell, NASA, Samsung and Wells Fargo, the company's primary customers are groups with several hundred employees. Even its large customers tend to be remote groups or units, Beloussov acknowledged.
"They have really renewed their focus on the small business customer and the consumer," said Robert Amatruda, research director of data-protection and recovery at IDC. "I was skeptical but pleasantly surprised at the rapid speed these guys have reworked the company. The way they have rebuilt this product, it is now feature-rich around virtualization, and around migration of data for physical to virtual and virtual to virtual. I think you will see Acronis in environments where you have remote offices and workgroups in organizations that need these features."
Posted by Jeffrey Schwartz on 03/03/2014 at 1:44 PM0 comments
IBM pulled out all the stops this week to convince the IT world that it's transforming its entire business into a cloud company where all its hardware and software will be consumable as a service.
Big Blue used its annual Pulse conference in Las Vegas to outline to the 11,000 attendees how it will fill the gaps in its current cloud portfolio. Much of that effort centers around last year's $2 billion acquisition of SoftLayer, which operates a large global Infrastructure as a Service (IaaS) public cloud. At last year's Pulse conference, IBM made a big push around OpenStack, saying the open source cloud IaaS platform would be the basis of its entire cloud infrastructure offerings, including its SmartCloud public IaaS.
Recognizing it needed a more substantial public IaaS than the SmartCloud it was building out, IBM months later acquired SoftLayer, which is now the core of Big Blue's public and private cloud strategy overall. While it offers the IaaS needed to provide compute, storage and networking as a service, IBM spelled out how SoftLayer will offer PaaS and SaaS on-demand applications and API services.
The unofficial buzz at Pulse was that SoftLayer founder and CEO Lance Crosby and his team now have the run of the house at IBM, so to speak. That was evident in everything the company talked about. Here are some of the numerous announcements at Pulse:
- Application Services: Building on top of the SoftLayer IaaS, IBM will build PaaS and SaaS offerings using CloudFoundry as its underpinning. As I reported earlier this week, IBM is a founding member of the new CloudFoundry foundation that Pivotal is spinning off (other members include Pivotal parent EMC, and its offspring VMware, along with Hewlett-Packard, Rackspace and SAP).
- BlueMix: To enable the PaaS capabilities in IBM's SoftLayer cloud, IBM launched BlueMix, which the company describes as orchestration software that enables dev-ops management of cloud infrastructure and applications. Designed to run on CloudFoundry public and private clouds, BlueMix will allow for rapid development of what IBM touts as "composable services." These services are API-based, IBM officials emphasized. The beta is available for download now.
- Database as a Service: Looking to offer database as a service for cloud and mobile apps, IBM realized its DB2 and Informix databases wouldn't cut it for many of today's modern apps. So the company said it has acquired Cloudant, a leading NoSQL database platform. Cloudant conveniently runs on the SoftLayer network. Because it handles all data as JSON documents, IBM said it will appeal to developers who don't have database programming experience and need to build Web-scale applications.
- Middleware to the Cloud: IBM will offer its key middleware offerings, specifically its WebSphere portfolio, as a service in the SoftLayer cloud. The company said there are 200 middleware patterns available from IBM and its partners.
- Systems Management as a Service: The company is extending its systems management tools to enable IT pros to optimize and manage workloads and applications both on-prem and in the cloud.
- Power on SoftLayer: Like most of the large cloud service providers, SoftLayer is based on x86 servers. Looking to provide higher levels of performance for high-performance scale computing, the company will offer its Power platform running Linux, as well. In addition to offering bare-metal servers, IBM will offer various solutions on Power running in the cloud, including several based on its artificially-intelligent computer platform Watson. Later in the year, IBM will also offer its DB2 BLU database and Cognos analytics solutions running on Power on SoftLayer.
Much of the attention centered around BlueMix, which will be the key enabler of moving traditional software to utility computing and application services, said Robert LeBlanc, senior VP for middleware in the IBM Software Group.
"BlueMix is really focused at the enterprise with a pre-integrated set of services to enable clients to build out the next generation of applications that combine systems of engagement and systems of record, all based on an open platform and a set of capabilities we're now moving as a service," LeBlanc explained. "We have shifted a lot of our technologists and our people to these new areas of opportunities."
Posted by Jeffrey Schwartz on 02/27/2014 at 5:13 PM0 comments
Pivotal on Monday said it will spin off its Cloud Foundry Platform as a Service (PaaS) open source project, which will have its own governance model by this summer.
Joining the effort as founding members of the new foundation are Pivotal's parent company EMC and VMware, along with IBM, Hewlett-Packard, Rackspace, SAP, telecommunications provider CenturyLink (which operates the Savvis cloud services) and ActiveState.
Cloud Foundry is an Apache License 2.0 project. As it transitions into an independent foundation, the licenses will carry over, as well, Pivotal said. Spun off last year from EMC and VMware, Pivotal said Cloud Foundry has benefited under its stewardship with 750 contributors.
The move looks to create an open source PaaS just as Rackspace's contribution of OpenStack to an independent foundation has done for open source Infrastructure as a Service (IaaS). By creating a foundation, the goal is to create portability and interoperability among public and private PaaS offerings. Some public and private PaaS cloud offerings are already built on Cloud Foundry, including the SoftLayer public cloud that IBM acquired last year for $2 billion.
Describing it as a strong complement to its commitment to OpenStack, IBM talked up its plans to join the Cloud Foundry foundation at its annual Pulse conference, taking place this week in Las Vegas.
"The enthusiasm from the development community to leverage this open Platform as a Service is immense," said Dave Lindquist, an IBM Fellow and CTO for the company's Smarter Cloud infrastructure, during the opening keynote presentation at Pulse. "We are expecting tremendous growth around the Cloud Foundry ecosystem."
Robert LeBlanc, senior VP for middleware in IBM's software group, used the opening keynote to chide those who aren't participating. Asked whom he was referring to, LeBlanc declined to name any company, but obvious players that are not participating are Amazon Web Services, Citrix, Google, Microsoft, Oracle and Salesforce.com.
Posted by Jeffrey Schwartz on 02/24/2014 at 2:32 PM0 comments
Convirture is hoping it can spread the use of its multi-hypervisor management software by letting administrators manage their KVM and Xen virtual machines (VMs) in the cloud.
The San Mateo, Calif.-based company on Thursday launched a new version of its open source software that lets Amazon Web Services (AWS) customers manage KVM and Xen VMs on local Linux servers and in the cloud. ConVirt Open Source is the free version of Convirture's software that provides basic management of virtualized environments.
Convirture's advanced commercial versions include ConVirt Enterprise, which includes extended automation and backup and recovery, while the premium ConVirt Enterprise and Cloud version offers substantially higher levels of security, integration and multitenant support (see this comparison).
In addition to KVM and Xen, the commercial versions of ConVirt also support VMware environments. The company last month also added support for Microsoft's Hyper-V. Arsalan Farooq, CEO of Convirture, argued that ConVirt can manage multiple hypervisors at a fraction of the cost of Microsoft's System Center Operations Manager.
ConVirt OpenSource 2.5 is available as an Amazon Machine Image (AMI) and can securely link to the KVM and Xen hypervisors via the new ConVirt Connector. The company says this should appeal to developers and testers looking to extend their virtual infrastructures using Amazon rather than requiring additional datacenter capacity.
"As more of our users and customers move their IT functions to the cloud, it only makes sense for them to have the option of moving the management capabilities into the cloud, as well," Farooq said in a statement.
By making ConVirt OpenSource available as an AMI, the company is hoping to introduce its software to administrators who haven't tried managing hybrid clouds, while giving existing enterprise customers the ability to manage all of the hypervisor stacks available on AWS. It's a safe bet ConVirt Enterprise and ConVirt Enterprise and Cloud are in the queue to become AMIs.
Posted by Jeffrey Schwartz on 02/20/2014 at 10:44 AM0 comments
Cloud Cruiser has extended the analytics engine designed to help IT decision makers determine whether it's more financially feasible to use private or public cloud services.
The company's new Cost Advisor tool tracks usage of datacenter resources, including compute, network and storage capacity, and compares with public cloud service usage and costs. It uses the metrics to predict costs and determine whether it would be more affordable to run specific jobs in a private or public cloud based on historical and future usage.
Cost Advisor initially works in hybrid cloud scenarios running on Microsoft's Windows Server with System Center and the Windows Azure Pack, as well as with its Windows Azure public cloud service, explained Nick van der Zweep, Cloud Cruiser's VP of strategy. However, the company plans to roll out Cost Advisor on the other platforms its namesake product supports, including Amazon Web Services, VMware, Hewlett-Packard and Rackspace.
"Our intent is to go broad," van der Zweep said.
"We are able to normalize the data that we're getting from Windows Azure private and public clouds, and then we compare and contrast and do recommendations to customers," he added. "Ultimately, you're going to see us do that across multiple private and public clouds and make recommendations to customers based on our financial analytics where it's best to put your workloads."
Cloud Cruiser is known for its namesake product, used to help CIOs and CFOs track usage of public and private cloud services, provide charge back, and determine multitenant billing and cost of public cloud services.
The company this week also announced a partnership with Rackspace, which will support Cloud Cruiser on OpenStack-based Rackspace Private Cloud. It will be bundled with the Rackspace offering but the companies have not yet struck any kind of resale deal.
Posted by Jeffrey Schwartz on 02/20/2014 at 12:17 PM0 comments
The sudden "retirement" of CEO Lanham Napier has brought to the surface a lingering question looming over Rackspace: Can the pure-play cloud and hosting provider sustain its battle with Amazon Web Services (AWS) and a slew of other formidable challengers?
After 14 years at Rackspace and eight years as its CEO, Napier is stepping down and his predecessor, Rackspace Chairman and Founder Graham Weston, is returning to the helm, the company announced Monday. Despite posting a decent fourth quarter of 2013 with $408 million in revenues -- up 16 percent year-over-year -- and earnings of $.14 a share, Rackspace's profit slipped 33 percent year-over-year. Moreover, growth has slowed and annual earnings declined for the first time since Rackspace went public in 2008.
Revenues for the year reached $1.5 billion and the company boasted having 100 customers of its OpenStack-based private cloud offering, launched in the middle of last year. While the company issued slightly better-than-expected guidance for this year, Napier's unexpected departure hammered the company's stock by about 25 percent, though it bounced back by about 3 percent Thursday.
During the earnings call Monday, Napier indicated his reason for leaving was burnout and the desire to move on. But as CEO, Napier oversaw Rackspace's bet-the-company move to take on Amazon by leading the OpenStack project, which has cut into its bottom line over the past few years. Nevertheless, Rackspace officials believe the move has positioned the company well for 2014 and beyond.
If the move to OpenStack was aimed at mounting a challenge against Amazon, that has yet to bear fruit. A survey of potential customers by investment banking firm Jefferies found 57 percent were considering Amazon for their cloud deployments compared with just 33 percent for Rackspace, The Wall Street Journal reported. Also, Rackspace's public cloud business grew only 35 percent last year.
"As far as the 35 percent growth, of course, we always wanted to grow faster," Weston said in response to an analyst question during the company's earnings call (see transcript). "But I think that it's important to just understand that all of our strength has always been around serving that pragmatist customer. And I think that an awful lot of the growth for the cloud so far at other companies has been serving the do-it-yourself company, the company that loves the science project that the cloud is giving them."
In other words, Rackspace sees its growth in serving enterprise customers running business-critical applications looking at hybrid cloud deployments and requiring services to provide that application integration. The problem is that so do AT&T, Hewlett-Packard, IBM, Microsoft, Oracle, VMware and Verizon, which are backed by much larger businesses with large enterprise customer bases. Despite vowing to remain independent, it begs the question: Can Rackspace go it alone indefinitely?
To be clear, I'm only posing the question. I've heard nothing to suggest this is under consideration but public companies are always weighing and making offers. Furthermore, I'm not advocating it as a good idea -- the more independent players, the greater competition we see, so long as the economics allow for it. But if, on the other hand, IBM, HP or someone else believes that with Rackspace they can challenge Amazon and the price is right, it's certainly not beyond the realm of possibility.
Weston's remarks that he is in no rush to hire a new CEO despite saying he is instituting a search of internal and external candidates suggest that maybe he's weighing other options. Maybe not. But considering the stock was trading near $41 per share before the news hit and some analysts believe it could fall to as low as $15, it could be attractive to a number of players looking to beef up their cloud footprint.
Before IBM acquired SoftLayer last year, rumors surfaced that Big Blue was circling the wagons but the price was too high. Now, with Rackspace trading more than 50 percent less, maybe IBM will give it a second look if the share price continues to fall. According to WSJ, even at its current stock price, Rackspace may be too expensive. But considering the stock once traded at a peak of $81, if it were to fall in the teens, investors are likely to become impatient.
As Forrester analyst James Staten noted in a blog post following the report, Rackspace is a company that has evolved from a traditional managed hosting provider to a pure-play cloud computing company by making the investments traditional managed service providers (MSP) balked at in fear of cannibalizing existing revenue streams.
"What makes Rackspace different is that it has already figured out that cloud computing is more profitable than traditional hosting," Staten wrote. "This is a serious struggle for most MSPs who have a hard time looking at cloud outside the lens of the traditional hosting business. When viewed this way, cloud looks cheaper, more risky and more expensive to operate. Plus customers can come and go as they please which upsets the capitalization model. But take this lens off and look at cloud with fresh eyes and you can see that it's actually more efficient, carries higher margins and delivers more predictable revenues."
I've talked to numerous Rackspace executives over the years and I doubt I've ever had one conversation when the exec didn't point out the company's "fanatical support." Indeed, this is what sets Rackspace apart from Amazon's "do-it-yourself" approach, as Rackspace put it.
"Loyalty in cloud isn't set by the contract but by the value delivered and where Rackspace shines is in support and service, where loyalty really lives," Staten added.
That has served Rackspace well when catering to midsized, organizations but the company has yet to gain a strong presence among large Fortune 500 enterprises.
"It's getting there slowly but breaking into the CIO ranks of the top companies takes time and persistence," Staten said. "Thankfully some of its long-loyal companies have grown into enterprise leaders and can help with reference calls. But many of the incumbents are now using a Rackspace calling card against them."
Posted by Jeffrey Schwartz on 02/13/2014 at 4:45 PM0 comments