Rackspace Cashes Out On Its Hybrid Cloud Strategy, Acquired by Private Equity

Cloud Computing company Rackspace will be acquired for $4.3 billion by private equity firm Apollo Global Management. Deal is expected to close in Q4 2016 and Rackspace stockholders to receive $32.00 per share in cash (a nice a premium of 38% on Rackspace’s stock price).

This acquisition is a clear sign of success for Rackspace’s change of strategy, whereby Rackspace eased off on its own cloud and managed services, and started offering third-party support for the public clouds of Amazon and Microsoft. This change of strategy started showing clear positive impact on its financial results earlier this year (see this post from 2 months ago), which sent the right investor signals and paved the way to this acquisition.

For more details on the acquisition see here.

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The Uber Plan To Disrupt Transportation

Uber has become the trademark for sharing economy. It’s the proverbial social win-win formula: You want to get somewhere, a driver is heading there, so he picks you up, and earns a friendly fee on the way.

But in fact Uber’s vision isn’t really about sharing economy. In fact, the “human factor” of the drivers is pretty messy for Uber: it involves costs, labor laws, contractual engagements, assault incidents, lawsuits… Uber would rather eliminate the “human factor” altogether. It has a whole other plan for us. And the plan goes through:

Autonomous cars!


Which plan? Sit back and take a quick tour into our daily lives in the (not-so-distant) future:

You don’t own a car, you consume a service. car-as-a-service. Need a ride? Just tap your smart phone/watch/skin, and a ride will come and pick you up from your GPS-detected location, and you’ll be charged just for that ride. Just like electricity or water. no need for a large capital expense for purchasing a car, and extra cost for insurance, regular checkups and fixes for a car that sits idle most of the day. you’re not in the business of car fleets, you just need a ride.

This will also disrupt the automotive industry: the car design will no longer revolve around the driving experience. there simply is no driver now, remember? the car is now a ride service robot, and the focus is shifted to the passenger’s quality of experience. Now that the rider has his hands (and attention) free, focus will shift to making the ride more informative, more entertaining, more productive, with multimedia, games, work tools, with automated analytics learning the needs of the passenger, perhaps even offering some interesting goods… reminds you a bit of Google? Why isn’t that surprising…


This is not Sci Fi. This is a concrete plan taking shape as we speak. Last Thursday Uber announced acquiring Otto, an Israeli startup less than a year old headed by ex-Googlers, which provides technology that turns regular trucks into driverless (autonomous) ones. In parallel Uber announced moving into commercial stage with its autonomous cars initiative, launching a pilot in the city of Pittsburgh.

Uber isn’t the only one setting eyes on this mark. Traditional car manufacturers such as GM, Ford and Fiat (jointly with Google) have also identified the upcoming disruption and are also racing to the commercial autonomous car. In fact, just a day before Uber’s acquisition Ford announced acquiring another Israeli startup, SAIPS, as well as investing $75 Million in startup Velodyne, both aimed to boost its autonomous car project.

We’re heading to a brave new world. So sit back and enjoy the ride.

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Open Source Is Taking Over Networks, Startups Lead The Way

Innovating in the networking world is hard. With purpose-built boxes, protocols, technologies, legacy, processes… But when industry veterans from the likes of Apple, Juniper and Big Switch start up fresh and think outside the box – that’s when networks get shaken up. Just see the updates from the last couple of weeks:

After building the complex networks for iCloud, Apple engineering veterans decided to leverage their experience and last week launched their new startup SnapRoute. SnapRoute promises to bring a “developer friendly and operations focused network protocol stack that runs on all commoditized network and hardware with any Linux operating system”. This open stack will remove the dependency in the software provided by the vendors providing the network equipment (such as routers and switches) and will enable innovation decoupled from the vendor.


SnapRoute’s first open source project is its FlexSwitch, which it contributed to the Facebook-founded Open Compute Project. FlexSwitch will also be offered as an option for the OpenSwitch operating system. OpenSwitch is an open source, Linux-based network operating system designed to power enterprise grade switches from multiple hardware vendors that will enable organizations to rapidly build data center networks that are customized for unique business needs. Earlier this month OpenSwitch got accepted to the Linux Foundation, which will surely facilitate and boost its open source community activity.


Another promising startup, which made headlines recently following Google’s investment, is Barefoot Networks, which brings the vision of programmable networks. Their innovative switch chips can be programmed using the P4 language to run various network tasks to replace today’s purpose-built networking equipment. Interesting to note that both Barefoot Networks and P4.org are also members at the OpenSwitch project.

Apstra is another interesting startup that was launched last week and was founded by networking veterans from Big SwitchArista and Juniper, which offers data center network automation. It employs an intent-driven approach for network operations, and treats the network using the methodologies of distributed systems:

“You need to recognize that your network is a distributed system. This allows you to operate your network as a system”

To be fair, startups are not alone in this front. Check out what GoogleFacebook and Amazon have been doing in their data centers. Together, startups, big players and open communities push the traditional networking world to the modern era.

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Programmable Networks – Is The Dream Finally Coming True?

One of the hottest trends in the Telecommunications industry is Software Defined Networking (SDN), the idea that you can control the logic of the data flow dynamically using central programmable logic, instead of having it hard-coded into every individual networking “box”.

Stanford Prof. Nick McKeown, one of the guys who invented SDN, and a serial entrepreneur in networking technology startups, now brings the next transformation: programmable switching chips. While in today’s networks special-purpose chips are used which are hard-wired to run specific protocols, the new switch chips can be programmed so that they could perform different functions such as firewall and load balancing, which currently require specialized networking equipment.

McKeown’s new startup Barefoot Network just completed its series C funding round with $57 million from Google (Alphabet) and Goldman Sachs. Google’s interest isn’t surprising as Google has been exploring next-generation networking for a while, and even earlier this year joined the Open Compute Project (in which Goldman Sachs is also a member).

The chips will be programmed by P4, a language for protocol-independent data packet forwarding. P4 is backed by a large open consortium of industry leaders, including tier-1 Telcos AT&T and Huawei, leading manufacturers such as Intel, Cisco and Juniper, and even software giant Microsoft. Reportedly the new chip can reach up to up to 6.5Tbps (terabits per second)—double the speed of the fastest comparable technology on the market, which is critical in making the new chips realistic for the high-performance standards of Telecom.

The vision of Software Defined Networking and that of programmable switching chips is basically one. As Barefoot puts it:

We envision a world where programmable networks outperform fixed-function networks. We believe that programming the network should be as easy to program as a server.

That’s a vision worth pursuing. And it may just about to come true.

You can read more on the latest announcement on this comprehensive coverage by the Wall Street Journal.

For a more technical deep-dive, download Barefoot’s whitepaper here.

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Prometheus Joins Google’s Kubernetes In Cloud Native Computing Foundation

Last August the Cloud Native Computing Foundation (CNCF) was founded by important names such as Google, CoreOS, Docker, Weaveworks, Mesosphere and others, and was hosted under the Linux Foundation. The first contribution to CNCF was Kubernetes, which Google open-sourced for that end, and served as the cornerstone of CNCF’s open source stack.

Last week CNCF accepted its second project: Prometheus. Prometheus is a monitoring and alerting toolkit backed by a powerful time series database. Such monitoring and alerting is an important part of any large-scale system, which a cloud-native reference architecture needs to address. Kubernetes and Prometheus already play well together, as Kubernetes exposes Prometheus metrics natively. Nonetheless, Prometheus supports many other monitoring targets and service discovery integrations, from Graphite and Consul to simple SNMP and JMX that enable open-ended and custom integrations.


Unlike Kubernetes at the time, Prometheus is already open source and backed by an active community. Among the impressive users of Prometheus you’d find several members of CNCF such as Google, CoreOS, Docker and Weaveworks, which probably made its acceptance easier. In its announcement Prometheus team said:

By joining the CNCF, we hope to establish a clear and sustainable project governance model, as well as benefit from the resources, infrastructure, and advice that the independent foundation provides to its members.

Another candidate to join CNCF is Data Center Operating System (DC/OS), which was open-sourced by Mesosphere last month. Seeing that Mesosphere is a founding member of CNCF, it’s reasonable to estimate they’d host DC/OS there. With an active community of more than 60 partner companies, this could be a serious tail wind for the foundation.

So who’s next in line for Cloud Native Computing Foundation?

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Can Hybrid Cloud Present An Alternative To Amazon, Microsoft, Google?

It’s not easy to be a public cloud vendor these days. The public cloud world has been undergoing serious consolidation in the past few years. Amazon, the pioneer of the cloud, has been keeping a clear lead, while Microsoft and Google have been pulling in, utilizing their accumulated experience, global data centers and software platforms, and positioned themselves as next in line. Together this trio serve the vast majority of the workloads running on public cloud.

This consolidation drove out many vendors, including some big incumbent names such as HP that shut down its cloud late last year and Verizon that did the same a couple of months ago.


So what’s their answer? I’d say it’s threefold:

  1. Multi-cloud model: If you can’t beat them, join them. Support Amazon, Microsoft, Google public clouds. If done via a good generic platform, it can help avoid vendor lock-in.
  2. Hybrid model: mix the public cloud support with support for private cloud and bare-metal to offer public-private-hosted hybrid approach.
  3. Private model: concentrate on strictly private cloud. The popular open-source project OpenStack is a leading candidate for this strategy. This approach is useful for the customers insisting to run things on their own premises.

HP (now HPE), after shutting down its public cloud, moved to a hybrid cloud strategy with a series of acquisitions and by endorsing OpenStack private cloud open source project.  Verizon went for the private cloud approach.

An interesting case is Rackspace, which eased off on its own cloud and managed services, and started offering third-party support for the public clouds of Amazon and Microsoft, leveraging its Fanatical Support brand. Also, in parallel to supporting leading public cloud vendors, Rackspace keeps its longstanding support of private cloud deployments based on OpenStack, the popular open-source platform which it co-founded.


Rackspace’s strategy seems to have hit well. quarterly results published this week show quarterly revenue $518 million, up 7.9% from the year-ago-quarter. Executives noted Rackspace’s success was buoyed particularly by a growing number of Fanatical Support customers for its Microsoft Azure and Amazon Web Services (AWS) offerings as well as customers on its OpenStack private cloud.

Hybrid cloud strategies gain traction with enterprises. While Amazon, Microsoft and Google try to convince enterprises to go all-in on the public cloud, it’s too big a change to swallow for most. Even Microsoft realized that hurdle and tried bringing its Azure cloud to the enterprise’s datacenter. Hybrid cloud seems to have demand, and may also be the focus of those who failed to take the lead in the public cloud.

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The Mysterious Creator Of Bitcoin and Blockchain Comes Out Of The Shadows

The birth of the virtual currency Bitcoin was accompanied with great mystery, when its creator chose to remain in the shadows, known only by his (or her?) pseudonym Satoshi Nakamoto. Rumors over the years brought up various potential “suspects”, but nothing was proven and no one confessed. Until now.

Today Dr. Craig Wright, a 45-year-old computer scientist from Australia, announced that he is Satoshi Nakamoto. In his post Wright says

If I sign Craig Wright, it is not the same as if I sign Craig Wright, Satoshi.

Wright then goes on to thank those who supported the project. Something that has started from a monumental paper by the mysterious Satoshi Nakamoto, followed by a release of an even more monumental implementation of Blockchain, the revolutionary technology for open distributed ledger underlying Bitcoin. In fact, the impact of Blockchain currently seems to surmount that of bitcoin, with blockchain-based innovation boiling up in both startups and financial institutions. The interest is so great (and skill set is so rare) that IBM and Microsoft launched Blockchain-as-a-Service offerings on their clouds to help companies innovate with Blockchain.


Wright dedicated most of his post to convincing the community of the authenticity of his claim. He provides a signed evidence, supposedly signed with a private key associated with Satoshi Nakamoto (the key for block 9), and elaborates on the process of verifying cryptographic keys, basically implying on the verification of his own evidence.

Wright knew such announcement would not go about without a storm, so he summoned in advance three high-profile magazines – The Economist, The BBC and GQ Magazine – to exclusively present his claim and evidence so they can accompany his post with their own coverage. The magazines jumped on the scoop and dag deep into his claims. You can read their full review here:

The Economist: Craig Steven Wright claims to be Satoshi Nakamoto. Is he?

The BBC: Australian Craig Wright claims to be Bitcoin creator

GQ Magazine: Dr Craig Wright Outs Himself As Bitcoin Creator Satoshi Nakamoto

Is Dr. Wright the real Satoshi Nakamoto? The community will be debating that in the weeks to come, together with further evidence released by Wright. More importantly, Wright hints of new work he’s done in this field with “an exceptional group”. It may very well be that his current announcement just sets the stage for bigger announcements or releases yet to come.

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