Tag Archives: hybrid cloud

Cisco Is Shutting Down Its Public Cloud, Exploring Hybrid IT Strategy

Cisco just confirmed it’ll shut down its Intercloud by March 2017. Intercloud was supposed to be Cisco’s move in public cloud, addressing both businesses and service providers. But Cisco learned the painful lesson of the cloud, same lesson learned by HPE which shut down its Helion public cloud a year ago and Verizon which shut down its cloud earlier this year. On its statement, Cisco explained:

Cisco has evolved its cloud strategy from federating clouds to helping customers build and manage hybrid IT environments.

It appears Cisco realized that hybrid cloud may be its answer to Amazon, Microsoft and Google. It may have learned from Rackspace, which abandoned its cloud product and turned to partnering with Amazon, a strategy shift which paid off big time a few months ago. VMware is another datacenter giant that realized it’d better off partnering with Amazon for cloud services, and announced partnership a couple of months ago.

With open source taking over networking, Cisco foresees rough times also on traditional networking side. The big guys go as far as building their own datacenters from the ground up from simple hardware, skipping Cisco’s expansive purpose-built high-end boxes.

While many abandon their public cloud aspirations, it’s interesting to see that last month Oracle launched bare metal cloud services, which is in fact just the first step of its new cloud strategy announced back in September. Will it succeed where the others have failed?

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Amazon and VMware: Strange Allies In The Game Of Clouds

Before cloud there was datacenter virtualization. The king of virtualization was VMware, who had ruled enterprise datacenters for decades uninterruptedly. Then a new force arose – Public Cloud – ruled by the reincarnated online retailer Amazon, which swiftly won the hearts of startups and web apps alike. As enterprises started exploring the cloud, VMware adapted its offering in the form of Private Cloud in attempt to keep the lucrative enterprises under its dominion, while Amazon has been fighting to convert them to its public cloud, with relentless price cuts and innovative services. War was fierce.

But in the Game of Clouds strange alliances are formed…

Now VMware is striking an alliance with Amazon. The new strategic partnership announced this month brings forth a hybrid child: VMware Cloud on AWS, which promises to let enterprises have their cake and eat it too – keeping them working in their good-old VMware vSphere environment while letting VMware operate it for them as a managed service on the Amazon Web Services (AWS) bare metal infrastructure. The new service is currently in Technology Preview, with general availability expected mid-2017.

vmware-aws

What could bring together these bitter rivals? In the land of private cloud VMware has been suffering fierce competition from OpenStack open source community, so fierce that ultimately VMware jumped on the OpenStack bandwagon. Flanked by OpenStack from private cloud and by Amazon from public cloud, VMware came to realize what HP, Verizon and others learned the hard way – that hybrid cloud can be the alternative. A similar strategy change brought the got Rackspace acquired a couple of months ago.

And what’s Amazon’s angle with WMware you ask? Amazon has been eyeing the lucrative enterprises for a long time, but has largely failed to convert them to the public cloud. Microsoft, Amazon’s public cloud competitor, identified that and launched Azure Stack (currently in Technical Preview 2), a flavor of its Azure public cloud that can extends to the enterprise’s datacenter. Amazon so far has been dogmatic in its public cloud vision, preaching full migration to the public cloud and refusing to provide variants for private cloud. But market forces are stronger, and Amazon’s way off the proverbial tree was found in the form of VMware. With Microsoft’s Azure Stack expected in general availability mid-2017, Amazon had to prepare its counter move towards the same mark.

In the Game of Clouds great forces are at play. With private and public clouds, open source communities and vendor-locked solutions, incumbents and startups all at play. And everyone’s eyeing the holy grail of enterprises.

Who will win the Cloud Throne?

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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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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.

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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-multi-cloud-offering

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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HP Quits Public Cloud Race, Focusing On Hybrid Cloud For Enterprises

If you don’t see how the IT world is changing, just follow the recent tectonic shifts: while some tectonic plates merge (see Dell & EMC), others split (see HP split). The big players are assessing their play in this new world of IT where people and companies consume services rather than products, and where businesses run entire operations without owning “stuff” (think about the biggest taxi company not owning a single vehicle…). In this world, the game shifts from selling boxes and licenses to cloud-based services and open-source software and standards. And that’s a shift the big guys are now facing.

In its recent evaluation of the company’s future, HP (soon to be HP Enterprise) realized it cannot compete in the public cloud global arena, and decided to shut down its HP Helion Public Cloud offering on January 31, 2016. This arena is heavily dominated by Amazon, followed by Google and Microsoft, it requires a lot of upfront investment to gain significant global coverage, and it has a fierce war on price and performance.

hphelion

Instead, HP will focus on hybrid cloud, helping their traditional enterprise customers combine their on-premise data center with different public cloud vendors. This way HP actually plans to partner with the big public cloud vendors. In its recent blog post, Bill Hilf, SVP and GM, HP Cloud, stated that:

To support this new model, we will continue to aggressively grow our partner ecosystem and integrate different public cloud environments.

HP’s strategic choice to focus on hybrid cloud should come as no surprise. With the agenda of bringing hybrid cloud to enterprises  HP acquired Stackato 3 months ago from ActiveState. Also, late last year HP acquired open-source software Eucalyptus to “accelerate hybrid cloud adoption in the enterprise“, which paved HP’s way to offering compatibility with Amazon’s AWS cloud. On the Microsoft front HP has been working to support Azure cloud and Office 365 SaaS offering. This may compete with Microsoft’s own hybrid cloud offering announced earlier this year. And Amazon is debating its position on hybrid cloud as well. so these partnerships will be interesting. If formed well, they could lead HP to a true multi-cloud offering.

hphelion

The big players are all eyeing how to bring hybrid model for the enterprises, where the big money lies, and where complex environments, systems and constraints mandate such hybrid models and enterprise-grade tooling. We’ll also be seeing more use of open-source, such as HP’s adoption of Eucalyptus, CloudFoundry (for PaaS), and OpenStack. In fact, today started the OpenStack Summit in Tokyo, it’d be interesting to hear what HP executives elaborate on the recent and expected moves for Helion.

You can read more on HP’s recent moves around cloud, containers, open-source, HP company split and more on this post.

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