OpenStack Punches Above Its WeightOpenStack Punches Above Its Weight

Amazon and other proprietary public clouds have the bulk of the cloud market, but OpenStack fills special needs.

Mitch Wagner, Executive Editor, Light Reading

November 15, 2016

9 Min Read
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While OpenStack's installed base is small compared with Amazon Web Services and other public hyperclouds, OpenStack has attracted power users for which proprietary public clouds are unsuitable.

"There is a necessity to have something other than the public cloud, and OpenStack is the answer," Johan Christenson, founder and CEO of CityNetwork, a European cloud provider, tells Light Reading. "Amazon is not the one vendor for everything, even though they are certainly a great company."

OpenStack fills needs that the proprietary public clouds can't meet. It brings the benefits of the public cloud to companies' own data centers. "The idea of being able to provision and deprovision slices of compute with your own data center is what OpenStack provides," says Dustin Kirkland, who works on the Ubuntu product and strategy for open source software provider Canonical Ltd.

How small is OpenStack? Revenues from the platform will exceed $5 billion by 2020, with CAGR of 35% per year, according to a recent report by 451 Research . Sounds impressive, right? Think again. Net sales for Amazon Web Services Inc. alone were $8.6 billion for the nine months ending September 30. And that's not four years from now -- that's this year. Microsoft Corp. (Nasdaq: MSFT)'s intelligent cloud revenues, which includes revenues from Azure, were $6.4 billion in the quarter ending September 30. OpenStack looks tiny by comparison. (See OpenStack: Small Pond, but the Big Fish Love It, Cloud Lifts Microsoft Stock to Record Height and Amazon Bigger in IaaS Cloud Than Microsoft, Google & IBM Combined.)

But for companies deploying OpenStack, the platform fills a need. (See OpenStack: Small Pond, but the Big Fish Love It.)

For example, PayPal relies extensively on OpenStack to deliver the agility it needs for online financial technology, said Sri Shivananda, PayPal senior vice president and chief technology officer, speaking at the Structure conference in San Francisco in November. "For us to get and stay agile is super-important," he said.

PayPal operates in about 200 markets, with about 100 different currencies, doing an average of $10,900 in transactions per second last quarter. The peak rate last year was $25,000 per second, which PayPal expects to exceed this year, Shivananda said.

To meet those needs, PayPal has developed complex applications, with 2,600 services making up an infrastructure stack on more than 100,000 cores.

Before deploying OpenStack, a PayPal team required up to eight weeks to deploy a new app or service; with OpenStack, that time is reduced to 17 minutes, Shivananda said. The company previously did a big code release every six months; now it does hundreds of releases every day.

"For our scale OpenStack has done well," Shivananda said. "This is a combination of working with the community that contributes code and a sizable engineering team that we hired."

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Vendor independence
Because it is open source, OpenStack provides freedom from vendor lock-in. If a cloud operator uses an OpenStack distro from one vendor and decides after a while it's not working out, it can switch to another vendor's distro, or download the latest version from the OpenStack Foundation.

Because OpenStack is an open source project with a thriving support community, cloud operators can take control of their own destiny.

For example, Walmart is a leading OpenStack implementer, with 170,000 cores running the open source cloud platform. For Walmart, being part of the operator community is one of the chief benefits of deploying OpenStack, says Andrew Mitry, senior distinguished engineer for Strati, Cloud at Walmart.

Next page: Speeding things up

Speeding things up
Traditionally, a data center operator looking for new capabilities -- block storage, for example -- solicits quotes and proofs of concepts from multiple vendors, then rolls out the new capability a year and a half later.

But with OpenStack, a data center operator can first turn to peers, such as service providers, retailers, and scientific and research institutions. Use cases are similar, and an operator can narrow down options for future technology deployments quickly. For example, in the case of block storage, 80% of operators are using Ceph, so there's no need to evaluate alternatives. The same is true for load balancing, networking and other components, Mitry said.

"I'm learning from my peers how they're solving a problem, and they're learning how I solve problems," Mitry tells Light Reading.

Walmart was able to cut a year and a half off of one technology rollout by consulting with peers on what had succeeded for them in similar situations.

"That's a pretty big benefit you don't necessarily get when you're on other platforms," Mitry says.

OpenStack users enjoy the benefits of open source. They can contribute to the code and drive the roadmap, without relying on a vendor to fill needs, Mitry says. Walmart has a small team of developers working on various aspects of OpenStack code.

Standard APIs allow Walmart to switch best-of-breed components from multiple vendors.

And for enterprises that aren't operating their own clouds, portability enables those companies to choose a cloud provider optimized for their business needs.

"When you build an application, you want the ability to move and place the workload and application wherever it makes sense," says Angel Diaz, vice president of cloud architecture and technology for IBM Corp. (NYSE: IBM).

For example, UKCloud specializes in being a cloud provider for UK government agencies. Sweden's CityCloud specializes in cloud for financial services, healthcare and other highly regulated industries. And Internap Network Services Corp. (Nasdaq: INAP) provides low-latency cloud services for gaming, marketing, healthcare and other applications requiring high performance. (See UKCloud Pushes VMware Aside to Make Room for OpenStack.)

Achieving OpenStack's application portability potential will depend on the ability to move application workloads from one cloud to another. IBM led a test of that interoperability at the OpenStack Summit last month, demonstrating moving running the same workload on 16 different vendors' OpenStack implementations. (See OpenStack Interoperability Demo Disappointingly Fails to Explode.)

Regional pubic clouds, like UKCloud, are a prime use case for OpenStack. "Every country will have a national cloud, in the same way they have a national phone system," says Canonical's Kirkland. The national cloud will be used for strategic and defense purposes. China, for example, isn't going to put its data on US-based Amazon.

Regional cloud operators provide data sovereignty for public cloud operators and their enterprise customers, Tim Burke, Red Hat Inc. (NYSE: RHT)'s vice president of cloud and operating system infrastructure, says. Data sovereignty laws require data to physically reside locally in a country where a company does business. SwissCom, for example, is using OpenStack to build its public cloud.

The drive to local, regional and international clouds based on OpenStack could gain momentum in the next US presidential administration, as President-elect Donald Trump has promised an "America first" trade policy. "While this appears to be aimed at the manufacturing sector, cloud computing could become caught up in a global retrenchment to a nationalistic approach to business by other countries in response," says Ovum analyst Roy Illsley in a blog. Other countries might beef up their own data protection and privacy laws as well. In Western economies, where Amazon, Microsoft and IBM have physical infrastructure, that might not make much difference, but in emerging economies, where those companies don't have a direct presence, localization could create opportunities for Tier 2 operators using OpenStack.

Next page: VMware looks to compete

VMware looks to compete
OpenStack and open source in general "is seen as more transparent and enables different companies and countries to adopt a cloud platform that they can trust because they have contributed to its development," Illsley says. "In a world where the US is seen as being protectionist, the open movement could represent a shift in how cloud computing evolves."

For private and hybrid clouds, OpenStack isn't the only game in town.

In addition to OpenStack, the other major cloud platform is VMware.

"VMware is going to be there for a long time. They've owned the enterprise for ten years," says Christenson. But he is pessimistic about VMware in the long term. "When you're looking into the future now, from a cost perspective, what you need is a digital transformation. VMware is not the answer."

Red Hat's Burke agrees, saying cloud providers are moving to OpenStack to get away from VMware's expensive costs.

Not surprisingly, VMware isn't prepared to hang the "OUT OF BUSINESS" sign on its door just yet. VMware sees its technology as complementary to OpenStack, Guido Appenzeller, chief technology strategy officer of networking and security at VMware, tells Light Reading. The company's NSX SDN technology supports OpenStack. "The largest NSX deployments are on OpenStack," Appenzeller says. "We like OpenStack." (See VMware Ships OpenStack 3 With 'Mitaka' Support.)

VMware's typical customers are enterprises, and they find it difficult to deploy OpenStack, Appenzeller says. "For typical enterprises, it's really hard to get OpenStack to work." he says. "I have seen more failed OpenStack deployments in the enterprise than successful ones."

Web-scale companies can get OpenStack up and running, but other companies struggle. And typically when they do run OpenStack, they run a commercial distro rather than the main open source code, Appenzeller says.

VMware is an OpenStack provider, offering VMware Integrated OpenStack, running OpenStack on top of vSphere rather than the standard KVM virtualization software. "But the top layers are OpenStack," Appenzeller says.

VMware's and other vendors' endorsement of OpenStack signifies the technology is gaining traction in the marketplace. But the real proof is in the value it provides to cloud platforms. While small in market share, OpenStack punches above its weight as a building block for enterprise and service provider clouds.

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About the Author

Mitch Wagner

Executive Editor, Light Reading

San Diego-based Mitch Wagner is many things. As well as being "our guy" on the West Coast (of the US, not Scotland, or anywhere else with indifferent meteorological conditions), he's a husband (to his wife), dissatisfied Democrat, American (so he could be President some day), nonobservant Jew, and science fiction fan. Not necessarily in that order.

He's also one half of a special duo, along with Minnie, who is the co-habitor of the West Coast Bureau and Light Reading's primary chewer of sticks, though she is not the only one on the team who regularly munches on bark.

Wagner, whose previous positions include Editor-in-Chief at Internet Evolution and Executive Editor at InformationWeek, will be responsible for tracking and reporting on developments in Silicon Valley and other US West Coast hotspots of communications technology innovation.

Beats: Software-defined networking (SDN), network functions virtualization (NFV), IP networking, and colored foods (such as 'green rice').

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