Caught in a gilded cage. OpenStack provider are trapped.

OpenStack is on the rise. The number of announcements increase that more and more companies and vendors rely on the more than three years old open source project to provide scalable solutions and own infrastructure-as-a-service (IaaS) offerings. However, in my view, the OpenStack community is in a dilemma – diversification. In addition, unnecessary disturbances from the outside carried indoors, which do not consider exactly this issue. Thus, for example, the discussions on the Amazon API compatibility by Randy Bias are as little conducive as Simon Wardley’s demand OpenStack should be like the Amazon Web Services (virtually a clone). OpenStack has to find its own way. However, OpenStack itself is not the problem, it is the provider who use OpenStack. These are 100% responsible to present meaningful offers and deploy OpenStack profitably for themselves.

Amazon API compatibility is a means to an end

I think it is important that OpenStack is implementing the Amazon API in order to offer the possibility, if necessary, to span a hybrid cloud to the Amazon Web Services. At least OpenStack service providers should offer their customers the option, to not only theoretically promise no vendor lock-in, but actually allow this.

But that’s it. Amazon should not have more influence on the OpenStack community. To get the curve to the “Linux of the cloud.” Has Linux orientated at Microsoft Windows? No. And it has become successful. In my view, the problem lies also in the fact that Linux was developed from an ideology by a single person and then was driven forward by a large community. OpenStack, however, has been launched to meet 100% of a commercial purpose for the OpenStack community. For this reason, OpenStack is nothing more than a big marketing machine of all participating providers. The OpenStack community must find its own way, create innovation itself and should not be influenced by what Amazon is doing.

Amazon Web Services are NOT the biggest competitor

What I still do not understand about the Amazon Web Services vs. OpenStack discussion is, that constantly apples and oranges are compared. How can one compare a public cloud provider with a software for the development of public/private clouds? If you really want to compare Amazon Web Services and OpenStack you’ve to match each single OpenStack provider with AWS! Everything else is meaningless. Only then you can make a real statement!

However, one will then realize very quickly that the by the OpenStack community self-proclaimed competitor Amazon Web Services is not the competitor! This sounds hard, but it’s the truth. There is currently no single OpenStack service provider who rudimentarily can hold a candle to the Amazon Web Services. The Amazon Web Services are the imaginary competitor, the desired competitor in the minds of the providers.

Just compare the services of the two top OpenStack public cloud provider Rackspace and HP to the Amazon Web Services.

Amazon Web Services



Amazon EC2 Cloud Servers Compute
Auto Scaling
Elastic Load Balancing Cloud Load Balancers Load Balancer
Amazon EMR
Amazon VPC
Amazon Route 53 Cloud DNS DNS
AWS Direct Connect
Amazon S3 Cloud Files Object Storage
Amazon Glacier Cloud Backup
Amazon EBS Cloud Block Storage Block Storage
AWS Import/Export
AWS Storage Gateway
Amazon CloudFront CDN
Amazon RDS Cloud Databases Relational Database
Amazon DynamoDB
Amazon ElastiCache
Amazon Redshift
Amazon CloudSearch
Amazon SWF
Amazon SQS Messaging
Amazon SES
Amazon SNS
Amazon FPS
Amazon Elastic Transcoder
AWS Management Console Management Console
AWS Identity and Access Management (IAM)
Amazon CloudWatch Cloud Monitoring Monitoring
AWS Elastic Beanstalk Application Platform as a Service
AWS CloudFormation
AWS Data Pipeline
AWS OpsWorks
AWS Marketplace
Cloud Sites
Managed Cloud
Mobile Stacks

This comparison shows that the Amazon Web Services are not the biggest competition, but the danger comes from the own camp. Where is the diversification, if the two big OpenStack public cloud provider offer up to 90% of exactly the same services? The service portfolio of both Rackspace and HP is not able to represent a competition to the Amazon Web Services, by far. On the contrary, both take market share away from each other by offering almost identical.

Caught in a gilded cage

The OpenStack providers are in a dilemma, which I regard as the gilded cage. In addition, all providers basically cannibalize each other, which shows the comparison of the services of Rackspace and HP by the portfolios are hardly different.

But why do all OpenStack provider sitting in a gilded cage. Well, they benefit from each other by everyone make new ideas and solutions available to the project, and all benefit equally from a common code base to put it together to an own offering. But that also means in reverse that no one can draw a real competitive advantage of it by all sitting in this cage using the same means. The cage includes basically something valuable and offers its possibilities with the available services. However, each provider has limited freedoms by all have the same basic supplies.

Rackspace is trying to differentiate with an extended support. Piston Cloud to completely keep out of the public cloud competition and offers only private or hosted private clouds.

I have already followed discussions on Twitter, where it came up to duel with Amazon over a hybrid OpenStack cloud. However, many not bargain on Eucalyptus, which formed an exclusive partnership with Amazon and has developed more and more services lately to close the service gap to Amazon.

Furthermore, one must not be ignored. The comparison to Linux seems to be correct in its approach. However, most Linux distributions are free of charge. OpenStack provider have to sell their services to be profitable. This also means that OpenStack providers are doomed to make as much profit as possible from their service offering to cover the running costs of the infrastructure, etc..

Differentiation over an attractive service portfolio only

OpenStack provider have to accept being in the gilded cage. But that does not mean that one therefore must be just one of many vendors. At first one should refrain from seeing infrastructure-as-a-service as a bearing business model, at least as a small vendor. Infrastructure is commodity. Furthermore, one should not continue, or even begin to imitate the Amazon Web Services, the train has left the station. Instead, attempt should be made to develop the wheel further and become – on innovation – the next Amazon Web Services.

Rather, it is about that every OpenStack provider must make the most out of the OpenStack project and not forget to be disruptive and neglect innovations. In the future, only the cloud providers will be successful who offer services, giving customer an added value. Here OpenStack can and will play a very important role, however, not occupy center stage, but serve as a means to an end.

The OpenStack providers must begin to change the marketing machine OpenStack to the innovation machine OpenStack. Then the admiration comes naturally.

By Rene Buest

Rene Buest is Gartner Analyst covering Infrastructure Services & Digital Operations. Prior to that he was Director of Technology Research at Arago, Senior Analyst and Cloud Practice Lead at Crisp Research, Principal Analyst at New Age Disruption and member of the worldwide Gigaom Research Analyst Network. Rene is considered as top cloud computing analyst in Germany and one of the worldwide top analysts in this area. In addition, he is one of the world’s top cloud computing influencers and belongs to the top 100 cloud computing experts on Twitter and Google+. Since the mid-90s he is focused on the strategic use of information technology in businesses and the IT impact on our society as well as disruptive technologies.

Rene Buest is the author of numerous professional technology articles. He regularly writes for well-known IT publications like Computerwoche, CIO Magazin, LANline as well as and is cited in German and international media – including New York Times, Forbes Magazin, Handelsblatt, Frankfurter Allgemeine Zeitung, Wirtschaftswoche, Computerwoche, CIO, Manager Magazin and Harvard Business Manager. Furthermore Rene Buest is speaker and participant of experts rounds. He is founder of and writes about cloud computing, IT infrastructure, technologies, management and strategies. He holds a diploma in computer engineering from the Hochschule Bremen (Dipl.-Informatiker (FH)) as well as a M.Sc. in IT-Management and Information Systems from the FHDW Paderborn.