Do you have the right formula for cloud survival? Consolidation and the lessons from motor racing history 

Is your Cloud vendor more like a works teams like Brabham, McLaren or Williams, a premium brand like Lotus, Mercedes and Ferrari, or a volume one like Toyota or Volkswagen?

In the early days of motor racing, like today, a number of drivers competed with each in time trials in order to qualify for a place on the grid. The difference back then was that most of the drivers were enthusiastic amateurs. Eventually works teams started to emerge that were more organised and more professionally focused and in more recent times much better funded. Teams such as Brabham, McLaren, Williams and so on started to squeeze out the private entrants. Some these firms were then in turn displaced or bought out by the big automobile manufacturers that nowadays dominate motor racing as the main sponsors / competitors. 

[easy-tweet tweet=”The initial players in the #OpenStack community are being replaced and bought out at an incredible rate” user=”billmew”]

I know the history well as my father use to motor race. As an enthusiastic amateur he owned a garage in Tunbridge Wells and raced at weekends with the mechanics from the garage acting as his pit crew. In the 1960s they towed the car behind their van across the continent seeking to qualify for races such as the 1961 Formula 3 Grand Prix at Monza in Italy. There were 90 entries but only 30 places on the grid to be decided by lap times. They managed to get the last position on the grid for the final and were the only private British entry, racing against the works teams. Soon the private entrants were squeezed out entirely by the works teams and the whole affair became rather professional. However, before they did, my father made his name in history: in one race in 1963 having failed to get away correctly at the start, he twice broken the Formula 1 lap record at Brands Hatch fighting his way back from the back of the field to finish second. A short while later the formula classifications were restructured into the Formula 1,2 3 and 4 that we know today were created – meaning that the old formula 1 lap record at Brands Hatch is still held to this day by none other than John Mew – See more here Tunbridge Wells Motor Club: “John Mew In at the Best Time”

Similarly the band of enthusiasts that were the initial players in the OpenStack community are being replaced and bought out at an incredible rate. With OpenStack taking far longer than many had expected to take off, many of the initial players have simply run out of funds. Nebula ran out of funds a while ago and rather than sell out, it simply shut up shop and its team moved on.

Others have chosen to sell out. IBM has recently acquired BlueBox and Cisco has gobbled up Piston Cloud, which will be incorporated into Cisco’s OpenStack Private Cloud, joining MetaCloud. EMC had earlier acquired CloudScaling, while HP had acquired Eucalyptus. By absorbing early OpenStack firms these giants are simply doing what they do best: turning point technologies into full productised offerings within their vast portfolios. Just as the works teams were the only ones with the funding to take formula one forward, these big players are now stepping in to take OpenStack forward. About the only remaining stand-alone OpenStack player is Mirantis, but for how long? I mean how long will it be able to compete with the level of investment in R&D, channel enablement and marketing as these giants?

The same wave of early expansion followed by consolidation has been seen in many industries. Cloud (and OpenStack in particular) is just going through the same growing pains.

The parallels here go further. Premium brands like Lotus, Mercedes and Ferrari, that have invested in formula 1, compete with each other at the top end of the automobile market where it is very much a premium play, but they can’t compete with the volume manufacturers like Toyota or Volkswagen in terms of volume. Similarly Cisco, EMC, IBM and HP are investing in OpenStack as a private or hybrid play for premium cloud offerings, knowing that they cannot compete on volume or price with the mega-scale public cloud vendors like AWS, Azure and Google. 

The lessons here are clear: don’t assume that the initial players in any market will the same ones that end up commercialising it. And don’t accept a lift from a driver with the surname Mew (we all learned to drive from our father).

This post was originally published July 24, 2015.

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