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Rackspace financial reporting, Walmart's OpenStack and other cloud news from the week ending 2015-02-22.
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This Week In Cloud

Weekly roundup of interesting developments in the cloud industry, curated by David Mytton.

Rackspace financial reporting will merge lines of business (17 Feb)
In its 4th quarter earnings call, Rackspace said they would no longer make a distinction between "dedicated" and "public" cloud. The term "dedicated" is really just the Rackspace legacy dedicated server business in disguise, mixed in with their various "private" cloud offerings. "Public" cloud is their old Slicehost technology merged with the OpenStack powered cloud products which, according to RightScale, put them in 3rd place in the public cloud market.

When it comes to the commodity cloud products like compute, storage and networking, Rackspace has no trouble competing with any other hosting provider. The problem is when you broaden "cloud" to cover products which are built on top of those core components, Rackspace simply can't compete. It doesn't have the engineering resources or culture to innovate, which means it is effectively out of the cloud wars.

As such, Rackspace is re-positioning itself as a "managed" service provider. It has always differentiated on "fanatical support" and after trying to compete in public cloud, it changed its tag line to be "the managed cloud provider". In this context, merging the lines of business makes sense - Rackspace will offer you public cloud products but it's not defined by them, instead opting to be your IT department and run/manage everything for you.

The problem is that the big 3 are trying to do this too. Amazon is ahead in most areas and you can see this strategy with all the supporting products they offer: code hosting, deployment, archiving, document storage, email, calendar. Google is much more advanced with its Apps suite but the strategy is similar with Google Cloud Platform - owning all of IT. 

This leaves "fanatical support" as a differentiator. But is it enough?
Walmart runs on OpenStack (Feb 17)
In an interview with Amandeep Singh Juneja, senior director of cloud operations and engineering, it was revealed that Walmart runs many of its systems using OpenStack, deployed across 100k cores.

This is a good case study for OpenStack and "private" cloud until you start getting into the details. Walmart initially worked with "all the leading distribution vendors" and then decided to built its own in-house team to help them run things. The WalmartLabs team that manages this has over 1500 engineers and although it's unclear how many are dedicated to the OpenStack project, over 1000 of those were hired in the last year as they moved from vendor supported to in-house OpenStack.

 

"What WalmartLabs loved about OpenStack was that it could be molded and modified to fit its specifications, without vendor lock-in."

This shows that they are dedicating significant resources to building their own "private cloud" and although it's true there is no specific vendor lock-in, they are locked into their own development. They're competing in resources, talent and innovation against the public cloud providers (who have more resources to dedicate to engineering both product features and efficiency at scale). 

As more and more services move to a utility, cloud model, Walmart are going to need to hire more and more people, and spend more and more time and money on R&D, just to keep up. Why are they doing this? There seems to be no public, defensible reason for it. I suspect that there is a view that they do not want to be reliant on Amazon, who compete with them in many areas. But what about Azure? It sounds very much like a dogmatic approach to "we don't use public cloud" and "owning key technology" which isn't actually core to their business in any way.
Other things of note
  • Cloudera claims more than $100m in Hadoop revenue (link).
  • Heroku announces a product specifically for enterprise PaaS (link).
Copyright © 2015 David Mytton, All rights reserved.


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