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The Great Cloud Squeeze

IBM and OpenStack are building what Jason Bloomberg called at ZDNet a Cloud Service Orchestration system, a way to make cloud workloads portable between public and private clouds. By working together with other vendors and customers, they're putting the squeeze on VMware, while Amazon's price cuts make customers wonder why they need portability at all.

They're also putting the squeeze on Citrix (CTRX), which is backing an OpenStack alternative called CloudStack and has its own virtualization system called Xen that, like KVM, is open source. Bloomberg says Xen is better than KVM , making Citrix' Cloud Platform look like a competitive offering.

What's missing from this picture? A lot of things.

  • Start with the major computer vendors: Hewlett-Packard (HPQ) is trying to fork OpenStack while Dell (DELL) seems to want to integrate Microsoft into the cloud mainstream. But where are the customer benefits?
  • Where are the old phone companies? Verizon (VZ) and CenturyLink (CTL) are trying to define what they call an "enterprise public cloud" space, but can they succeed with prices higher than Amazon's and technology inferior to IBM's?
  • Then ask where the startups have gone. This is a market that is not yet fully developed, but the competition between Amazon and IBM seems to be starving new companies, which use customers as a prime funding source, of financial oxygen.

It is not unusual for a technology market to be simultaneously growing and consolidating. However, the importance of cloud and the size of its players seem to be taking this to a new level.

I haven't seen such churn in over 30 years, since IBM exploded into the PC space. It makes me feel young -- even if it gives vendors and investors heartburn.

At the time of publication, the author was long IBM and GOOG.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

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