This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Why the OpenStack Cloud Bubble Will Soon Burst

NEW YORK (TheStreet) -- The OpenStack Summit, which stopped in Atlanta this week, is a lifeboat with too many passengers aboard it.

OpenStack is an open-source cloud infrastructure that began as Project Nebula at NASA. The government decided the software would improve faster as open source, and Rackspace (RAX) was the first sponsor. Now it's run by foundation headed by Alan Clark of SUSE Linux, a unit of The Attachmate Group.

According to Clark, the heart of the week-long meeting is the Design Summit, in which a "blueprint of functions" will be created for the next version of the software and a road map hashed out detailing who will do what.

To an outsider it's a small world of tee-shirted programmers wandering among technical seminars, collecting toys from an enterprise technology industry that sees cloud as the next iteration of the Internet market.

But price sells cloud. Amazon (AMZN - Get Report), Google (GOOG), and Microsoft (MSFT) have been putting billions into their cloud capacity for years. They are engaged in a bitter price war that is drawing most of the big scaled sites of our time, like Netflix (NFLX), into their orbit.

OpenStack can compete with the public clouds in many ways but not on price. Open source, in this case, is the high-cost choice.

This leaves big OpenStack vendors facing a shrinking waterhole. They can save corporations and governments money and private OpenStack clouds can replace traditional server clusters, but for companies like Hewlett Packard (HPQ) and IBM (IBM), the money being saved is coming out of their pockets because it used to be spent on their gear.

Many of the elephants' big breakthroughs are coming from relative mice. At a small table on the trade show floor Adi Paz, executive vice president of Gigaspaces, an Israeli company, described how his software can Cloudify an enterprise application.

When IBM says that you can run its older software, like Cognos or DB2, in a private cloud Gigaspaces software is making that happen, Paz said. IBM keeps the software license, but hardware sales decline.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG
AMZN $440.33 -1.10%
GOOG $556.00 -1.60%
AAPL $132.66 1.80%
FB $82.41 1.10%
TSLA $233.68 7.00%

Markets

DOW 18,070.57 -9.57 -0.05%
S&P 500 2,112.30 -5.39 -0.25%
NASDAQ 5,069.0980 -22.9870 -0.45%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs