How many is too many public OpenStack cloud services?

OpenStack public cloud service providers will need to better differentiate their offerings because there's a chance all the providers won't survive

We aren’t there yet, but the market for public OpenStack clouds is promising to get crowded.

So far, Rackspace, HP, Internap and AT&T are the big names in public OpenStack clouds. Dell has promised to launch a service later this year. IBM continues to dance around the subject but hinted to Network World that it may shift its public cloud offering to OpenStack.

Just a few months ago, in October, Forrester analyst James Staten said that the clock was ticking – OpenStack needed launches or the community could fizzle. As recently as January, I called it make or break time for OpenStack.

crowd_0.jpgSource: James Cridland, via Flickr
Is the OpenStack public cloud market getting crowded?

With Dell and IBM more solidly in the OpenStack public cloud arena, it feels like OpenStack now has notable momentum. Soon enough the community will face a new question: How many OpenStack clouds is too many?

Enterprises like competition for services. They’d rather pit vendors against each other since that drives prices down and innovation up.

But we’ve all seen what happens when a hot new market segment emerge. Startups and established companies flock to it, followed by a shake out after which only the strong survive. I’ve been watching it happen most recently in the mobile device management market, where consolidation has been happening at a rapid pace and standalone providers are struggling.

There is expected to be plenty of demand for public cloud services, meaning there’s room for multiple offerings. But it’s a capital intensive business to get into. Providers will need to rack up customers to make the investment pay off and it’s not yet certain if there’s going to be too much supply for the demand.

To win customers in a market that revolves around an open technology like OpenStack, the service providers will need to differentiate their services.

I’ve been trying to look closely for signs that the vendors are actually offering differentiating services. So far, I’m not finding glaring differences.

Rackspace tries to set itself apart with its “fanatical support.” While that tagline surely resonates with small and medium sized businesses, I’m not certain how valuable it will be as the company tries to move upmarket. Enterprises pretty much assume they’ll get “fanatical support” from their vendors.

Dell said it hopes to win customers by offering them stronger SLAs than the competition. That might work, but I wonder if it’s enough of a differentiating factor.

AT&T is targeting its Cloud Architect offering primarily at individual developers so probably isn’t on the radar of enterprises. And then there’s Internap, the first to launch a public cloud based on OpenStack, which has been a bit quiet about its offering recently, at least from my vantage point.

Otherwise, we don’t know much about how the other companies plan to differentiate their OpenStack clouds. Some of the traditional enterprise vendors may simply figure offering cloud services is table stakes – if they want to retain existing customers, they have to offer cloud services. But they’d best stay on their toes since the independent providers or those that are targeting enterprises for the first time may be hungrier for the business.

Plus, the OpenStack providers have more to worry about than other OpenStack providers. Amazon Web Services, thought to be by far the biggest service provider out there, is after the enterprise market, as is Google.

While it’s early yet to wonder if there’s too much competition in the OpenStack market, the question could be relevant sooner than we may have expected.

Read more of Nancy Gohring's "To the Cloud" blog and follow the latest IT news at ITworld. Follow Nancy on Twitter at @ngohring. For the latest IT news, analysis and how-tos, follow ITworld on Twitter and Facebook.

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