To Build Cloud-Services, Some Companies Adopt OpenStack
The changes in computing are coming from open source, much the same way as there was the move from mainframe to client server. Aivars Lode avantce
To Build Cloud-Services, Some Companies Adopt OpenStackProgram Becomes a Key Factor as Firms Weigh Whether to Keep Computing Operations In-House April 15, 2014 7:23 p.m. ET By Spencer Ante and Michael Hickins PayPal chief technology officer James Barrese has seen the future of the company's computing infrastructure and at its heart is a new kind of software.
OpenStack, a sort of operating system for computer rooms, helps eBay Inc. 's PayPal unit to manage about 20% of its computing operations now, including main applications such as its payment and merchant technology. Though Mr. Barrese says the software still needs further refinement, he predicts it will ultimately handle 80% of PayPal's computing functions.
"We are jumping into the deep end," he said.
OpenStack, an open-source program, has become a key factor as companies consider whether to keep computing operations in-house or turn them over to external services known as public clouds run by Amazon.com Inc. and others. Supporters of the software say it can bring the ease of use and agility offered by cloud-service vendors, while using a company's own server systems.
If OpenStack continues to catch on, it could pose a threat to programs that companies now use to run their data centers from vendors like VMware Inc., Microsoft Corp. and Citrix Systems Inc. Tech research firm IDC estimates software from such providers used to build cloud services for internal consumption will generate $5.8 billion in revenue this year.
OpenStack is the latest example of big changes brought on by open-source software, the development model behind Linux, the popular operating system used on servers that run most big Web services.
Such programs, whose computer code can be viewed and modified by users, typically come in both commercial and free versions. The latter are a benefit for companies with many servers, which would otherwise pay a software licensing fee for each machine. Such programs also typically have multiple distributors, easing customer fears of being locked into using one vendor.
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OpenStack was introduced jointly by the National Aeronautics and Space Administration and Web-hosting providerRackspace Hosting Inc. three years ago. The software provides a kind of dashboard to manage large numbers of servers, storage and networking devices as if they were a single resource. OpenStack can help set up computing resources for users at a company in minutes; such processes can take days or weeks if done manually.
Cloud vendors like Amazon, Microsoft Corp. and Google Inc. have developed similar software to run their own services. But other companies have rallied around OpenStack in an attempt to create an open standard for cloud computing; a group called the OpenStack Foundation has attracted vendors that includeInternational Business Machines Corp. , Hewlett-Packard Co. , Intel Corp. , Cisco Systems and Dell Inc.
On Thursday, the foundation plans to release a new version of OpenStack, dubbed Icehouse.
Companies distributing commercial versions of OpenStack include Red Hat Inc. and startups Mirantis Inc., Piston Cloud Computing Inc., Cloudscaling and Nebula Inc.
Ericsson plans to use OpenStack as the software foundation for its internal operations and to manage cloud services it intends to offer its customers. The telecom giant recently committed to buying a commercial version of OpenStack software from Mirantis. The five-year deal is valued at $30 million, said a person familiar with the deal terms, and is believed to be the largest to date for OpenStack.
Companies such as AT&T Inc., Gap Inc. and PayPal are using OpenStack for what the industry calls "private clouds"—internal computer operations that share many attributes of public cloud services, such as the ability to rapidly add or subtract computing resources.
Rivals offering public clouds and some customers say OpenStack needs more development. Andrew Jassy, senior vice president of Web Services at Amazon, said at a recent conference that there is broad difference in functionality now between OpenStack and top public cloud players like Amazon. "It remains to be seen how much impact it's going to have," he said.
VMware, the Silicon Valley software company majority-owned by EMC Corp., is a key incumbent in software for managing computing resources. When OpenStack was adopted at Ericsson, "most of what it replaced was VMware," said Jason Hoffman, the Swedish company's head of cloud system and platforms.
But John Gilmartin, a VMware vice president, said OpenStack has created opportunities for VMware to help its customers to build hybrid clouds.
Some OpenStack supporters like PayPal's Mr. Barrese say for large companies, a hybrid cloud that uses OpenStack can be around 30% cheaper than using a pure public cloud, while allowing companies to better protect their own data. While initially more expensive, engineers say a private cloud can be cheaper over time because companies can build more efficient systems that are optimized for their needs and use commodity hardware and open-source software.