Rackspace going ALL - IN with OpenStack

I was alerted by a good friend of mine Benjamin Black that Rackspace had announced it was going "ALL - IN" with OpenStack and that it was going to compete with Amazon on service not scale.

Ok, this is potentially great news for OpenStack but that depends upon the play and intention at hand.

If Rackspace believes that there are enough companies setting up or wanting to setup as utility providers of infrastructure around OpenStack then the move can make a great deal of sense. By enabling other companies to set-up, Rackspace's focus would be on growing the entire ecosystem without being a dominant player in that market. This is actually essential if you want to try and become the exchange and / or marketplace for a broad utility market.

So let us assume that the focus in Rackspace has become :-

• build OpenStack into the reference model for a huge ecosystem (i.e. bigger than AWS)
• manoeuvre to become the exchange / marketplace / assurance body for that ecosystem 

... then that's grand. It's a bold move but a good play.

By doing so, it would also make it easier for Rackspace to co-opt OpenStack competitors where such action is beneficial as it removes the whole differentiation and on ramp to Rackspace argument. It may also mean that Rackspace will push the technology even faster as they increasingly depend upon a broad ecosystem of utility providers. It will also enable them to introduce some form of certification for OpenStack (much as Google has done with CTS) in order to overcome the collective prisoner dilemma (everyone within the group differentiating). This latter part is required for assurance reporting across multiple providers (and an essential part of an exchange).

So the models for Rackspace would become :-

• Focus on growing the ecosystem rapidly
• Build a certification and ratings agency (e.g. a Moody's model) to ensure compliance of members offerings to OpenStack (essential for switching)
• Build a marketplace for a market of OpenStack providers (e.g. a uSwitch model)
• Build a computing exchange (e.g. where the real money will be)

Add into this some service and technical support revenue (though helping companies get going with OpenStack) then this would all be very reasonable. By also growing OpenStack in the enterprise and helping companies build their own private OpenStack clouds (whether sensible or not), there is the potential to grow future customers of this market by providing a natural route for transition.

Whilst the play is obvious and has been often repeated umpteen times over the years (in 2007 we were talking federated markets etc), it's potentially a good move because no-one has yet effectively built that market, marketplace, exchange and assurance body. Of course, it'll bring them straight into a collision course with RightScale, Enstratus, Canonical and others who have been gearing up for this space.

It's going to be a huge uphill battle - you've got AWS vs GCE to contend with, you'll need to move fast, you'll need to encourage OpenStack members to bet big as utility providers, you'll need to co-opt competitors, you'll need to manage the potential conflicts and you'll need to get that market setup within the next 12 months. 

However, it gives some hope.

Of course, I'm assuming that this is what they're actually planning. If instead their plan is to get enterprises building OpenStack as an on ramp to Rackspace services which they'll "differentiate" on some spurious basis rather than competing on scale with little or nor focus on the ecosystem, marketplace, exchange etc ... then ... oh well.

So, the dead duck might just have made a murmur or alternatively it was gas escaping ... can't tell which yet. Will they successfully achieve this? Will they be able to climb that mountain?

Well, if you want my personal opinion ... no.  Looking at what has happened and the choices they've made, then I take the view that they lack the force of leadership necessary to play this game. Of couse, that's assuming they're even playing the right game.