Enterprise Linux Log

Jun 23 2011   5:11PM GMT

Exploring the economics of open source cloud computing initiatives

Leah Rosin Leah Rosin Profile: Leah Rosin

SAN FRANCISCO– Does open source work as a cloud computing business model?

This question was pondered by a panel of experts at Structure 2011 on Wednesday. Lew Moorman, president of Rackspace led the discussion around OpenStack, Open Compute and Cloud Foundry projects, why they exist and how they can be monetized by their sponsor companies.

As for the “why open source?” question, the panel agreed that the model has proven successful, as demonstrated by the success of Linux over the last 20 years.

VMware CTO, Derek Collison posited that for cloud computing to advance technologically, use of open source is a must.

“The open source movement is required for the cloud,” he said, explaining that the transparency and no vendor lock-in desire is helped by open source. When people find out it’s open source, they relax about committing to a vendor. And really, cloud computing is too big a problem—and opportunity– for a company or small set of companies to handle. Cloud requires the industry to collaborate.

The shift from making money on intellectual property to a model where some core components are freely available isn’t a huge hurdle for companies, they just need to focus on adding value in order to make money.

“Customers will pay for the innovation from the product or service – there are many different ways to add value,” said Forrest Norrod, VP and GM of server platforms at Dell. “This will disrupt some of the models. [But] the industry will find ways to monetize and add value.”

Collison said that while everyone wants to be in a public cloud, “very few people are willing to walk to the deep end of the pool.” The difficulty in setting up and maintaining distributed systems is something VMware is looking to capitalize on with their cloud services packages, alleviating the IT teams from getting caught up in all of that work.

Adapting to fill these needs is necessary, or the open model could threaten the long-term economics of companies such as VMware and Dell which derive most of their revenue through software sales tied to intellectual property said Norrod.

“If we don’t offer value above and beyond what’s completely commoditized in the standard, then we’re in trouble,” he said. “It can be product value based on IP, it could be service value or just support services. We have to adapt and continue to seek out value-add or we will become irrelevant.”

And building an open source project isn’t cheap. Moorman, whose company sponsors OpenStack, said “it’s a lot of work to run a community – it’s a big investment. We’re spending a lot of money to get input and contributors.”

The experts agreed that their involvement and sponsorship of the open source cloud projects has been costly, but worth it, to their companies, and to the industry as a whole.

Leah Rosin is Site Editor at SearchEnterpriseLinux.com. Follow us on Twitter!

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