Why HP bought Eucalyptus: An easy way to go hybrid

HP picks up hybrid cloud expertise to round out its growing cloud portfolio -- and a great bargain on the deal

When HP announced it was purchasing Eucalyptus Systems, the company behind an open source project for creating AWS-compatible private clouds, a couple of questions jumped immediately to mind: Why? To what end? Also, given the still fresh memories of HP blowing piles of money on ill-advised acquisitions: How much did it shell out for Eucalyptus?

Why HP?

The "why" behind HP buying Eucalyptus may be the simplest of the questions: HP is building out its Helion portfolio of cloud offerings by adding a well-known creator of hybrid cloud solutions to its lineup.

HP, like many vendors of hardware or legacy enterprise software, has been trying to add cloud solutions to its repertoire. The company kicked off its cloud efforts earlier this year when it started offering its own OpenStack distribution under Helion, which HP had already been using to power its existing HP Public Cloud service.

Forrester noted at the end of last year that HP had made a dent in the mind share of those looking to build private clouds, courtesy of its OpenStack-powered HP CloudSystem Enterprise Suite.

But OpenStack is mainly for private cloud. While others have extended it to perform hybrid work -- such as Appfog, by way of Cloud Foundry -- it's not regarded as native to the project. With Eucalyptus under its wing, HP could better fulfill those needs and give existing HP cloud customers a way to connect public and private services if they want. It makes little sense for HP to reinvent this wheel when a perfectly good one is waiting to be used.

Why Eucalyptus?

HP could have bolstered its cloud play by acquiring an existing OpenStack vendor, but instead it choose to strike out into slightly different territory to broaden its portfolio.

The contrasts between Eucalyptus and OpenStack aren't merely about their stated aims. For one, Eucalyptus is a smaller project with far less activity and participation than OpenStack, which might make it seem like an underdog. But a better explanation is that it's a more focused and specific project that concentrates on one deliverable: AWS-compatible private (and therefore hybrid) clouds. Since Amazon has no discernible plans to create its own hybrid cloud offering -- and likely never will -- it's up to projects like Eucalyptus to fill that gap.

Eucalyptus' relative smallness also gives it nimbleness -- never an OpenStack strong suit. Eucalyptus CEO Marten Mickos emphasized this difference when he compared OpenStack to a Soviet-era collective, where a great deal of work accomplishes very little. In his blog post about the acquisition, Mickos touched on agility and fast-moving innovation as things that he claimed both HP and Eucalyptus could bring to the table. (Mickos will remains onboard after the acquisition, with HP's Bill Hilf reporting directly to him.)

How much?

Last but not least is the purchase price, which according to one source is alleged to be less than $100 million, although official figures have not been disclosed. If that's the case, the purchase qualifies as one of the most high-profile, yet low-budget purchases that HP or any company in this space has made lately. HP is still wiping egg from its face after its infamously overpriced ($11.1 billion) 2011 acquisition of Autonomy. The fruits of that deal have materialized mostly as data-mining tools for Hadoop, as well as some PaaS offerings -- useful, but not the revolutionary stuff of exploding shareholder value, espcially not at that price.

It would be a supreme irony if this relatively low-budget acquisition turns out to be one of the most transformative and forward-looking moves HP's done in years.

[An earlier version of this article incorrectly stated that Mickos would be reporting to Bill Hilf.]

This story, "Why HP bought Eucalyptus: An easy way to go hybrid," was originally published at InfoWorld.com. Get the first word on what the important tech news really means with the InfoWorld Tech Watch blog. For the latest developments in business technology news, follow InfoWorld.com on Twitter.

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