Dell dumps OpenStack and VMware for public cloud, focuses on private clouds

Dell has dramatically shifted its cloud computing strategy, canceling plans it once had to launch a public cloud service based on the OpenStack open source platform

Dell has dramatically shifted its cloud computing strategy, canceling plans it once had to launch a public cloud service based on the OpenStack open source platform, and discontinuing an EMC VMware-based public cloud it already has on the market.

Instead, the company will focus on selling OpenStack-powered private clouds that run on Dell hardware and software. Using technology it acquired from cloud-management company Enstratius, Dell says its customers will be able to deploy resources to more than 20 public cloud providers. In announcing this change in strategy, Dell also said it has a new "partner ecosystem," consisting of just three providers now, but with plans to increase that number, which will provide integrations between those partner public cloud services and Dell customers' private clouds.

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Launching an OpenStack-powered public cloud would have been an expensive investment for the company, which is mulling opportunities to go private, but Nnamdi Orakwue, vice president of Dell Cloud, said this shift is not related to the company's broader financial position as it deals with slumping revenues in some of its legacy business units.

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Dell has been a cheerleader for OpenStack, and for more than a year has said it planned to launch an OpenStack-powered public cloud. At the very end of last year, the company said those plans had been delayed and the cloud would not be ready until at least 2014. Rumors began swirling last week when Network World reported that Dell is "refining" its cloud strategy and multiple members of the team working on Dell's public cloud have left the company. Monday, Dell released details of its new strategy.

Orakwue says the focus now will be on private cloud deployments for customers, and then secondarily consulting with customers to help them determine what the best fit for a public cloud is. Dell will work with customers who are already using the company's VMware public cloud -- which will be discontinued -- to migrate to another platform. Orakwue would not say how many customers are in that situation, but the news comes on the eve of VMware announcing details of its plans to launch a public cloud. He added that the new strategy is in no way a commentary on OpenStack as a platform for building clouds and reiterated the company's commitment to using the open source platform for building private clouds for customers and partners.

Dell is working with three providers who are part of its partner ecosystem, whose services will be optimized to integrate with its private cloud deployments, including Joyent -- a company known for its ability to offer high-performance cloud computing -- along with ZeroLag and ScaleMatrix, two other small infrastructure-as-a-service (IaaS) providers. Orakwue says Dell hopes to expand its partner program to include more providers.

Forrester cloud watcher James Staten says it's good that Dell is integrating technology it acquired less than a month ago from Enstratius, a management platform that allows customers to deploy resources to a more than 20 public cloud providers, including all the major leading cloud companies like Amazon Web Services, Rackspace, Microsoft Azure, and Google.

On the downside, Staten says Dell will have to show some compelling reason for customers to use its "partner ecosystem" clouds, such as providing some integrated billing, security, or service level agreement support. Orakwue offered little details about any of those areas, but said there will be "tight" operating and business support system (OSS/BSS) integration with partner providers. "It looks like more of Dell adding things to the catalog hoping you will want to buy out of their catalog," Staten says.

Wayne Pauley, an analyst at Enterprise Strategy Group, says he thinks the moves are good for Dell. If the company had launched a public cloud, it would have been competing with some of its service provider partners. Instead, Dell can enable providers to use the company's technology, including Enstratius, as well as Dell Boomi -- a tool for enabling hybrid cloud connections -- as well as other acquisitions it's made, like Quest, which makes IT and database management software. Even though Dell is dropping plans for an OpenStack and VMware clouds, it still does have cloud offerings focused on specific industries, like health care and education. "By providing software and hardware capabilities, it enables service providers to stand up Dell branded clouds, which is a great direction for them to move in," he says.

That cloud management layer where the company hopes to compete is a crowded one, though. Pauley recently reviewed more than 30 providers offering such services, showing just how competitive that market is.

Network World senior writer Brandon Butler covers cloud computing and social collaboration. He can be reached at and found on Twitter at @BButlerNWW.

This story, "Dell dumps OpenStack and VMware for public cloud, focuses on private clouds" was originally published by Network World.


Copyright © 2013 IDG Communications, Inc.

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