The New Open Source Superpower

Today is yet another important day in the history of OpenStack. The initial list of founding organizations for the independent OpenStack foundation has been announced and we, at Mirantis, are proud to be on that list.

While there is a lot to talk about on what this means for the infrastructure cloud market, I’d like to focus on what this means as far as illustrating the sheer momentum of the OpenStack beast. The non-profit legal entity that will house OpenStack has not yet been formed, but 18 organizations have already pledged significant financial (and not only financial) support to the foundation. The current financing model calls for $500K/year commitment from a Platinum sponsor and $50-$200K/year – from a Gold sponsor. Judging by the current composition of the supporting organizations, it is clear that the new foundation will launch with the initial budget north of $5M.

So how does this measure up to the rest of the FLOSS ecosystem? Well, there is a reason why OpenStack has been repetitively tagged as the Linux of the cloud. With the $5M annual budget, the newly formed OpenStack foundation takes the second spot in the entire FLOSS world. And it is second only to… you guessed it… the Linux foundation itself. According to form 990 filed by the Linux foundation in 2010 its operating revenues were $9.6M. Yes, the Linux foundation budget is still double that the OpenStack…but…come on…Linux is close to 20% of the server market. It also happens to power the majority of all mobile devices. OpenStack = Linux was a vision… judging by these numbers, this vision may soon be realized.

Another interesting thing that these numbers portray is why OpenStack (unlike CloudStack) has opted to create its own foundation, rather than surrendering everything to the governance of the Apache Foundation. With the Apache Foundation budget under $1M, OpenStack eats it for breakfast.

Now many of you will argue that none of this matters. Apache foundation houses many great projects that are far more mature and popular than OpenStack… true. But can you tell me, how many of these are truly vendor agnostic? And I am not talking about developer tools like Ant, Maven, Beehive etc. All Apache projects fall into two categories – they are either developer tools or vendor centric enterprise products: Tomcat – VMWare, Hadoop – Cloudera, Cloud.com – will now be Citrix =).

In my opinion, there is a reason for it and it is somewhat tied to foundation budgets. Open source is heavily driven by marketing. The number one open source company – RedHat - spends 2-3x more on marketing relative to its revenue than any of its closed source competitors. Ultimately, it is the marketing spend on an open source project that heavily affects its vendor independence status. If the entire spend comes from a single pocket, there is a single vendor that dominates that product.

Unlike most Apache open source projects, OpenStack (while still under RackSpace) was backed by a significant marketing and PR budget. Consequently, when foundation plans were being discussed, it was the desire to continue this centralized marketing effort that precluded OpenStack from considering the Apache foundation as its home. A significant chunk of the $5M raised will be spent by the foundation to promote and protect the OpenStack brand and the projects that the foundation will house. In a sense, this implies that for anyone to derail the vendor independent status of OpenStack, one will need the marketing budget, comparable to the $5M the foundation has raised… I say this is a decent barrier to start with.

Some Brutally Honest Thoughts on Citrix’s Defection

When I first heard the announcement about Cloud.com being spun off into the Apache foundation, my initial reaction was to interpret the event as a hostile move by one of the OpenStack community insiders. Citrix is one of the founding members of OpenStack, with representation on the project policy board; the company has been quite active evangelizing the community through various events and code contributions. So why, all of a sudden, a move that may appear to undermine the OpenStack momentum?

Let’s take a look at the history. When Citrix bought Cloud.com for more than $200 million in July, 2011, insider information suggested the company had revenue of only a several million. While high valuations were not uncommon in the cloud space, a 40x revenue multiple is quite unusual. Why did Citrix do it? The only answer that comes to mind was that it wanted to quickly gain credibility in the cloud market.

I believe that corporate politics and relationships also played a role in this deal. Cloud.com was backed by Redpoint Ventures, which had an existing track record of selling its portfolio companies to Citrix. But, more importantly, Cloud.com founder and CEO – Sheng Liang – was also the founder and CTO of Teros Networks, a Web security company that was acquired by the very same Citrix just a few years before Cloud.com was founded. In fact, I am pretty sure, that in some sense cloud.com was Citrix’s skunk works project; acquisition by Citrix was the key part of the Cloud.com business plan. While there is nothing wrong with the approach and I can only complement the strategy, the early connection between Citrix and Cloud.com was key to its successful exit and the events that followed.

Just one year before the acquisition of Cloud.com, OpenStack was announced at OSCON and nobody knew what to think of it. It took the open source community by a storm and it soon became evident to all those competing for open cloud dominance, that simply ignoring the OpenStack phenomenon was not an option. “Open cloud strategy” soon became synonymous with the “OpenStack Strategy”. Citrix, a founding member of OpenStack itself, was in a bit of a tight spot. One choice was to abandon its Cloud.com project. Given the OpenStack momentum at the time, this could inevitably translate to the swift death of Cloud.com and $17 million in losses to the VCs backing it. Alternatively, Citrix could go all in, acquire the Cloud.com community to boast its credibility in the open source cloud space and take a stab at creating the dominant distribution of OpenStack, ultimately becoming to OpenStack what Red Hat has become to Linux. In the end, the scales tipped towards the latter option. In May, 2011 Citrix announced its distribution of OpenStack – project Olympus. Two months thereafter, the Cloud.com acquisition was announced.

However, when the dust settled, it became evident that Citrix’s involvement with Cloud.com and OpenStack (Project Olympus), instead of being complimentary as Citrix has anticipated, has been perceived as strange and surprising. CloudStack is Java based, whereas OpenStack is all Python. On the compute side, CloudStack focused on Xen, whereas the dominant hypervisor for OpenStack so far has been KVM. CloudStack was licensed under GPL, and OpenStack under Apache 2.0. Ultimately, Citrix’s cloud.com acquisition was sending confusing messages to both communities and Citrix’s customer base. A few months after Citrix’s acquisition, the Cloud.com community had little momentum left. At the same time, the OpenStack community remained wary of Citrix due to its involvement with CloudStack. Consequently, not much has happened with Project Olympus since its announcement over a year ago until it was officially abandoned with the latest announcement.

Today, Citrix announced that Cloud.com will find a new home with the Apache foundation. Is it a hostile move that will undermine OpenStack? I see it more as an act of desperation. Clearly, that wasn’t the initial plan, when Citrix first acquired Cloud.com. Consequently Citrix has failed to build the community around Cloud.com, miscalculated the synergies between the two communities, got trumped by OpenStack momentum, and dumped what’s left of Cloud.com to the Apache foundation. They have already announced CloudStack would be open source twice before, yet have received no outside contributions to date. The last commit to Cloud.com on GitHub by a non-Citrix employee is dated several months ago.

At this point, Citrix has a spotty history when it comes to open source. Open source is built on trust and they are hard to trust right now. Having burned bridges at their last two communities (Xen / Linux) and now OpenStack, it is going to be big challenge for them to revive CloudStack from its present semi-dead state.