Dell Executing Cloud Flanking Move With Red Hat

By Patrick Moorhead - December 12, 2013
When Dell backed away from developing their own public cloud a few months back, some were thinking Dell would essentially exit the cloud services business. Today at Dell World in Austin, TX, Dell made some announcements that clearly showed it’s very much doing what it takes to become a cloud player.  What I consider to be a flanking move on Hewlett-Packard and IBM, Dell is partnering with Red Hat to build out Dell’s cloud delivery portfolio.  While I have published a deeper dive paperhere, I wanted to share some of the basics and my quick opinions. Let me provide some background first.  Today, Amazon owns the public cloud by leaps and bounds over its competitors like Hewlett-Packard,   IBM  and Rackspace. Amazon had first mover advantage and is proprietary, but both HP and IBM are investing literally billions to flank Amazon.  HP, IBM, and Rackspace use OpenStack, an open, emerging kind of de facto industry standard to stand up cloud instances, which is different than Amazon’s proprietary AWS offering. Theoretically, end customers will be able to move apps and data between different vendors’ OpenStack-based cloud services and with proprietary clouds like AWS, so in theory, many OpenStack-based clouds could become big enough to challenge Amazon, and in aggregate become bigger.  There are some catches to OpenStack.  You cannot currently download the base OpenStack and make it work without a lot of high level provisioning and orchestration expertise – it isn’t something you can use right off the shelf.  It needs a lot of work.  HP, IBM and Rackspace all “roll” their own versions of OpenStack, making each vendor’s OpenStack cloud a custom solution, and none of them seem to be interested in enabling their private cloud customers to control their own destiny, to learn to fish on their own. Linux used to be in the same boat.  You would get Linux from Linux Foundation and add what it took to make it work well.  Then companies like Red Hat got into the business of hardening Linux and launched Red Hat Enterprise Linux (RHEL), considered the gold standard for Linux in the enterprise.  Red Hat makes money on support, not the software, which you can download for free. Dell and Red Hat announced today that they will be co-engineering cloud solutions based on Red Hat Enterprise Linux OpenStack Platform (RHELOP).  Dell will also be doing all configuration support and services for everyone using  RHELOP, including customers with HP, IBM, and ODM hardware.  Red Hat will continue to support the code base, as they do with RHEL today. What does this mean in plain English?  Simply put, Dell has a front seat at what could, over time, be considered the “gold standard” of OpenStack in the enterprise, just like RHEL. For customers who start by choosing their flavor of OpenStack, this could give Dell an advantage with customers who want to most open version of a platform.  Of course, Dell has a lot of work to do that HP, IBM and Rackspace have already done, but with this strategy with Red Hat, Dell is doing it for pennies on the dollar.  Also, because Dell will get all RHEL OpenStack configuration and consulting calls, I believe this will lead to a lot of additional business.
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Patrick founded the firm based on his real-world world technology experiences with the understanding of what he wasn’t getting from analysts and consultants. Ten years later, Patrick is ranked #1 among technology industry analysts in terms of “power” (ARInsights)  in “press citations” (Apollo Research). Moorhead is a contributor at Forbes and frequently appears on CNBC. He is a broad-based analyst covering a wide variety of topics including the cloud, enterprise SaaS, collaboration, client computing, and semiconductors. He has 30 years of experience including 15 years of executive experience at high tech companies (NCR, AT&T, Compaq, now HP, and AMD) leading strategy, product management, product marketing, and corporate marketing, including three industry board appointments.