HP's $1bn 'Linux for the cloud' dream: Will Helion float?

Plus: Why it wants to be like IBM, not Sun

HP Helion marketing from HP website

Hilf: We're not open-sourcing proprietary HP technology

“The number one thing I hear from customers is: ‘We took OpenStack and tried to run it across 5,000 different servers. Can we take OEM your public version of OpenStack because you are doing it at scale?',” Hilf says.

But others have cottoned on to this idea. Database giant Oracle and Linux shops Red Hat and Canonical each made OpenStack announcements of their own last week: both are also offering their own separate distros.

Canonical will provide Ubuntu hosting and OpenStack in an industrialised-looking and orange-coloured appliance.

Little is known about the Oracle technology while Red Hat seems to be mostly adding a management layer.

Hilf reckons HP's Helion is doing what Windows and Amazon achieved - scale and simplicity, opportunity without the headache of making the platform work.

The commercial version of HP’s Helion will scale to 10 – 20,000 nodes; will support third-party plug-ins; come with management tools; and run with a choice hypervisors and hardware. The community edition will be updated every six weeks too, to target devs but not conservative business types.

On this Hilf is clear: the model is Microsoft - opportunities accrue from real market share.

But open source has been a siren call for tech hopefuls also wishing to emulate the reach of Microsoft. Their MO has been to release a free edition of their code and persuade customers to buy the paid-for edition or services. The dream is Red Hat... the reality is Sun Microsystems.

Sun thought it could use open-source code to sell its servers while also becoming an open-source software company. It got bought by Oracle.

The lesson is eerie for HP, which - like Sun - is using open source to sell its hardware. Unlike Sun, HP is also using open source in a hosted service. “We are not taking proprietary Hewlett-Packard technology and releasing it as open source and expecting customers to pay us,” Hilf told us.

Hilf reckons the OpenStack market is still green enough for HP's strategy to work.

“It’s early in the game of when markets are emerging and market share is still up for grabs,” Hilf said. “The OpenStack market share is still completely green field so in these early days, the more we can get customers to adopt those technologies and see the value from what we are building, the better for long-term value.”

Let's come back to that $1bn and the IBM model and Linux.

In some ways OpenStack is like those early Linux firms. No one company dominated the Linux market and the enemy was easy and obvious – Microsoft with its proprietary Windows operating system and a costly licensing model.

But unlike those days, there is no high-cost rival - quite the opposite: Amazon has been cutting prices and killing the competition.

RackSpace was gung-ho on OpenStack, which it co-announced in 2010 with NASA. Four years on, RackSpace's quarterly revenue was up 16 per cent but income down 21 per cent. Its chief executive is leaving, while it's reported to have called in the bankers to help re-assess its future. It’s a comment on the high-growth, dwindling margins of cloud.

HP will need to do more than just build better code or ship OpenStack pre-loaded on servers. It must infiltrate the enterprise customers using Amazon and persuade them it is wise not to rely on a single (in this case cloud) supplier.

That, after all, is how IBM loosened Windows' grip on the workplace. ®

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