OpenStack to Transform Data Center Market
Now that IBM has become the latest major vendor to throw its weight behind the emerging OpenStack cloud management framework, solution providers in the channel need to adapt to a competitive landscape that is rapidly changing. At the IBM Pulse 2013 conference, March 3 to 6 in Las Vegas, IBM reiterated its support for OpenStack and threw its support behind a set of open-source Chef IT automation tools that transform how data centers are managed.
Instead of managing server, storage and networking resources in isolation, tools such as Chef and OpenStack allow IT organizations to more holistically manage those resources at a higher level of abstraction. As long as a server, router, switch or storage device is addressable via OpenStack, customers over time will become less concerned about the individual components that make up the data center. In fact, in all probability, they will come to see those components as commodities that can be easily replaced at any given time.
Vendors are betting that by making it easier to add more components to the data center, the overall size of the market will significantly expand. At the same, however, the barriers to switching vendors at any given moment are substantially reduced.
From a solution provider's perspective, that creates both opportunity and peril. On one hand, it should lead to a more vibrant data center market where customers are less locked in to a particular vendor. At the same time, solution providers that are heavily aligned with one particular vendor are going to find it increasingly difficult to forestall competitors.
For example, Silverstring, an IBM business partner in the United Kingdom, plans to ride its alliance with IBM to extend its reach into North America.
"We view what IBM is doing with OpenStack to being roughly equivalent to what they did when they started investing in Linux at the turn of the century," said Silverstring CEO Alistair Mackenzie. He said his company is developing a business plan that aligns with IBM's stated 2015 goals to get ahead of what he said will be a market dominated by hybrid cloud computing models.
"We're trying to get ahead of that," said Mackenzie. "And because we're working from a much smaller base than IBM, we expect to outperform IBM's growth expectations."
With the rise of OpenStack, it's becoming increasingly clear that the rules by which solution providers compete across the channel are being rewritten. As part of that shift, product margins are now being de-emphasized in favor of higher-margin IT services.
The good news is that as products become less expensive and easier to implement, there's more money for customers to apply to higher-margin IT services.
"For the partners, the products really have become a means to the services end," said Diane Krakora, principal with PartnerPath, a channel consulting firm. "Unfortunately, a lot of the vendor channel programs are still stuck in channel models from the 1980s."