Will the Dominance of Azure, AWS, and Google Cloud Spell the Demise of OpenStack?

The recent developments in cloud computing have brought a wave of excitement and challenges for cloud service providers and their users. One such development that has captured my interest is the Azure Stack, Microsoft's entry into the on-premises cloud market as a direct competitor to OpenStack. As a long-time fan of OpenStack, I am naturally concerned about the future of this open-source platform.

The Rise of Azure Stack

Microsoft's Azure Stack takes a multi-faceted approach to disrupt the OpenStack landscape. It is available not just as a software-only solution, but also as turnkey appliances from the top five cloud hardware vendors. These appliances are offered as managed services, priced on a per-core or pay-as-you-go basis. For organizations already relying on or interested in Azure, Azure Stack provides a seamless transition to private and hybrid cloud environments.

The On-Prem Cloud Threat to OpenStack

Given Microsoft's massive resources, it is clear they are committed to leveraging Azure Stack to gain market share and reach. While many organizations still prefer open-source solutions, it is important to remember that many enterprises find the simplicity and support of turnkey solutions more appealing. A single point of support for public, private, or hybrid cloud environments can be more attractive than managing a complex multi-cloud strategy with multiple skills sets and support channels.

The Financial Disparity

According to recent data, Microsoft's revenue from public Azure cloud services last year was likely around $3 billion, with a 100% growth rate. Meanwhile, the total forecasted revenue for OpenStack by 451 Research is estimated to hit $3.4 billion by 2018, distributed across 100 companies with a 25% compound annual growth rate (CAGR) before Azure Stack's entry into the market.

The Future Is Hybrid

Gunther Leopold, a respected industry analyst, posed the fundamental question: which will have the higher growth—OpenStack, which is primarily focused on private clouds, or Azure, which can cater to private, hybrid, and public cloud environments?

The Market Trajectory

Over the next 18 months, we will see how well Azure Stack performs in the market. However, it is clear that Microsoft is not sitting idle. While the die-hard OpenStack adopters will remain, there are several other organizations that stand to benefit from Azure Stack. Microsoft's solution is particularly appealing to organizations that primarily use Microsoft technology, those requiring new IaaS/PaaS services for various use cases due to compliance issues, and those deterred by the complexity of OpenStack.

The Competitive Landscape

My current assessment does not take into account the potential moves of AWS and Google into the on-premises cloud market. If these cloud giants decide to enter the space, the competitive landscape will undoubtedly transform once again. Despite this, I strongly believe in the merits of competition, as it fosters innovation and drives improvements in the industry.

As the cloud computing market continues to evolve, OpenStack's future remains uncertain. The choice between Azure, AWS, Google Cloud, and OpenStack will ultimately depend on the evolving needs and preferences of individual organizations. The good news is that there are still plenty of mature and successful OpenStack-based solutions, and major enterprises continue to leverage it. Let's hope the competition continues to bring about significant advancements in the cloud computing space.