VMware To Join Cloud Initiative Led By Rackspace
August 27, 2012
Grazed from Investors.com. Author: Reinhardt Krause.
VMware (VMW) is set to join OpenStack, a cloud computing software project that was spearheaded by Rackspace Hosting (RAX) and space agency NASA. More than 150 companies have joined the OpenStack software initiative, which freely licenses open-source programming code for software that runs servers in data centers.
But VMware and another cloud heavyweight, Amazon.com (AMZN), haven’t been OpenStack supporters. VMware’s "virtualization" software is widely deployed on servers in data centers. VMware recently acquired computer networking firm Nicira, which was an OpenStack member, for $1.2 billion.
The OpenStack Foundation is expected to approve VMware’s application to join the group at a meeting on Tuesday. VMware is majority-owned by data storage firm EMC (EMC)…
Jefferies analyst Thomas Seitz says VMware’s decision to join OpenStack is a good development for San Antonio-based Rackspace. The company’s shares were up more than 2% in early trading Monday.
"VMware is to join OpenStack," said Seitz in a report published on Monday. "We believe this is a shot in the arm for the open source project, and presents Rackspace a real opportunity to grow market share in a fast-growing segment. In our view, anything that sets up Rackspace as an alternative to Amazon in the nascent (cloud computing) industry is a positive for the company.
"In our view, the move could turn a potential rival (VMware) into an ally of sorts, and provide a boost to the nascent open-source project."
Rackspace gets more than 20% of its revenue from cloud services, where customers rent computing resources via the Internet. It garners the rest of revenue from website hosting services. Rackspace has developed versions of OpenStack software that it’s providing to corporate customers so they can connect their data centers to public, shared cloud services.
Amazon supports an OpenStack rival called Eucalyptus. Another rival, Citrix Systems (CTXS), is pushing its own rival cloud platform, called CloudStack.