HP’s acquisition of Eucalyptus is raising eyebrows and drawing head scratches around the industry. This morning I read another opinion on the deal after Greg Knieriemen posted this tweet: “Good read by
@babcockcw: “What HP Gains In Eucalyptus Cloud Deal” – http://ow.ly/Bw63h ” I went there, read it and commented and then decided to post about it here, taking a little more time to think about it and adding a few links.
Most industry observers know that HP needs to find traction in the enterprise cloud business or risk becoming irrelevant. Although HP pioneered the converged infrastructure concept, they failed to capitalize on it and missed the hyper-convered platform opportunity when Nutanix and Simplivity came from seemingly nowhere. Large online companies that once were customers now build their own platforms and make their designs available for anybody else to use. HP’s attempt to penetrate the smartphone industry was a complete disaster and they have very little opportunities left in mobile.
So, they have no choice but to bet big on enterprise cloud and are doing the only thing they can by acquiring technology and people. But if you look at how the big 3 in cloud (Amazon, Google and Microsoft) are investing in this space, HP is already too far behind. Amazon attempts to buy market share with every service and both Microsoft and Google have ways to print money that nobody else can touch. For everybody, including HP, the ship of public cloud opportunities has already sailed. That said, HP can compete in the private cloud business if it can deliver open-source offerings that corporate DevOps customers want. They will have no trouble beating out Amazon, Microsoft and Google for that business because Amazon and Google are surprisingly lost with private cloud and Microsoft’s private cloud offerings are not well-aligned with corporate DevOps directions.
But the big 3 aren’t really the obstacle for private cloud. Pivotal (part of the EMC Federation) and Red Hat both have a big head start on HP in open-source enterprise solutions and posess the talent and know-how to make them – as well as the access to enterprise customers. Pivotal may be the most lethal here through alignment with EMC’s and VMware’s sales organizations. HP will have to execute very well and must continue to catch up by acquiring companies, which means they will have to outbid Pivotal and Red Hat to get them. What it can’t acquire, it will have to develop, and it’s not clear that they will be able to identify the missing pieces quickly enough to stay in the race. Still as they acquihire talent, they may be able to build a team that can compete. Their margin for error is razor thin. Getting employees from different backgrounds to quickly agree on anything will be an ardent exercise in cat-herding – something smart gamblers would bet against. Nonetheless, HP has a chance, a slim chance and it is going to have to play the game a long time, because everybody else is in it to win it. In the end, HP’s own efforts may be less relevant than those of its competitors, who will need to screw up to make room for HP at the table.