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OpSource, Rackspace upset cloud software market

Infrastructure as a Service (IaaS) providers, OpSource and Rackspace, threw their hats into the cloud software ring this week, disrupting the traditional enterprise software market and other upstarts in the cloud market.

OpSource announced Cloud Software, a way for companies to buy enterprise software such as Microsoft SQL Server, SharePoint and Oracle database products on a pay-per-use basis. So far, cloud users have been able to pay pennies per hour for servers, but still had to pay the full perpetual license fee for whatever software they ran on those machines.

With this offering, users can rent Oracle or Microsoft products for a fraction of the price to buy them, as long as they are an OpSource customer.

Microsoft is moving in this direction itself with its EAs and Open Value licensing, but so far we haven’t seen this kind of licensing model from Oracle. The database giant is expected to announce changes to its licensing model for Oracle Public Cloud soon.

Keao Caindec, chief marketing officer at OpSource said he doesn’t expect these new pricing schemes for enterprise software in the cloud to cannibalize the perpetual license business. “It satisfies a different need,” he said. OpSource’s market is developers testing software in the cloud, where they only need to turn on a machine for the period of the test. He said pay-per-use would be more expensive on an annual basis than a perpetual license if you kept the machines running. A perpetual license from Oracle costs from $7,000 to $20,000 per processor. While OpSource cloud software is approximately $350 per month, flat rate for a fully-fledged Oracle machine.

There are many cloud database-only providers out there and also cloud providers that offer a database as part of their service, but OpSource said its goal is to be multi-vendor and multi-product.

Meanwhile, OpSource isn’t the only company upsetting the apple cart in the cloud software market. Rackspace, the hosting provider that morphed into a cloud provider, is now offering software to enterprises. It’s Rackspace Cloud: Private Edition, is its distribution of the OpenStack IaaS software for enterprises to run their own private clouds.

The OpenStack OS is free, but Rackspace will charge users for implementation support, OpenStack updates and upgrades, performance tuning, system analysis, security patching and fixing, escalation support for engineering questions and OpenStack training for developers. Think Red Hat Linux, but for the OpenStack OS.

For Rackspace, the goal is to push wider adoption of the OpenStack platform. As companies deploy this in house, and then need more resources, it becomes easier to move their OpenStack environments into Rackspace’s facilities, or into one of its partner’s data centers, like Equinix which just announced support for Rackspace Cloud Private Edition.

It’s a similar strategy to VMware’s vCloud business. VMware is seeding service providers with vCloud data center software that can connect to VMware infrastructure companies run in-house.

The big question now is how long all the standalone IaaS platform providers, Nimbula, Abiquo, Eucalyptus, et al, can last. It’s a bit of a bet to be sure, but I’m guessing OpenStack is most apt to nail the ’80’ while all these small cloud plays are nailing the ’20’.

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