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Dell weaves a tangled web with vCloud, OpenStack

Dell's latest cloud computing strategy hinges on OpenStack, and it may be Dell's last chance to gain a significant foothold in the market.

Dell's latest cloud computing strategy includes a commitment to OpenStack, but questions arise surrounding timing, OpenStack's maturity, and even whether Dell's platform is truly cloud.

Industry watchers take issue with the notion of a planned single-tenant cloud based on OpenStack and managed by Dell on the customer's premises -- which is also how the company's vCloud private cloud offering works.

"They're really doing managed services," said James Staten, analyst with Forrester Research Inc., a Cambridge, Mass.-based technology research firm.

Dell has done little to clear up the confusion.

The key is going to be if they actually deliver on everything this year. If not, it's a pretty big red flag.

"It gets fuzzy," admitted Michael Cote, Dell's director of cloud strategy. "It comes down to the elasticity that you bring, and are you getting a metered rate versus a flat rate, and is there a self-service portal on top of it?"

Dell cloud customers are hard to come by, but the company offered one reference of a customer that appreciates the hands-on approach Dell takes with private clouds.

Yugma, an online meeting software and free video conferencing company based in Minneapolis, Minn., has three servers hosted by Dell on Dell's premises under vCloud Director. The company has been a Dell customer since 2009, first for a shared-infrastructure cloud, and more recently for a private cloud as a precaution for added security; it did not consider other infrastructure providers before its recent move to a Dell-hosted private cloud.

Yugma has the ability to make changes to the servers automatically, but it doesn't, said Ron Davis, vice president of the Americas for the company, who said conference calls are done with Dell whenever a change is made.

Davis said it was the effort that Dell's team put into winning his business that convinced him to go with Dell originally.

"Not only did they have a sales person responsible for me, they had a technical person that was also assigned to me; they had marketing people, capacity planning people, five to six people that would always attend conference calls," he said.

Meanwhile, larger companies have already committed to software interests elsewhere, and still see Dell primarily as a hardware vendor.

"I don't think [Dell's] target market is anyone who has embraced a cloud or virtualization solution to this point, because they're already pretty much set on what infrastructure they're going to go with," said Chris Steffen, principal technical architect with Kroll Factual Data in Loveland, Colo., which also uses Dell hardware.

Can Dell's OpenStack cloud succeed?

Dell's OpenStack offerings should probably target small shops that have yet to embrace the cloud, Steffen said.

Although a Dell executive said earlier this month that OpenStack isn't mature enough for Dell to offer it as a production-ready product to customers, and that it wouldn't be ready until at least the end of 2013, the company has had some early OpenStack engagements since 2011, according to Dell's Cote.

Cote referred to a program run through the Enterprise Server Group that offers Crowbar, a Chef-based installation and configuration software package for OpenStack. These early customers have run things such as Hadoop clusters on OpenStack, Cote said.

OpenStack offerings won't be available until at least the end of this year, when two other platforms will be available: the OpenStack-based Dell public cloud and another, which will prepackage OpenStack into a simple managed private cloud for customers who simply want to order something, plug it in and have it work.

"It's a single-tenant cloud that we'll either run in our data centers, or we'll run on the customer's premises, and we manage it either way," Cote said.

Dell's OpenStack-based public cloud will take some time to get off the ground because OpenStack doesn't natively support components necessary to run a public cloud, such as billing, customer onboarding and monitoring tools, Cote said.

"It just shows that the overall maturity of taking the code for OpenStack off the Web, and standing up a public cloud for it, it's not even designed to be that easy to use," he said.

Dell's not the only one to take its time with an OpenStack release, pointed out Boris Renski, executive vice president and co-founder of Dell OpenStack partner Mirantis Inc., citing Red Hat, which has yet to release its OpenStack distribution.

"I would say that folks like Dell … are ultimately the most committed OpenStack supporters that are not simply looking to be first to market with a half-assed solution just to validate demand or get quick leverage against VMware," Renski said. "Winning offerings require a careful and deliberate approach."

But why the commitment to OpenStack at all if it's still immature and Dell already has working products based on VMware?

Cost and control, according to Cote; the core of OpenStack is free open source software, and also gives Dell a seat at the table when it comes to developing the code.

Whatever they do with OpenStack, this is probably Dell's last chance to gain a significant foothold in the market, industry sources close to the company said.

"The key is going to be if they actually deliver on everything this year," said one source, who requested anonymity. "If not, it's a pretty big red flag."

One industry watcher disagreed with the "last chance" assessment. According to a recent survey of 100 mostly North American businesses by 451 Research and TheInfoPro, some 60% of respondents were still in the virtualization and consolidation phase of cloud, giving Dell plenty of time to carve out its niche in the market.

Moreover, Dell has a history of waiting out markets before fully diving in, said Peter Foulkes, lead analyst on the study, citing Dell's relatively late takeover of the PC market.

"It's entirely possible they could do it again," he said.

Some sources said Dell has more than 1,000 customers for its current cloud products, a number unconfirmed by Dell. (Dell did say it had shipped more than a million cloud servers.) By contrast, cloud top-dog Amazon Web Services said it has hundreds of thousands of customers; runner-up Rackspace said it has more than 197,000 customers for its cloud services.

Read more about Dell's cloud computing strategy in part two.

Beth Pariseau is a senior news writer for and Write to her at or follow @PariseauTT on Twitter.

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