Update: Intel backs $100M funding round into OpenStack cloud

Chip maker looks to move enterprises further into the cloud

Looking to fuel enterprise adoption of the cloud, Intel is playing a lead role in a $100 million investment in an emerging player in the OpenStack arena.

Intel announced today it was leading a $100 million funding round for a collaboration with Mirantis Inc., a Mountain View, Calif.-based cloud computing company, to boost its work in enterprise OpenStack distribution and adoption.

"We hear a lot about OpenStack being ready for the enterprise, and in many cases OpenStack has provided incredible value to clouds running in enterprise data centers today," wrote Jonathan Donaldson, a vice president at Intel in a blog post. "However, when talking to the IT managers who have led these deployment efforts, a few key topics arise: it's too complex, its features don't easily support traditional enterprise applications, and it took some time to optimize for deployment."

Intel is hoping that a $100 million investment will help Mirantis finetune OpenStack to better meet enterprise needs.

The OpenStack cloud, according to Donaldson, needs to improve its network infrastructure, storage, stack resiliency and stack performance.

OpenStack cloud software, which has been five years in the making, is built by a global development team of open source contributors under the umbrella of the OpenStack Foundation.

Jeff Kagan, an independent industry analyst, said this is a strong move from Intel, which has a vested interest in seeing the cloud move forward.

"The future is the cloud, and Intel is planning on being a major player in the cloud space going forward," said Kagan. "This is just one more investment in that space to help them reach that goal. This is all about positioning. Intel wants to position itself as a leader in the cloud."

The investment isn't the first one that Intel has made in the cloud and it is not expected to be its last. "The cloud is how information will be managed for every company and every person going forward," Kagan said. "The future is the cloud."

This latest investment round includes Goldman Sachs, which is joining existing investors August Capital, Insight Venture Partners, Ericsson, Sapphire Ventures, formerly known as SAP Ventures, and WestSummit Capital. 

Rob Enderle, an analyst with the Enderle Group, said Intel needs to get a solid foot in the door with the cloud.

"This is a huge part of Intel’s future revenue," Enderle said. "They have to be on this cloud wave, otherwise much of the enterprise server market is likely to bypass them."

Getting further into OpenStack is an important move for Intel, he added. "Much of the current activity is around OpenStack, and it is emerging firms like Mirantis that seem poised to take much of the momentum," he said. "Intel wants to make sure they do it with Intel parts."

Copyright © 2015 IDG Communications, Inc.

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