Rackspace's CEO on Open Source and OpenStack

I wrote about the open source OpenStack back in October, based largely on wandering around the main OpenStack site. But there's no substitute for talking to people involved – especially when they are Lanham Napier, CEO of Rackspace, one of the two instigators of the OpenStack project (the other being NASA). He filled me in on the background to both his company and the OpenStack project.

The former goes back 12 years to the heady days of the dotcom boom, when it helped companies gain quick access to this new-fangled Internet thing – quick being 24 hours rather than the usual six weeks that most offered. Over time, Rackspace has evolved from a company providing the basic infrastructure to one doing that plus services. Today, Rackspace is a public company and has an annual turnover of around $850 million.

As well as dedicated machines, it offers what it calls "Cloud Servers" - virtual machines running either GNU/Linux or Windows. Interestingly, the majority of virtual machines are running the former. Companies often use these cloud offerings to add extra resources to their computing capabilities at peak times. For example, the main e-commerce system might be hosted in-house, but cloud computing resources added to provide flexible and scalable Web hosting.

Rackspace's broad experience with open source and its advantages probably helps to explain the bold move of launching OpenStack last year. The original impetus came from work that Rackspace was doing with NASA, which was looking at how to build a cloud out of a million physical machines.

It was a perfect fit: NASA was able to provide the code behind OpenStack Compute, one of the two main elements of OpenStack, while Rackspace supplied the other part, the code for OpenStack Object Storage. Both have been released under the Apache 2.0 licence.

The idea is have a completely open stack for cloud computing, allowing different implementations of various layers to be offered. This means that customers can move relatively easily between cloud computing suppliers that follow the OpenStack standards (the first third-party implementation of them has just been announced.)

The advantages for the end-user are clear: the ability to switch suppliers means that there is no lock-in – unlike cloud computing offerings from Amazon or Microsoft, say. As a result, OpenStack suppliers will need to compete on price and quality, and margins for basic services are likely to be cut to the bone. That's the old open source story of leaving money with the customers, which I discussed in the context of Red Hat last year. So how does Rackspace make its money?

The answer is quite simple, but important. Over the last few years, Rackspace has moved on from a company that supplies infrastructure to one that also provides a range of services on top of that. Rackspace hopes to do exactly the same with OpenStack cloud solutions. Napier says that they are "a few months away" from converting their own cloud computing solutions to the OpenStack standards.

As well as being able to offer this new and open resource to customers, the experience of setting it up will also allow them to help larger organisations implement OpenStack clouds themselves. Although that won't necessarily be something that every company will want to do, it does have its advantages for those with thousands of servers. For example, it would allow such organisations to create internal clouds that would have all the advantages of external ones, but with the added bonus of being far more secure.

What's particularly interesting about Rackspace's joint move with NASA to create a completely open cloud computing standard is that once more it is based on the idea that you make money from giving stuff away by providing extra value around it. Rackspace views OpenStack as a way to grow the ecosystem in which it operates to give it more opportunities to make money from services.

This is, of course, a common approach in the world of open source – Google does exactly the same offering free services and making money from advertising – so it's no surprise to see it here. But it's nonetheless a welcome move by a company as big as Rackspace, since it represents a vote of confidence in the idea, and a further demonstration that free software is perfectly compatible with a profitable business model.

Follow me @glynmoody on Twitter or identi.ca.


Copyright © 2011 IDG Communications, Inc.

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