eBay, PayPal breakup an OpenStack private cloud split too
eBay's decision to spin off PayPal into an independent public company and install new leadership at both companies in 2015 will have a notable cloud spin. The separation will highlight how easy or difficult it is to separate an OpenStack private cloud architecture.
There are multiple details of the eBay and PayPal split that will need to be worked out. PayPal and eBay will continue to be partners via "arm's length agreements." PayPal will be able to focus on mobile payments and likely competing with Apple Pay. PayPal is also a likely acquisition target for Google or even Amazon.
- Previously: eBay, PayPal to split into two separately traded companies | Apple Pay: Really a PayPal killer?
At a high level, eBay's board concluded:
A changing competitive landscape creates enormous opportunities for eBay and PayPal; separation will create sharper strategic focus and better position each business to capitalize on those growth opportunities as independent companies. The pace of industry change and innovation in commerce and payments requires maximum flexibility to stay competitive and drive global leadership.
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And then there are the details. Dan Schulman, former president of American Express' enterprise growth unit, will become CEO of PayPal after the split.
Cowen analyst John Blackledge said Schulman is a good pick.
The new structure should allow Paypal to be more nimble responding to emergent challenges, like potentially the new Apple Pay service. Finally, we would note that Mr. Schulman seems like a compelling choice to run the business: Mr. Schulman has experience in the payments business coming from American Express, but also has deep understanding of the mobile phone business as a former executive at AT&T and Virgin Mobile. We think Schulman's expertise running a large organization, and experience in payments and telecom could be a strong fit for Paypal as a public company.
But the management change will require new technology leadership for both companies. PayPal will also need to invest in its developer relationships---especially since Apple Pay has an army of iOS programmers already in the fold.
The biggest item on the initial to-do list will be the cloud breakup.
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Fortunately for both eBay and PayPal, both companies are OpenStack architecture converts. eBay's architecture is evolving into an OpenStack powered private cloud. The goal is to avoid lock-in, use open source as much as possible, be software defined and utilize public clouds where possible.
PayPal first rolled out its OpenStack private cloud in December 2011 and has been building out ever since. PayPal also has aimed to separate deployment and application development. The PayPal stack goes like this:
As for core compute infrastructure, both eBay and PayPal appear to run on the same cloud. PayPal will have to break off.
And here's eBay's architecture.
In theory, this infrastructure split should be easier given the OpenStack infrastructure and cloud approach. It remains to be seen whether that theory will work in the private cloud.