​Where OpenStack cloud is today and where it's going tomorrow

The future looks bright for OpenStack -- according to 451 Research, OpenStack is growing rapidly to become a $5-billion-a-year cloud business. But obstacles still remain.
Written by Steven Vaughan-Nichols, Senior Contributing Editor

OpenStack Summit has 5,000-plus people who believe that OpenStack is the future of the cloud. 451 Research thinks they may be onto something, The research company expects revenue from OpenStack business models to exceed $5 billion by 2020 and grow at a 35 percent compound annual growth rate (CAGR).

OpenStack Logo 2016

OpenStack clouds are heading for multi-billion dollar revenue.

The total revenue is small potatoes compared to Amazon Web Services (AWS), but the growth rate is great.

451 observed that so far OpenStack-based revenue has been overwhelmingly from service providers offering multi-tenant Infrastructure-as-a-Service (IaaS). Looking ahead, though, 451 believes OpenStack's future success will come from the private cloud space and in providing hybrid-cloud orchestration for public cloud integration. Better still, for OpenStack companies, 451 sees private cloud revenue exceeding public cloud by 2019.

This focus on the private cloud was clearly visible in the OpenStack Summit keynote speeches. Tech leaders from Banco Santander, a Spain-based international bank, and Sky, one of Europe's leading television and internet companies, both sang the praises of OpenStack on the private cloud. Both companies are also using a distribution-based OpenStack approach: Red Hat Enterprise Linux (RHEL) for Santander and Ubuntu for Sky.

451 Research also predicted that OpenStack will grow across software-defined networking (SDN), network function virtualization (NFV), mobile, and Internet of Things (IoT) for both service providers and enterprises. This is in addition to its existing use cases in big data and lines of business. The keynotes, again, supported this conclusion. Representatives from Huawei, NEC, and Nokia all sang OpenStack's praises in business and telecom.

That's not to say that everyone thinks OpenStack will do best in private or hybrid cloud environments. Germany telecom giant Deutsche Telekom is using OpenStack as the foundation for its public cloud.

But it's not all wine and roses for OpenStack looking ahead.

"This year OpenStack has become a top priority and credible cloud option, but it still has its shortcomings," said Al Sadowski, 451 Research's research VP. For example, while OpenStack is still growing in popularity for enterprises interested in deploying private cloud-native applications, its appeal is limited for legacy applications and for companies that are already comfortable with AWS or Microsoft Azure.

In addition, while several marquee enterprises, such as Wal-Mart, use OpenStack as the central component of cloud transformations, others are still leery of the perceived complexity associated with configuring, deploying, and maintaining OpenStack-based architectures.

They're not wrong. OpenStack is still difficult to deploy, That's why companies such as Red Hat, Canonical, HPE, and Mirantis are making a living from OpenStack distributions and OpenStack integration respectively. As ZDNet editor Larry Dignan pointed out in a recent article, systems integrators still have a role to play in the cloud.

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