Why OpenStack firm Mirantis says China joint venture is key to Asia ambitions

A deal struck with Chinese cloud provider UCloud to build a new jointly-owned OpenStack company is designed to strengthen Mirantis' hand in the burgeoning Asian open-source cloud market.

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Mirantis co-founder Boris Renski: A Chinese partner means faster growth and local know-how. Image: Mirantis

OpenStack software and services firm Mirantis has stepped up its Asia expansion plans by linking up with independent Chinese public cloud provider UCloud in a joint venture.

The new company, UMCloud, which already counts the Shenzhen Stock Exchange as a prize customer from an earlier Mirantis push, will sell subscription support to the Mirantis OpenStack distribution, as well as professional services, and training and certification for OpenStack.

"We see China as an extremely important market for OpenStack, second to the US. One might argue that it might be even more important long term than the US itself, due to China's current embrace of open source," Mirantis co-founder Boris Renski said.

"OpenStack is viewed there as a fabric replacing pretty much most virtualization platforms - so Microsoft, VMware, all that stuff. Most of the government-affiliated institutions in China, which are a very significant portion of the China economy, are now moving onto the open-source path, and OpenStack is quickly gaining momentum as the default fabric for doing that replacement."

OpenStack is an open-source project started in 2010 by Rackspace and NASA to create components for building public and private clouds on standard hardware.

It is now backed by more than 200 vendors, including Cisco, Dell, HP, IBM, Intel, Oracle, Red Hat, and VMware, with a large developer community working on a range of loosely-coupled projects. Mirantis is one of OpenStack's founding members.

Last December, China's Ministry of Industry and Information gave OpenStack its official backing, encouraging state-owned enterprises to use cloud products based on the open-source platform.

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"Because China is important, we wanted to go in there fast and hard. Particularly for a startup - even a big startup of over 800 people like us - China is very alien territory, and we've no idea how to do business there," Renski said.

"We need local people who have a track record of building such implementations, selling to the government - all of that's very hard to just green-field. So we decided to partner up with UCloud to build a joint venture. The use of a Chinese partner is to enable us simply to go faster and leverage their existing local know-how."

The new company is jointly owned in roughly equal shares by Mirantis and UCloud, an important arrangement, according to Renski, because China is keen on growing its own internal economy.

"To be able to succeed there you really need to have a local company, a local brand and local people. A branch of a foreign company in China is not nearly as likely to be successful as a local Chinese company run by local people, registered in China and owned by the local Chinese-affiliated folks," he said.

The approximately 15 staff that Mirantis already had in China - mainly OpenStack implementation engineers - now become part of the UMCloud team, joining about 10 more employees provided by UCloud.

A few more training experts will also be hired because the Mirantis OpenStack training business in China forms part of the joint venture.

"We're going to be bringing on board a lot of people. Now that we've done a joint venture, a lot of the work related to building that business in China is really going to be driven by the UCloud team. That's the whole premise behind it. It's going to be hands off for us. Naturally, we're going to be involved but most of the day-to-day business running is going to be done by them," Renski said.

The first goal is to succeed with the initial customer implementations, which number about six, including the Shenzhen Stock Exchange. "By far the highest-profile customer that we currently have in China," Renski said.

Among other Mirantis customers in China moving to UMCloud are telecoms hardware and software provider Jiesai, major networking equipment firm Huawei, and telecoms multinational ZTE Corporation.

"For us it's very important, in this next wave of evolution, that the OpenStack standard becomes the Mirantis standard. To get that, it's not enough to just be successfully selling to customers in the US, because other geographies and Asian in particular are very big," Renski said.

"Just because we're successful in the US, if we lose out in China or Japan, we won't get to become that standard. This international expansion into China - and by the way Japan is going to follow shortly, we have something cooking there that we'll talk about later - it's about becoming that standard.

"It's less about immediate revenue. It's just about land grab and making sure that the ecosystem wraps around Mirantis OpenStack as the standard distribution."

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