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OpenStack - 451 Research's annual market assessment

Analyst: Al Sadowski
August 1, 2014

451 Research has released a new Technology & Business Insight report, The OpenStack Pulse 2014. an annual examination of the open source project called OpenStack. This report is a follow-up to the 2013 report The OpenStack Tipping Point. (Download for free!) Rather than focusing on describing OpenStack and explaining it in introductory form, this report offers an annual 'pulse check' on the OpenStack business models that have evolved over the last four years, and includes quantitative market-sizing data, regional perspectives, use cases and customer-survey feedback. It covers a variety of software vendors and service providers leveraging OpenStack both internally and for commercial offerings, as well as providing up-to-date insight into the developing OpenStack distribution battles and ongoing debates about functionality and overall project governance.

Key findings

  • There are several emerging OpenStack-related business models, including service providers; products/distributions/IT services; cloud management; and PaaS providers.
  • 451 Research's Market Monitor service expects revenue for these OpenStack business models to exceed $1.7bn by 2016.
  • Service providers with public and private IaaS clouds enabled by the OpenStack platform represent 73% of that revenue total.
  • OpenStack revenue is growing quickly, but is still relatively small in comparison with market leaders such as VMware (private cloud), AWS (public cloud) and Red Hat Linux (distribution).
  • We expect opportunities to monetize the technology to persist, particularly within the higher management layers of OpenStack.
  • There continues to be enormous demand for OpenStack architecture and development expertise, especially within Silicon Valley. Talent poaching is a concern for both vendors and users of OpenStack. Formal OpenStack training and technical certifications have emerged.
  • Flexibility, modularity, cost, and avoiding proprietary platforms are the most cited reasons for choosing open source alternatives among enterprises.
  • CloudStack and Eucalyptus are mentioned as the two main open source alternatives to OpenStack considered by enterprises and service providers, while and AWS and VMware are the main proprietary rivals mentioned.
  • These same enterprises and service providers consistently refer to the robust roster of industry leaders supporting the OpenStack Foundation and the OpenStack community's momentum as deciding factors in the selection process.
  • On-site private clouds for agile software development and IT operations, also known as devops, and 'big data' technologies such as Hadoop and Cassandra are primary enterprise use cases for OpenStack.
  • OpenStack implementations still require a great deal of technical expertise to deploy, and concerns with the overall reliability, load balancing and the scalability of the networking project, Neutron, mean that it is still not appealing to many enterprise and service-provider organizations.
  • OpenStack has consistently launched releases every six months; the upgrade process and backward compatibility issues are still a concern, but less so compared with 18 months ago.


Our research indicates that OpenStack's attractiveness to enterprises and service providers parallels the drivers typically associated with open source software in general: flexibility, cost savings, avoiding vendor lock-in, and the ability to customize for integration with other infrastructure and applications – whether traditional datacenters, virtualization, or public or private clouds. Another key advantage that is relevant when it comes to OpenStack is modularity, which can enable a diverse and vital ecosystem via add-ons and plug-ins. Open source software without the large vendor sponsorships does not see this kind of viability.

In its favor, OpenStack has broad vendor and developer participation, many viable options for enterprise-grade support, and free availability for experimentation and piloting. However, OpenStack remains a highly complex technology project and ecosystem. The open source cloud software is still very complicated and difficult to install and manage amid a lack of talent and expertise. The growth of private and hybrid cloud use among large enterprise and service-provider customers will drive continued growth for OpenStack going forward, but significant challenges, including vendor influence and fragmentation, will also be part of the equation.


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