This week our friends over at Rackspace (RAX) announced OpenStack: an open source cloud compute and object store framework that they’re spearheading along with NASA Ames Research Center, and many other partners. I’ve talked about my admiration for Rackspace before, and over the past few months have had the pleasure of meeting some of their management both here in the US and in Asia.

I think this is seriously awesome, and has the potential to alter the landscape of the IaaS market.

That market is obviously a really exciting place to be right now, and at Voxel our product strategy has been centered around helping our customers take advantage of the best mixes of the old fashioned and the new fangled; a hybrid, flexible and open approach. In order to effectively do that we’ve evolved over the years with the market and started looking more like a software company than a hosting company. That kind of metamorphosis is a common theme for hosting companies that want to stay relevant in an increasingly on-demand world. For such companies (Voxel and Rackspace included), software has gone from being an operational necessity that impacts your efficiency to being a centerpiece of strategy and part of a serious and escalating arms race. In a lot of cases, we had to build this stuff from scratch because it didn’t exist.

But who is this race between? From a market share and market influence perspective, here’s how the cookie crumbles from the perspective of someone who needs IaaS service:

  1. Amazon Inc + “ecosystem”
  2. VMWare Inc + “partners”
  3. “Other Inc + Hosting industry”

Not a lot of choice. More importantly, not a lot of standardization. Plenty of lock-in. At the moment, whether you want a public or private cloud, you are likely going to put all your eggs with either Amazon or VMWare. The rest of us are jostling for the people who don’t.

In the hosting world, we’re used to operating in a highly competitive, fragmented, and saturated market. With cloud, it’s a very different story. The industry leaders in the public and private worlds have a very large chunk of the market, and catching up is a daunting prospect. Unlike other industries, there is just as much raw innovation coming out of the market leaders as there is out of the upstarts. Such is the challenge, even though the market itself is relatively nascent and evolving very quickly.

To me, the Openstack announcement is a recognition of that, and a shot across the bows of both Amazon and VMWare

I think OpenStack has the potential to impact the IaaS in a grander and more swift way than what Netscape open sourcing Navigator did to the browswer market. The Netscape event in 1998 was something I followed very closely. Working at VA Linux (LNUX) at the time on, I was around a lot of people who had a lot of passionate opinions about open source, and the Netscape event in particular. It made a pretty big impression on me and was part of the reason that Voxel was born as a open-source centric Managed Hosting provider, which we still are 11 years later. Unfortunately, in the case of Netscape, the golden days of Mozilla/Firefox began years after Netscape was open sourced. This was partly because AOL botched it and partly because Netscape was already on their death bed. It took a long time for the community to define itself (it had to reinvent itself) and rally around Gecko. It took even longer for the product to catch up to Microsoft and start eating market share.

With Openstack the situation is a bit different, and there is less baggage. While I see it as a defensive move, it is also a bold and extremely forward thinking one. Since we’re talking about infrastructure software (as opposed to an end user browser), the community aspect is magnified. There’s LOTS of money to be made by providing a viable alternative to people who want to realize the service delivery benefits of the cloud. Dell wants to put its stamp on it in order to sell more kit; the same reason they bought Scalent. Citrix and Red Hat will probably both participate, to promote their own hypervisors.

A lot of these companies compete directly with each other. To that end, it has the power to move faster than what happened with Mozilla and Netscape. Unlike the browser, there are even more competing interests that all want to co-opt the technology for their own selfish and contradictory terms. The beauty of open source is that is exactly the kind of environment that can work really well, and lead to huge momentum.

Openstack could really start fragmenting the market and establishing itself as the open standard that has the brightest future. I hope it does just that.