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HP buys Eucalyptus

by Lydia Leong  |  September 12, 2014  |  9 Comments

In an interesting move that seems to be predominantly an acquihire, HP has bought Eucalyptus for an undisclosed sum, though speculation is that the deal’s under $100m, less than a 2x multiple on what Eucalyptus has raised in funding (although that would still be a huge multiple on revenue).

Out of this, HP gets Eucalyptus’s CEO, Marten Mickos, who will be installed as the head of HP’s cloud business, reporting to Meg Whitman. It also gets Eucalyptus’s people, including its engineering staff, whom they believe to really have expertise in what HP termed (in a discussion with myself and a number of other Gartner colleagues) the “Amazon architectural pattern”. Finally, it gets Eucalyptus’s software, although this seems to have been very secondary to the people and their know-how — unsurprising given HP’s commitment to OpenStack at the core of HP Helion.

Eucalyptus will apparently be continuing onward within HP. Mickos had indicated something of a change in direction previously, when he explained in a blog post why he would be keynoting an OpenStack conference. It seems like Eucalyptus had been headed in the direction of being an open-source cloud management platform (CMP) that provides an AWS API-compatible framework over a choice of underlying components, including OpenStack component options. In this context, it makes sense to have a standalone Eucalyptus product / add-on, providing an AWS-compatible private cloud software option to customers for whom this is important — and it sidesteps the OpenStack community debate on whether or not AWS compatibility should be important within OpenStack itself.

HP did not answer my direct question if Eucalyptus’s agreement with Amazon includes a change-of-control clause, but they did say that partnerships require ongoing collaboration between the two parties. I interpreted that to mean that AWS has some latitude to determine what they do here. The existing partnership has been an API licensing deal — specifically, AWS has provided Eucalyptus with engineering communications around their API specifications, without any technology transfer or documentation. The partnership been important to ensuring that Eucalyptus replicates AWS behavior as closely as possible, so the question of whether AWS continues to partner going forward is likely important to the fidelity of future Eucalyptus work.

It’s important to note that Eucalyptus is by no means a full AWS clone. It offers the EC2, S3, and IAM APIs, including relatively full support for EC2 features such as EBS. However, it does not support the VPC networking features. And of course, it’s missing the huge array of value-added capabilities that surround the basic compute and storage resources. It’s not as if HP or anyone else is going to take Eucalyptus and build a service that is seriously competitive to AWS. Eucalyptus had mostly found its niche serving SMBs who wanted to run a CMP that would support the most common AWS compute capabilities, either in a hybrid cloud mode (i.e., for organizations still doing substantial things in AWS) or as an on-prem alternative to public cloud IaaS.

Probably importantly to the future success of HP Helion and OpenStack, though, Mickos’s management tenure at Eucalyptus included turning the product from its roots as a research project, into much slicker commercial software that was relatively easy to install and run, without requiring professional services for implementation. He also turned its sales efforts to focus on SMBs with a genuine cloud agility desire, rather than chasing IT operations organizations looking for a better virtualization mousetrap (another example of bimodal IT thinking). Eucalyptus met with limited commercial success — but thus far, CloudStack and OpenStack haven’t fared much better. This has been, at least in part, a broader issue with the private cloud market and the scope of capabilities of the open-source products.

Of the many leaders that HP could have chosen for its cloud division, the choice of Mickos is an interesting one; he’s best known for being CEO of MySQL and eventually selling it to Sun, and thus he makes most sense as a leader in the context of open-source-oriented thinking. I’m not inclined to call the HP-Eucalyptus acquisition a game-changer, but I do think it’s an interesting indicator of HP’s thinking — although it perhaps further muddies waters that are already pretty muddy. The cloud strategies of IBM, Microsoft, Oracle, and VMware, for instance, are all very clear to me. HP hasn’t reached that level of crispness, even if they insist that they’ve got a plan and are executing on it.

Edit: Marten Mickos contacted in me in email to clarify the Amazon/Eucalyptus partnership, and to remind me that MySQL was sold to Sun, not Oracle. I’ve made the corrections.

Category: industry  

Tags: cloud  iaas  open-source  openstack  

Lydia Leong
VP Distinguished Analyst
16 years at Gartner
23 years IT industry

Lydia Leong covers cloud computing and infrastructure strategies, along with a broad range of topics related to the transformation of IT organizations, data centers, and technology providers.Read Full Bio


Thoughts on HP buys Eucalyptus


  1. […] “In an interesting move that seems to be predominantly an acquihire, HP has bought Eucalyptus for an undisclosed sum, though speculation is that the deal’s under $100m, less than a 2x multiple on what Eucalyptus has raised in funding…Of the many leaders that HP could have chosen for its cloud division, the choice of Mickos is an interesting one; he’s best known for being CEO of MySQL and eventually selling it to Sun, and thus he makes most sense as a leader in the context of open-source-oriented thinking. I’m not inclined to call the HP-Eucalyptus acquisition a game-changer, but I do think it’s an interesting indicator of HP’s thinking — although it perhaps further muddies waters that are already pretty muddy. The cloud strategies of IBM, Microsoft, Oracle, and VMware, for instance, are all very clear to me. HP hasn’t reached that level of crispness, even if they insist that they’ve got a plan and are executing on it.” Via Lydia Leong, Gartner  […]

  2. […] de si el acuerdo de Eucalyptus con Amazon incluye una ‘cláusula de cambio de control’”, señala Lydia Leong de Gartner, “pero sí dijo que las alianzas requieren de la colaboración permanente […]

  3. […] de Eucalyptus con Amazon incluye una ‘cláusula de cambio de control’”, señala Lydia Leong de Gartner, “pero sí dijo que las alianzas requieren de la […]

  4. […] de si el acuerdo de Eucalyptus con Amazon incluye una ‘cláusula de cambio de control’”, señala Lydia Leong de Gartner, “pero sí dijo que las alianzas requieren de la colaboración permanente […]

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