Intel's Bet On Mirantis Shows How Vital OpenStack Is In Chipmaker's Plans

Intel made another big bet on OpenStack on Monday by leading a $100 million funding round for Mirantis, further signaling the importance the chipmaker sees in the open-source cloud operating system and the data center diversity it enables.

Mirantis, based in Mountain View, Calif., will use the infusion of cash, as well as a new strategic technology collaboration with Intel, to add and optimize features that it hopes will help bring OpenStack to a wider base of enterprise customers, Mirantis CEO Adrian Ionel told CRN.

And Mirantis, as is its practice, will offer all the code it produces to the greater OpenStack community, Ionel added.

[Related: Intel, Rackspace Team To Drive OpenStack Innovation]

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"This deal is not just about our distribution. All the fruits of the labor will be contributed upstream and will benefit all other OpenStack users, not just Mirantis customers," Ionel told CRN. "We won't keep anything for ourselves."

Intel's investment comes a month after it partnered with Rackspace to create the OpenStack Innovation Center -- an R&D facility in San Antonio, Texas, intended to bring engineering talent under one roof to advance the OpenStack project. Both deals are in line with Intel's new Cloud for All initiative in which the chipmaker wants to help spawn tens of thousands of new clouds.

Enabling enterprises to build their own data centers is a major strategic goal for Intel as the Santa Clara, Calif.-based chipmaker looks beyond its traditional PC segment in a sluggish PC market to its server and data center group.

In the quarter that ended June 27, Intel's data center group soared 10 percent from the same quarter the previous year, while its client computing group, which includes PCs and desktops, tanked 14 percent for the same period.

And OpenStack's success is a vital component of Intel's plans for its data center business, Ionel said.

"Imagine a world that is dominated by two or three proprietary cloud providers. Intel just lost all of its pricing power because there's just a few customers that matter," Ionel said. "It's extremely important that the world doesn't become a duopoly of very large infrastructure providers -- that there are many enterprises out there who build their own clouds."

Intel was an early investor in Mirantis, the largest pure-play OpenStack vendor in the market.

"They watched our trajectory over the past three years, and they're pleased with the outcome," Ionel said of the new contribution.

But the partnership is about much more than money, he said. It's "very much about technology partnership, to accelerate feature development of OpenStack, make it more scalable, more robust, so we can dramatically reduce the barrier to adoption."

Josh Lindenbaum, vice president of business and corporate development at Redapt, a Mirantis partner based in Seattle, told CRN that Intel and Mirantis' coming closer together came as no surprise.

Intel had introduced Redapt to Mirantis a couple of years back, and it's a relationship that has become very fruitful, he said.

"They've been trying to figure out ways to seed the market and accelerate adoption of OpenStack," Lindenbaum said of Intel. Many big IT departments have an engineer already experimenting with OpenStack, but the focus now is on "people to put production workloads on it."

"This investment is going to provide material support to the ecosystem and help people accelerate production," Lindenbaum told CRN.

Intel's backing also sends a strong message to the market, letting potential customers know their OpenStack investments are supported by a company that drives products they actually consume.

"Intel's field is so large and they have such strong relationships across the enterprise and technology community, it works at a second level just by signifying Intel is behind it," he said.

Ionel also told CRN that Intel's investment in Mirantis shows "that OpenStack is real and it's getting an enormous amount of traction" across many verticals, from SaaS providers, to major telecoms and service providers, to the enterprise, Ionel said.

Mirantis will develop several classes of new features with the funding, he said, including life-cycle management tools to ease use and operations of clouds at scale.

That's going to benefit some of its largest customers, like AT&T -- the telecom giant plans to have half a million production servers running OpenStack within five years, Ionel told CRN.

Mirantis will also focus on helping OpenStack perform well at scale, so companies can offer stronger SLAs. A third area of innovation made possible by the latest funding round will be enabling OpenStack to effectively manage bare-metal servers at scale, Ionel said.

Andrew Kretzer, director of sales and marketing at Bold Data Technology, a Fremont, Calif.-based system builder and Intel partner, stressed that the new investment in OpenStack would create viable alternatives to some of the traditional players in the hyper-competitive market, such as Hewlett-Packard and Dell.

"As far as what this means for [multinational] partners, one can only hope that it causes distress between them," he said. "They’ve all been too cozy for far too long."

Also contributing to Mirantis' latest round was new investor Goldman Sachs and existing investors August Capital, Insight Venture Partners, Ericsson, Sapphire Ventures (formerly SAP Ventures) and WestSummit Capital.

Lindsey H. O'Donnell contributed to this story.