HPE And Rackspace Take Aim At Public Cloud With A 'Groundbreaking' Pay-As-You-Go, OpenStack Private Cloud Service

Hewlett Packard Enterprise and Rackspace Monday unleashed what the duo is calling a breakthrough OpenStack private cloud service that offers the same pay-as-you-go economics of public cloud at a 40 percent or more cost savings.

The new service, which HPE and Rackspace are billing as the first-ever pay-as-you-go, elastic, single tenant OpenStack private cloud, is targeted at Fortune 1000 customers anxious to get public cloud economics in a secure, managed private cloud service.

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The two companies claim the new service fundamentally changes the private cloud versus public cloud debate by breaking the elastic private cloud barrier with OpenStack.

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"What we have done is created a new standard for how private cloud is going to be consumed with better economics than public cloud," said Rackspace Executive Vice President of Private Cloud Scott Crenshaw in an interview with CRN.

"It is the best of both worlds: a public cloud consumption model with all the advantages of a single tenant private cloud." Crenshaw (pictured) said. "This is groundbreaking.

"We are provisioning single-tenant, dark capacity that is not shared with anybody else. That means you get enterprise stability, security, performance, and control. You get all the advantages of a private cloud, but you get it with a pay as you go consumption model at superior economics. Nobody else in the world is doing this."

Crenshaw said the service marks the first time an OpenStack private cloud can be purchased like a public cloud, with an hourly virtual machine or per-gigabyte pricing. "Our goal with this was to make private cloud more compelling for even more applications," he said. "We have broken through the private cloud barriers to make private cloud the optimal platform for most enterprise workloads."

Typically, customers will save 40 percent compared with a three-year reserved instance compared to the public cloud, said Crenshaw.

"The amazing thing here is customers are getting that 40 percent savings in a pay-as-you-go private cloud model," he said. "That is easy to do in the public cloud where you have servers shared by a 100 or 1,000 customers. In this case, it is all single tenant. You don't share anything."

The private cloud OpenStack development effort between the two companies, which involved 100 developers from both companies over the course of a year, was the brainchild of Crenshaw and HPE President Antonio Neri.

"We knew we had an opportunity to change the industry," Crenshaw said of the meeting with Neri that led to the joint development project. "We knew we could make private cloud the preferred platform for the majority of enterprise workloads, but only if we integrated and gave customers a true cloud experience. Antonio is a visionary, and he knew this was a way to capture a large part of the market."

The new service – which will be offered initially by HPE and Rackspace in a direct sales effort with a channel plan in the works – will be available Nov. 28 either in a customer's own data center, a colocation facility or managed by Rackspace. HPE and Rackspace, which will be using the HPE Gen 10 DL360 and DL380 for the service, said specific pricing varies based on workloads.

Rackspace said it will follow up the HPE OpenStack private cloud offering with a similar pay-as-you-go private cloud service for both Microsoft Azure Stack and VMware Software Defined Data Center Private Cloud in 2018.

The HPE Rackspace elastic, single-tenant breakthrough came by leveraging HPE's flexible capacity pay-as-you-go software prowess with the Rackspace's technology integration muscle as the creator of OpenStack. "You bring those two together, and it is an unbeatable combination," said Crenshaw. "We built on the strength and foundation that made Rackspace the leader in private cloud as-a-service and HPE the leader in enterprise infrastructure."

Rackspace's private cloud expertise around pay as-you-go cloud capacity procurement and management was key to bringing the new service to market, said Crenshaw.

"We worked to integrate HPE Flexible Capacity with OpenStack so customers can get capacity on demand where and when they need it and get billed for it appropriately," he said. "That is hard to do. It is easy to share servers across a lot of customers. It is very hard to allocate servers to a customer and make it economically attractive. The user asks for a cloud resource just like they would with AWS and they get that server. We have integrated this in a way that no one else has. It is completely transparent to the user."

HPE and Rackspace already have "substantial demand" from Fortune 1000 customers demanding the new service, said Crenshaw. "My team is swamped even before the release just handling the demand for early outreach and validation with existing customers," he said.

Crenshaw insisted the two companies are 100 percent committed to bringing the HPE Rackspace OpenStack service to the channel. "The good news for the channel is we designed this with the channel in mind," he said. "After we have satisfied the immediate existing installed base of customers, the channel will have a proven offering with great reference customers."

Partners, for their part, said the private cloud breakthrough fills a much-needed gap in the marketplace but will need to be backed up by a strong channel program to be successful.

"If this is as advertised, it is a game-changer," said Douglas Grosfield, CEO of Five Nines IT, a fast-growing Kitchener, Ontario, strategic service provider. "Nobody has been able to fill the gap between public and private cloud with a consumption-based OpenStack service.

"Strategic service providers like Five Nines that target the Fortune 1000 have been looking for something like this. The gauntlet has been thrown down, and we have high expectations. The big question is what kind of investment are they going to make in bringing this to strategic service providers? Often we see breakthrough products like this designed as a direct play with no channel program or model to drive it into the market."

"There is definitely a market for this type of offering in which customers want to retain control of their compute environment for their applications," said Dan Molina, chief technology officer at Nth Generation Computing, a San Diego-based solution provider and long-time HPE channel partner.

"In many cases, they are looking for outsourcing management. They are not in the business of managing IT. They want to focus on their business. What we are going to need to understand is how are they structuring this for the channel. Involving the channel is very important for these types of services which require a lot of business expertise and hand holding. In order to properly scale this offering while maintaining high customer touch the channel is critical."

Rackspace's Crenshaw said the new service represents the channel's best opportunity to drive sales growth in the $15 billion to $20 billion private cloud market. "All the competitors are going to have to try to do something like this," he said. "It will take them a while to play catch up, but they are going to have to.

"Who wants to buy cloud in any other model than this? This is how the cloud was meant to be consumed. This is ideal for the channel. HPE and Rackspace have a lot of channel experience. We know how to manage our offering so the channel can make money. You can't say that about most of the public cloud companies."

When asked it feels that, after a year in development, the new service is finally gameday-ready, Crenshaw, graduate of the MIT Sloan, replied: "It feels like when the New England Patriots won the Superbowl."