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Red Hat Acquires CoreOS To Emerge As A Strong Leader In Container Space

Krishnan Subramanian · January 30, 2018 · Leave a Comment

Today, Red Hat, the open source company focussed on enterprise IT, announced the acquisition of CoreOS, its competitor in the container market (Red Hat press release). This is clearly shaking up the enterprise application platform market and, definitely, the Kubernetes community. CNBC puts the cost of the acquisition at $250 Million, making this one of the largest Red Hat acquisitions. In this quick analysis, we take a look at this news and how it impacts the modern enterprise.

The Competition

As a startup, CoreOS went directly at Red Hat, trying to position themselves as the operating system for containers. They also built a platform called CoreOS Tectonic as the multi cloud Kubernetes distribution going against Red Hat’s OpenShift Container Platform and other application platforms in the market. CoreOS is also one of the biggest contributor to the Kubernetes project and there was speculation that they will get acquired by one of the enterprise cloud providers to effectively compete with Red hat in the space.

What it means for Red Hat?

This helps Red Hat in many ways

It helps them emerge much stronger in Kubernetes community. Already, Red Hat is the second largest contributor to Kubernetes after Google. With Microsoft aggressively recruiting Kubernetes contributors and gaining leadership role in the committees and AWS entering CNCF and ramping up their open source efforts, keeping the leadership role in the open source community becomes a competitive advantage. By acquiring CoreOS, Red Hat is strengthening their leadership in the community and it will help them in selling to enterprise IT
Red Hat has a strong play in every layer of the modern enterprise stack, from operating system to container engine to orchestration to the developer platform layer. Bringing CoreOS inside Red Hat strengthens this advantage
CoreOS was not a threat to Red Hat, but it is definitely a pain in both container space and public clouds. Taking out a potential threat is a smart way to establish long term relevancy even if it comes at a huge (as per Red hat’s M&A standards) cost
Canonical’s Ubuntu has a lead in the public clouds. By buying CoreOS, which has both developer and startup mind share, Red Hat can fend off Canonical as well as public cloud providers own version of Linux

But

It will be interesting to see how Red Hat fits CoreOS with Project Atomic and Red Hat OpenShift. CoreOS has competing offerings in both container operating systems and application platforms. It is critical for Red Hat to position these offerings in a way that doesn’t confuse the market
They will have to retain the Kubernetes contributors for a few years to get better ROI from this acquisition. It will be interesting to see how they fend off the talent poaching after the vesting period

I have reached out to Red Hat Analyst Team with some questions and I will update this post after we hear from them.

What it means for the competition?

This definitely starts the process of consolidation in the Kubernetes community

Competitors are going to get aggressive in getting the attention of enterprise customers. Public cloud providers like AWS and Azure are going one step above Kubernetes to make Container as a Service seamless with AWS Fargate (which will integrate with AWS EKS soon) and Azure Container Instances. They will try to go up the stack to lock down customers inside their service
Other platform providers like Pivotal, Docker and Mesosphere will recalibrate their strategy after this acquisition. As we pointed out in this analysis, we expect Pivotal to get rid of the technical depth underneath the platform and focus on a more developer centric platform higher up in the stack with their Spring investments and future Functions as a Service offering. We will wait and see how Docker and Mesosphere react to this development
Expect to see some other startups in the Kubernetes space to be acquired by other enterprise vendors. Oracle is ramping up their cloud efforts. Both IBM and SAP are focussing more and more on Kubernetes. These large vendors will definitely need help in making their offerings attractive to modern enterprise and this will lead to some more acquisitions in the next year or so

What it means to Customers?

Anytime there is a consolidation in any market, customer lose choice but this round of consolidation is happening in an open source community which has emerged as a standard for container orchestration. In a way, such a consolidation in this space might accelerate container adoption and a stronger movement towards IT modernization. Many enterprise IT organizations have a strong relationship with Red Hat and this acquisition will help them stick with Red Hat as they move towards containerized workloads.

Overall an interesting acquisition by Red Hat and it all depends on how well they position the combined offerings and how well they integrate with existing products. Let us see how it shapes up.

Taking Stock of Public Cloud Vendors

Krishnan Subramanian · January 2, 2018 · Leave a Comment

A very happy new year from Rishidot Research. As we enter 2018, the pressure on CIOs to modernize their IT is going to increase significantly. Any further delay will hurt the business bottom line. At Rishidot Research, we have our hands full on a research agenda focussed on Cloud Native Computing landscape and CIOs will find our research very valuable for their modernization strategy. As a first step, and also to set the context for our discussions in the coming months, we will take stock of the major public cloud vendors and where they stand against their competition.

Amazon Web Services (AWS) is the leading cloud vendor by a huge margin. The scale and the momentum in the recent AWS Re:Invent 2017 is a clear indication of this trend. Now AWS’ user conference is comparable to the traditional IT vendors and the number of CIOs and other decision makers I came across in this event indicates that enterprises are eager to embrace public clouds. It is only natural to start our analysis with AWS.

Amazon Web Services

AWS leads all the cloud providers in the sheer number of services they offer to customers. Their push towards serverless which started two years back is now moving to other areas such as containers (AWS Fargate), Data Services (AWS Aurora Serverless), etc.. At Rishidot Research, we deeply believe in higher order abstractions playing a critical role in enterprise IT (we were only of the early believers in PaaS and ran a conference dedicated to it) and we strongly advocate the “serverless” abstractions as the path forward. AWS serverless abstractions other than Lambda is still in early stages and we would expect the services to become even more seamless and autonomic (eg: Without having to describe the limits on resources. AWS should handle that seamlessly with better ways to limit runaway costs)
Even though they are slow to push container services and Machine Learning, they are pushing hard in these two areas. AWS Fargate is how container services should be and might provide a competition to many Cars and PaaS vendors in the market. I would characterize their approach to “giving choice to customers” as an underdog marketing approach in areas where they are not a leader in the market. Both containers and ML are areas where mindshare is still not there with AWS. By touting “user choice”, AWS is trying to catch up with other cloud providers
One of the criticism I heard from users during AWS Re:Invent 2017 conference is on the interoperability of their services. I would expect AWS to focus on fixing the issues and solving the pain points faced by users of multiple AWS services. I would also like to see Amazon cut down the complexity in the consumption of services. The sheer number of services offered by Amazon makes it a daunting task for decision makers as they plot their strategy. Anything Amazon can do to tame this complexity beast will be helpful. A good example is AWS Fargate service. At Rishidot Research, we believe in the composability of the different layers in the IT stack but it shouldn’t come at the cost of increased complexity to consume the services
Both in terms of their service offerings and the customer momentum, AWS has the lead in the market. One trend I observed during the recent Re:Invent is that the size of the IT team makes a difference in organizations going all in with AWS. Large businesses with smaller IT teams are more open to going all in with AWS. If you are an enterprise decision maker wanting to go all in with a single cloud provider, the size of your IT team will impact the decision making process.

Microsoft Azure

Microsoft Azure is steadily increasing their public cloud marketplace. The main Azure development is driven mostly by the existing relationship between Microsoft and the IT decision makers but they are changing minds among OSS developers and the younger generation of developers by a strong OSS push. Being the largest contributor in terms of the number of lines of code (because of .NET being open sourced), Microsoft has gained the critical credibility needed to make Azure palatable to OSS developers. By releasing services like CosmosDB, Microsoft has been working hard to gain developer adoption to Azure cloud services
Microsoft may not be a leader in Containers but they are investing heavily in hiring Kubernetes talent. Many pundits (including myself) have linked AWS’s embrace of Kubernetes and CNCF as an indication of standardization around Kubernetes but Microsoft’s investment is critical because they are now in a position to neutralize Google from pushing Kubernetes in a direction suitable for them
I would like to see Microsoft focus more on making their services more “serverless”. They have necessary components including service fabric and others to move in that direction. I am expecting some announcements in this direction from Microsoft in the next Build conference
Microsoft is still an underdog when it comes to ML and AI workloads. They do have a solid technology to make Azure an attractive destination for such workloads. I am yet to see a coherent go to market strategy in this case
With Azure Stack (AS), Microsoft gave a great story for hybrid cloud/edge computing in last year’s Build conference. The use case with Carnival Cruise Line is a perfect example of Azure Stack. The way they are integrating serverless technologies with Azure Stack will make AS an attractive option for edge computing use cases

Google Cloud

After a slow start, Google Cloud got attention through two open source projects, Kubernetes and Tensorflow. With Kubernetes, Google is uniquely positioned to help enterprises “run like Google”. Even though they showcased some customers in last year’s Google Cloud user conference, they are yet to publicly demonstrate continued success with enterprises. I am hoping to see more customers in this year’s conference
Even though Google got early momentum with Kubernetes, AWS and Azure have since caught up with Google in terms of both mindshare (in the case of Azure) and market share (in the case of AWS). I would love to see Google showcasing technology that will make their cloud more attractive than both AWS and Microsoft when it comes to container workloads
Google cloud is a clear leader in ML and AI workloads on the cloud. They took a more opinionated approach with Tensorflow and it is paying off, mainly due to the success of Tensorflow as an OSS project. They need to demonstrate that they can capitalize on this early success this year
Google has an advantage in Big Data services but AWS and Azure are catching up fast

IBM Cloud

IBM started its cloud push much earlier than Oracle and even before Google or Microsoft showed their seriousness towards enterprise adoption of cloud. In spite of their acquisitions around cloud data centers, data services and even DevOps, they are still lagging behind the top three cloud providers in both mindshare and market share (at least, with AWS and Microsoft). More than anything else, there is absolutely no clarity on IBM’s cloud journey. After betting on OpenStack and CloudFoundry early on and, now, Kubernetes, they are yet to demonstrate a clear path towards success in the cloud. In 2018, I expect to see a more coherent cloud story from them
IBM Watson was supposed to help IBM gain on cloud computing. Even though there are some customer stories based on Watson and IBM Cloud, we need to hear more in 2018

Oracle Cloud

Oracle was the last to enter infrastructure as a Service business among the top cloud vendors. They are still in early stages even though they have made some announcements related to containers and container orchestration. I expect to see them take a deeper plunge in the Kubernetes ecosystem even though they are yet to demonstrate that they can work well with other vendors in an open source project.
They need to shore up higher order services if they have to compete effectively with AWS and Azure. They cannot just rely on their database service as the path to cloud success and they need to compete with AWS on the breadth and depth of higher order services. Looking forward to hearing from them on this topic in 2018

We are also closely tracking both Alibaba cloud and Huawei cloud. We do notice that Alibaba cloud is fast adding new features but we are waiting to hear from them on their US traction. We will include these two cloud providers in our future analysis.

Disclosure: AWS, Microsoft and Google paid for travel and stay to attend their user conferences in 2017

Oracle Cloud Strategy – An Analysis

Krishnan Subramanian · October 9, 2017 · Leave a Comment

Oracle., the enterprise giant of the legacy era, hosted their annual user conference Oracle OpenWorld last week shed some more light on their cloud strategy. Oracle made some announcements focussed on cloud computing, Artificial Intelligence, and Blockchain but it came out more like an organization trying to jumpstart their vehicle to catch up with competition than a thought leader pushing innovation. Oracle is almost a decade late into the cloud game and their efforts to compete is still focused on marketing than showcasing any substance. In this analysis, let us dive into Oracle’s strategy for the modern enterprise stack

Current Status

After dismissing cloud for the better part of the decade and then calling their legacy enterprise applications as cloud, Oracle started focussing on Infrastructure as a Service to take on AWS, Microsoft Azure, Google Cloud and IBM Bluemix. They built an infrastructure service from the ground up, tapping into AWS and Azure engineers, focussing on Compute, Storage, and Network. Then they expanded their offerings to include containers. Here is Rishidot Research’s SWOT analysis on Oracle IaaS strategy earlier this year.

Oracle OpenWorld 2017 Announcements

Oracle made many announcements at this year’s OpenWorld and we are highlighting some of the important ones on their cloud offerings

Oracle’s cloud strategy involves basic IaaS which competes with AWS on the “enterprise-centric” pricing strategy and vendor claims about better performance and “PaaS” (quotes used to differentiate Oracle’s definition of PaaS from the traditional industry definition of PaaS) which includes their middleware offerings and database service. At this point in time, their differentiating factor from the industry leader AWS is pricing
Set of container-based services on top of their IaaS to compete with container offerings by every other cloud provider. This includes Kubernetes based container service, Oracle container registry and Oracle container pipelines
Announcement of an open source functions as a service platform. It is an early stage software than a service on top of Oracle IaaS. However, with their middleware tools and IaaS, this could be a Oracle cloud service in the future
Announcements regarding AI strategy and blockchain tools in their cloud
Oracle 18c, their enterprise database offering with automation based in machine learning and enterprise grade SLAs

Rishidot Analysis

Oracle is building a infrastructure as a service offering with compute, storage and network. They are also adding container services to the mix. Compared to the top three cloud providers, AWS, Microsoft Azure and Google Cloud, Oracle Cloud is still at a barebones stage when it comes to the depth of their offering. We expected a bunch of higher order services on top of their IaaS but we didn’t see any announcements for newer services or even a coherent roadmap to match the depth of services in the other three providers. Oracle spent the news cycles around OpenWorld focussing on a strategy that is more about reducing their bleeding than convincing newer customers about Oracle Cloud as the infrastructure for innovation. They spent way too much time in the Larry Ellison keynote on their pricing strategy compared to AWS than showcasing innovation that could make their competitors sweat. Even their pricing strategy was more about convincing the customers of Oracle database and applications to use their IaaS than enticing newer customers to start embracing their cloud. We think that the pricing strategy is more old-fashioned and focussed on enabling their salespeople to close big deals than a pricing strategy for the modern era.

It is important for the market to have Oracle as a strong player but, to compete effectively, Oracle has to go at full speed to build depth in the services they offer on top of IaaS. Building iteratively is not going to either help them close the gap with the top three providers or in giving confidence to decision makers that betting on Oracle IaaS is a smart choice. Between now and the next Oracle OpenWorld, I would love to see Oracle add a wide range of higher order services so that enterprise customers can really innovate on top of Oracle cloud. Modern enterprise CIOs are more focussed on innovation than cost savings or iterative performance improvements. They need a powerful infrastructure on top of which their developers can innovate. It is critical for Oracle leadership to understand this need and build a compelling offering to outcompete AWS, Azure and Google Cloud.

Oracle’s container strategy is on the right path but the lack of higher order services is going to hinder the developer adoption of their container service. They do offer a suite of tools to manage the containerized applications from development to production but it is still barebones and they have their work cut out in making this offering more compelling as Amazon ECS or Google Container Engine.

I am glad to see Oracle talking about AI and Blockchains as a part of their modern stack and I am hoping that they have a production ready set of tools available by next OpenWorld.

Recommendations For Enterprise Decision Makers

If you are an Oracle Customer wanting to migrate your applications to the cloud, it makes complete sense to consider Oracle IaaS for your migration needs. However, this is recommended for the migration of existing applications than building any net new applications. They have limited set of services for building next gen applications. Wait for their offerings to mature before using Oracle cloud for newer applications.

If Oracle tech stack is not critical for your applications, AWS, Microsoft Azure or Google Cloud have a wide range of services needed for the modern applications. We strongly recommend these providers for your next gen applications at this point. Oracle can still evolve fast to compete with these providers by increasing the breadth and depth of their higher order services but they are not there yet.

Conclusion

In spite of their late start, Oracle has shown seriousness and commitment towards a more coherent cloud strategy. They still have a long way to go before they can catch up with their competitors. Right now, their IaaS is quite attractive for migrating existing applications built on Oracle stack because of the aggressive pricing but their cloud is not recommended for net new applications. This may change between now and next OracleWorld if they accelerate rapidly, either by building or acquiring companies, to offer higher order services. We will have to wait and see. Rishidot Research recommends enterprise decision makers to closely watch their roadmap for the next year before betting their strategy on Oracle Cloud.

Virtual Panel: VMworld 2017 Recap

Krishnan Subramanian · September 6, 2017 · Leave a Comment

Yesterday, we hosted a Virtual Panel on VMworld 2017 talking about the news that came out of VMworld 2017 in Las Vegas last week. The panelists are:

John Allwright, Pivotal Inc
Rob Bissett, Virtustream
Scott Fulton, The New Stack
Bryan Friedman, Pivotal Inc
Krishnan Subramanian, Rishidot Research (Moderator)

We discussed many topics ranging from the recent cloud announcements by VMware, Multi Cloud Strategy, Pivotal Container Service, Enterprise use of Kubernetes and whether BOSH can emerge as a standard for infrastructure services orchestration. Watch the video below.

Pivotal Container Service – A Quick Analysis

Krishnan Subramanian · August 30, 2017 · Leave a Comment

Yesterday, at VMworld 2017, Pivotal Inc announced Pivotal Container Service and a partnership with Google for Hybrid Cloud. Pivotal Container Service (PKS) is made available based on Kubo project which integrates Kubernetes with BOSH. The infrastructure orchestration plane for CloudFoundry. Pivotal Container Service if the commercial offering for Kubo and the partnership with Google will allow customers of Pivotal Container Service to use a hybrid environment between VMware infrastructure inside the data center and Google Container Engine (GKE) on the public cloud.

What it means for Pivotal

Pivotal CloudFoundry (PCF) has gained good enterprise traction in the past several years (which is reflected, in some sense, on the revenue claims made by Pivotal for the past few years). However, the momentum around Docker containers since 2014 and the momentum around Kubernetes project in the past two years are adding pressure on Pivotal as they march towards their rumored IPO. Pivotal CloudFoundry platform got their traction in the market due to the developer centric approach they took in building their platform. Even though Kubernetes has its operational roots, some of the developer centric platform offerings in the Kubernetes ecosystem, like Red Hat’s OpenShift and others, is creating competition to PCF in the market. Based on our conversations with enterprise decision makers and our conversations with vendors, it is pretty evident that Pivotal sales teams face questions about Kubernetes as they go into the market. Clearly, Pivotal needs a response to the Kubernetes story.

One way to compete is to highlight the technical strength of CloudFoundry platform against Kubernetes and find a way to sell into enterprise accounts. But the momentum in Kubernetes is too strong for Pivotal to spend their sales cycles fighting Kubernetes. A smarter move is to support Kubernetes and add a layer of abstraction to hide its complexities. This is exactly what Pivotal is trying to achieve with this announcement. The key thing to notice here is BOSH as the glue to Kubernetes world (more about it later).

What it means to VMware

Ever since public clouds pulled the rug from underneath VMware, they are struggling with a credible public cloud story. Finally, they are narrowing down on a hybrid cloud story with a multi-cloud component. Moreover, containers are turning out to be an Achilles heel in VMware’s cloud playbook. The reality facing VMware is to have a credible story involving public cloud and containers. In spite of recent announcements in VMworld, they are far away from having a credible story on this front. With Pivotal’s investment in BOSH and VMware’s efforts to build a credible hybrid story in the multi-cloud world, there is an opportunity in front of them. They have started with a partnership with AWS where VMware’s Cloud Foundation is available for customers to use. Let us cut the slack here and call out the customers who will benefit from this partnership. They are the existing VMware customers wanting to go the AWS route without much of disruption. If VMware has to gain interest in new customers who are doubling down on the cloud, they need to go much beyond v-services on AWS and other public cloud providers. They need to make vSphere the orchestration plane for infrastructure services (be it public or private). Selling multi-cloud infrastructure services is difficult because of the user experience problem with multi-cloud infrastructure. This becomes even more damning when VMware is not one of the public cloud providers in this multi-cloud world. This is where Pivotal’s investment on BOSH comes handy. If Pivotal, through their application platform route, can make BOSH the standard for orchestrating infrastructure services in the multi-cloud world, VMware with their v-services as front end can stay as a credible player attracting newer customers focussed on digital transformation.

What it means to Kubernetes

To be blunt, nothing. Kubernetes community doesn’t care how the software is packaged. Whether it is VMware or Red Hat or AWS or Microsoft or any of the startups in the community, all they care is about having Kubernetes in more places. But I am long arguing that Kubernetes is the Google’s trojan horse in the enterprise to eventually get the enterprise workloads on Google Cloud. This strategy is nothing new to Google. They successfully used Chromecast as the trojan horse to gain market share in the home media room market. It is a similar gameplay with the enterprises. Google doesn’t care who takes Kubernetes into enterprise data centers. All they care is to provide an easy on-ramp to Google Cloud in their competition against AWS and Azure. This partnership with Pivotal provides them another opportunity.

What it means to Enterprise Customers

If you are a satisfied VMware shop, your IT modernization story runs through VMware and you are well-taken care off. If you are a Pivotal customer, you just put a check against Kubernetes in the Modern Enterprise checklist. If you are a customer wondering what is right for you, here are your choices:

If you are ok to outsource your infrastructure decisions to Pivotal/VMware, betting on Pivotal is the way to go
If you prefer Pivotal’s approach to application platform against, say, OpenShift, this will help you with multi-cloud strategy
If you are not sure, we strongly recommend you do the homework on the acquisition costs, lock-in costs, training costs, etc. to make a decision. There are other multi-cloud platforms available in the market

In short, Pivotal’s offering is a credible path to a digital transformation involving a multi-cloud story but it is important for you to decide if you want BOSH to be your multi-cloud orchestration engine.

Virtual Panel on VMworld: We are hosting a Virtual panel to discuss the announcements at VMworld on Tuesday, Sept 5th 2017 at 11 AM PST. You can watch it live here.

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