What $1 billion can buy HP in the cloud

A billion dollars is basically tables stakes to just be considered one of the major cloud vendors

The chief of HP's cloud sales, Kerry Bailey, says that a push to sell an enterprise open-sourced based public and private cloud platform is "one of the biggest strategic investments HP has had." To support it the company plans to spend $1 billion in the next two years on research, product development, implementation and support to install its newly-minted HP Helion cloud platform.

But what does $1 billion really buy you in the cloud nowadays? Well, in the crowded market that is the cloud, which features companies like the dominant Amazon Web Services, the growing-in-popularity Microsoft Azure, the disruptor Google, as well as companies like VMware, Verizon, Rackspace and IBM, HP is now among the vendors that customers can look to for cloud services.

"Does a $1 billion investment make HP a better choice compared to everyone else?" Forrester cloud analyst David Bartoletti asks. "No, it makes them another choice."

And that is the challenge HP, and all the other vendors will have in this market - everyone wants a piece of the cloud pie, and it's is a crowded market.

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HP has a compelling story for customers. It has a public cloud backed up by an international set of data centers; and its private cloud operating system, based on OpenStack code, was recently ranked by Forrester as the top private cloud platform for enterprises. HP argues that its ability to give customers software than spans the public and private cloud, and is based on open source standards, is a differentiator in the market. It says it already has 2,000 private cloud customers too, and it has a massive base of HP customers it can tap into for future sales.

But companies like HP, VMware, IBM and Microsoft are all trailing Amazon Web Services, according to Bartoletti, for one simple reason: Those competitors are targeting the IT decision makers and buyers in the enterprise. That's a relatively tough nut to crack.

Amazon Web Services has risen to become the leader of the cloud IaaS market by appealing not to the mainstream enterprise IT buyer, but instead to the developers. Application writers want access to virtual machines and storage quickly and cheaply. AWS was the first to offer that. Now, AWS is attempting to market its platform to mainstream enterprises.

VMware, Microsoft and now HP, will be approaching this market form the other end than AWS's approach. HP will attempt to enter the enterprise market through the IT sanctioned and supported cloud uses. Not the organic, grass-roots use cases that AWS has thrived with.

And now HP has a billion dollars to play with to do that. Similar to announcements made from IBM and Cisco though, $1 billion seems more like a table-stakes investment to be among the cloud players rather than a guaranteed winning strategy in this still nascent, but congested market. If there is any good news for these vendors though, it's the cloud could be a big market, and if they play their cards right, there will likely be enough pie for everyone. 

Photo credit: iStockPhoto. Senior Writer Brandon Butler covers cloud computing for Network World and NetworkWorld.com. He can be reached at BButler@nww.com and found on Twitter at @BButlerNWW.

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