OpenStack company Nebula shutters

Analyst says startups will have trouble competing with bigger competitors

One of the first casualties of the OpenStack world is Nebula, a company founded by a pioneer of the of the open source cloud computing movement.

Nebula's Chris Kemp Twitter

Nebula's Chris Kemp

Nebula posted an announcement on its website yesterday announcing it is shutting down. Chris Kemp, the former CTO for IT at NASA where much of OpenStack’s code was initially developed, founded the company in 2011.

Analysts say the move is not indicative of larger problems within the OpenStack community, but rather reflects the difficulties startups will have in competing with large name-brand vendors who are able to commit the resources needed over a long period of time to this still maturing market.

Nebula was one of the first pure-play OpenStack companies and during the past four years has received more than $38 million in funding, according to CrunchBase; the company lists Kleiner Perkins Caufield & Byers and Highland Capital Partners as some of its investors.

Nebula built a combined hardware/software appliance meant to allow easy onboarding of OpenStack within an enterprise to create a private cloud. It lists customers such as Lockheed Martin, Johns Hopkins University and DreamWorks Studios as customers on its website.

“When we started this journey four years ago, we set out to usher in a new era of cloud computing by curating and productizing OpenStack for the enterprise,” the announcement on Nebula’s website reads. “We are deeply disappointed that the market will likely take another several years to mature. As a venture backed start up, we did not have the resources to wait.”

Nebula is discontinuing support for already-installed instances of its product, but it says that because the appliance runs OpenStack that it is compatible with products from other vendors in the community, including Red Hat, HP, IBM and others.

Nebula is not the first cloud computing to shutter though – Nirvanix, a storage company shut down suddenly in 2013. (Read: It’s official: Nirvanix is closing.)

Nebula’s shuttering continues a trend of consolidation in the OpenStack market. Others, like Cloudscaling have been purchased (by EMC). Nimbula – founded by former AWS pioneer Chirs Pinkham – was bought by Oracle.

Nebula faced stiff competition from companies with much deeper pockets. HP, Red Hat, Cisco, IBM and Rackspace are all investing heavily in selling OpenStack products and building their services on the technology.

The move raises questions for other pure-play OpenStack-based companies – like Piston Cloud Computing Co. and consultancy Mirantis - that do not have the brand-name and legacy revenue bases as some of their bigger competitors.

IDC analyst Gary Chen says he expects to see additional consolidation in OpenStack. “To win in this market, you have to be in it for the long haul, and that could be problematic for smaller startups,” he wrote in an email, adding that he doesn't believe Nebula’s demise is an omen for broader OpenStack concerns; Chen is still bullish on the technology. “This market will not develop overnight and will likely grow at a steady pace over a longer time, so companies will need to invest and plan for that in order to survive. The good thing with OpenStack is that it is open and has broad industry participation, but the flip side of that is that it is increasingly harder to differentiate and this news is also a reflection of that as well.”


Copyright © 2015 IDG Communications, Inc.

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