Intel Leads $100M Round for OpenStack Cloud Heavyweight Mirantis.
The big chip maker on Monday plans to announce its lead role in a $100 million infusion into Mirantis Inc., which sells a subscription version of the open-source software OpenStack.Looking to help make OpenStack a more accessible management platform for a much broader number of IT organizations, Mirantis announced it will apply $100 million in additional funding from investors toward making the open source framework much simpler to deploy and manage. OpenStack, which began in 2010, has been adopted by some of the largest companies, like PayPal and Walmart, but it hasn’t become a mainstay among large enterprises in the same way as proprietary virtualization software like VMware’s vSphere, and it’s not quite as widely used as public cloud infrastructure.
Bryant, who runs Intel’s business in chips for industrial-size computing centers. “Everyone has to act differently.” Indeed, Intel’s venture arm is expected to announce on Monday that it will put $100 million toward software that is used in cloud computing, an increasingly popular method for making bigger and more efficient computing systems. Besides Intel Capital, other investors participating in this round of funding include Goldman Sachs, August Capital, Insight Venture Partners, Ericsson, Sapphire Ventures, and WestSummit Capital. Like many other open-source products, OpenStack is available in free and commercial versions in an arrangement that helps customers avoid being locked into one vendor. Intel will lead a $75 million equity investment in Mirantis, a little-known start-up specializing in open-source cloud software, and will spend another $25 million on bolstering its own resources for working with Mirantis-type products, according to several people familiar with the deal. The program, often described as a data-center operating system, offers a software dashboard to help companies manage collections of server systems, storage devices and networking equipment.
The cloud-native stack, including OpenStack, can provide companies with “a true alternative to Amazon, Google, Microsoft, and VMware,” Mirantis cofounder and president Alex Freedland told VentureBeat in an interview. Mirantis, based in Mountain View, Calif., boasts customers including AT&T Inc., Samsung Electronics Co., PayPal Holdings Inc., Gap Inc. and Ericsson AB.
As part of this latest round, Intel and Mirantis said they will work together to fine-tune enterprise features in OpenStack, a set of technologies for building private or public clouds. It led to a flurry of startups, but in the last year many have been scooped up by larger companies with Cisco grabbing Metacloud in 2014, then going back for more with Piston in June. The cost of managing IT on-premise is one of the primary reasons that so many application workloads are moving on to public clouds, which, Freedland said, winds up being a threat to the continued existence of internal IT organization.
Last month, the company pledged to make a series of investments under an initiative called Cloud for All to help corporate data centers emulate the efficiency of cloud services like Amazon Web Services and Microsoft Azure. But in anointing the start-up with more of its investment money, Intel, based in Santa Clara, Calif., is doing what a number of older tech giants have done in recent years: rely on a young, nimble company to help it remain competitive in a fast-growing market. Just as concerning from a vendor’s point of view is if the vast majority of application workloads move to the cloud, a handful of cloud service providers will essentially decide what new innovative products and services actually get a chance to come to market. “We need to drive IT costs down to the point where IT organizations can compete with all the hyperscalers,” said Freedland. “If all workloads move to the hyperscalers they ultimately become a choke point for innovation.” While Freedland said it’s important that the OpenStack community continue to partner with providers of other technologies, it’s also critically important that OpenStack be able to compete against VMware and Microsoft by offering as many native services as possible.
Diane Bryant, a senior vice president spearheading Intel’s initiative, has argued that more companies would set up cloud-style operations if software developers tackled technical shortcomings with existing products. Against this backdrop, Mirantis remains standing and it’s hoping that working closely with Intel, along with the huge infusion of money, will help it advance OpenStack in the enterprise. Freedland said both Microsoft and VMware will continue to expand the scope of the services they embed in their respective platforms to provide a better lifecycle management experience. Intel expects Mirantis to help modify OpenStack to minimize service outages. “There are targeted things that we want to see Mirantis go do,” said Jonathan Donaldson, an Intel vice president who is general manager for software-defined infrastructure.
The collaboration bears similarities to a deal announced in 2014 between Intel and Cloudera, a prominent supplier of an open-source program called Hadoop that helps companies collect and analyze large amounts of data. The Intel partnership will include resources such as access to hardware labs and a variety of gear at a scale, which Mirantis couldn’t access on its own, Alex Freedland, Mirantis president and co-founder told TechCrunch. Mirantis offers what it calls ‘a pure version’ of OpenStack, and Freeland believes that’s what separates his company from the big players in the market. “Mirantis is an open platform where everyone can come in and not be guarded by proprietary walls. Enterprise computing, as tech for business is called, has for years consumed about three-quarters of the $1 trillion of annual worldwide expenditures on technology.
Today’s news comes a few days after Mirantis disclosed in a regulatory filing that it had raised $75 million, but the company wouldn’t immediately discuss it. It hopes the investment in Marantis will help expedite OpenStack development for customers running its hardware, Jason Waxman, vp and gm for cloud platforms at Intel explained. Working together, the two companies hope to see significant improvement over the next 12 months, and expect to see some enhancements related to this collaboration as soon as this year, Freeland said. If perhaps you were thinking that this is the first step toward Intel buying Mirantis, Waxman quickly put that idea to rest. “If we were interested in an acquisition, we would have cut to chase,” he said.
Intel obviously thinks highly of Mirantis or it wouldn’t be making this investment, but Waxman made clear it has no interest in being a distributor of OpenStack. It enables about 50 computer servers to function in concert, creating one flexible machine, but Intel wants Mirantis to eventually raise that to 1,000 servers. In 2014, it generated the largest OpenStack sale ever, a $30 million dollar deal with Ericsson (which is also contributing funding to today’s deal). And among restive start-ups like Mirantis, there is an increasing sense that, now that the serious money is moving around, there are plenty of opportunities to work with giants both inside and outside the tech industry. “Companies like AT&T and Goldman Sachs have realized that their future businesses are all enabled by software in the cloud,” said Adrian Ionel, the chief executive of Mirantis. “It creates a lot of opportunities for new companies like us, because the old enterprise companies can’t help them there.” In addition to cash, Intel can also use its marketing muscle, and perhaps find some new allies.
The more people store and analyze data, Intel figures, the more they will consume Intel’s chips to do the analysis. “We’re seeing a very major transition,” Ms. The winding history of the OpenStack technology that Mirantis is working on shows how big companies can sometimes make a mess of a good idea, and why Intel is interested in the start-up.
In 2010, OpenStack was started by Rackspace, an early purveyor of cloud-type services, in conjunction with NASA, which turned over some code it had been developing internally. After considering selling itself last year, Rackspace now hopes to profit partly as a reseller of Azure, Microsoft’s cloud computing service. “My job is to try and get things moving,” Ms.