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Dell ditches public cloud service for partner scheme

ElliotBentley
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Own-brand OpenStack hosting to be replaced by partnership with smaller companies – all managed by Enstratius.

Having been teasing an OpenStack-based public cloud since the end of last year, yesterday Dell announced a change of strategy. Instead of providing cloud hosting themselves, the company will partner with several smaller suppliers, becoming a “central point of solution integration and control”.

Essentially, this means that Dell will sell hosting services from selected IaaS providers, which initially consists of Joyent, ScaleMatrix and ZeroLag. Crucially, all will be manageable through Dell’s recently-purchased cloud management tool Enstratius.

This is a considerable departure from Dell’s existing strategy, which was to provide IaaS hosting powered by VMware vCloud. A new OpenStack-based product was due to be made generally available at the end of the year, distinguished by a generous service-level agreement.

The new strategy is a move away from being a direct competitor to AWS and its ilk, instead becoming a middleman to smaller brands. By providing access to a diverse range of companies and products – all manageable by Dell’s Enstratius software – it may succeed in attracting customers looking for a known brand, but put off by the threat of proprietary lock-in.

Nnamdi Orakwue, VP of Dell’s Cloud division, said in a press release that the new program would offer “a choice of providers, flexibility and interoperability across platforms and models, the ability to compare cloud economics and workload performance, and a cohesive way to manage all of it”.

However, it could also be seen as a retreat from a market increasingly dominated by AWS and, perhaps, less profitable than it first appeared. Rackspace earlier this month reported lower-than-expected earnings, speculated to be linked to the company’s aggressive price cuts.

The move may provide long-term benefits to Dell, but it likely means throwing out years of investment: TechCrunch reported that a number of layoff notices were sent to the 300-person Dell Cloud team. Dell declined to comment on the matter.

Photo by Kansasphoto.

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