(Editor’s note: The acquisition of Eucalyptus closes a gap in hybrid cloud and expands HP’s reach against a $7 billion-and-growing hybrid cloud integration market, writes Technology Business Research Analyst Cassandra Mooshian.)
PALO ALTO, Calif. – Interoperability and open source technology are key focus areas for HP’s cloud and corporate strategies going forward
HP’s long-term goal with its cloud portfolio is to give enterprises the option to have open source private and/or hybrid cloud environments that are compatible with public cloud software from various providers as well as its own cloud systems that can be built, implemented and managed entirely by HP. TBR believes this is the first of many smaller, open source-focused acquisitions to come over the next two years. The company has made significant efforts over the past year to reduce its debt and has also reported notable improvements in free cash flow, better positioning HP to make such an investment.
We expect HP to adopt a “string of pearls” acquisition strategy over the next two years to address interoperability and open source cloud computing. Over the past year, SIs and ISVs have more often partnered to mutually benefit from market demand for multivendor cloud solutions, adopting a “better together” mentality. Recent partnership expansions with Microsoft, SAP and Avaya underscore HP’s commitment to its corporate turnaround that better aligns with where the market is headed. TBR expects the hybrid integration market opportunity for 2014 will reach $7 billion, while we expect the private cloud market size to reach $41 billion in 2014 and $69 billion by 2018. As HP shifts its focus toward cloud, mobility and analytics, it will cannibalize some revenue opportunities in its more traditional outsourcing, hardware and software businesses.
Eucalyptus offers organizations Amazon Web Services compatibility in HP cloud environments
HP signed a definitive agreement to acquire open source software provider Eucalyptus on Sept. 11,2014. Eucalyptus’ software enables customers to build private and hybrid clouds that are compatible with AWS solutions and software. Eucalyptus CEO Marten Mickos, former CEO of MySQL and a current member of Nokia’s board of directors, will join HP as the SVP and GM of HP Cloud, reporting directly to CEO Meg Whitman. The terms and conditions of the deal have not been disclosed, but HP anticipates the acquisition to close during its FY4Q14 (ending late October 2014).
This acquisition expands HP’s commitment to the cloud and its newly rebranded cloud portfolio, Helion. Since the launch of OpenStack-based Helion in May, HP has rolled out many Helion solutions, retrained its cloud sales force and built a new sales incentive structure, honed in on cloud-related channel and strategic partnerships, and was the top contributor to new code for the upcoming October release of OpenStack. TBR believes this is a noteworthy and necessary step for HP in its cloud journey. Aside from Helion, HP has limited its participation in public cloud, focusing its cloud efforts on private and, more recently, hybrid cloud. The addition of Eucalyptus to the HP cloud portfolio will allow for continued expansion of HP’s private and hybrid cloud capabilities. TBR believes hybrid cloud and hybrid IT (the integration of cloud and on premises) are where the cloud market will head as customers build out their environments and the adoption curve matures. Furthermore, AWS compatibility will offer HP significant opportunity to cross- and up-sell its other cloud and on-premises solutions.
(C) Technology Business Research