How to Disrupt IBM, Oracle, and VMware: The CloudBees Story

2/29/12Follow @gthuang

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be hopeful, says Bob Bickel, a former JBoss and Hewlett-Packard exec who serves as an advisor to CloudBees. “From a middleware business perspective, we think the cloud brings a lot more change than open source did, in terms of lower cost.”

Take VMware’s business. “They sold $2 billion last year,” Bickel says. “That means this year they’ve got to sell $3 billion. They’re not going to be doing that by making things cheaper with their licenses. Their first generation of virtualization starts to get eclipsed by cloud virtualization. They’re going to do great and all that—they’re better prepared than your typical middleware vendors—but even a VMware is going to have trouble shifting from this licensed enterprise software model, which will get blown up over time because companies won’t be able to afford it anymore.”

It’s too early to say whether CloudBees itself will disrupt the industry, but the trend toward cloud-based services is clearly affecting the big players. Yet something else Bickel said also piqued my interest: the bit about open source’s business impact as compared to the cloud’s. After all, CloudBees’ software is not open source, even though its founding DNA comes from that movement.

That decision comes down to Labourey’s experience with JBoss and Red Hat. “I was so convinced that open source would be amazing. In some ways it is. The cloud only exists because open source existed. But I thought it would be a bigger business, be much more influential,” he says. “There’s only one public company, Red Hat. And VMware is much bigger. I think [open source] is a very hard business model.” (Companies working with OpenStack, an open source system for configuring corporate data centers as clouds, might have something to say about that. See, for example, Nebula.)

And while Labourey now sees the limitations of open source, he seems to have come around fully to the promise of cloud computing—which he places in historical context as the industrialization of IT. “It’s exactly the same process as what happened in 1890 with industrialization of electricity,” he says. “Initially you had electricity produced in factories. They were private, very costly, hard to maintain. Then you had community-owned factories.”

He recalls a map of Paris from 1910 in which different regions used different power standards for voltage and current. “It was IT as we know it today. You have an HP box with Windows, and oh, sorry—you have equipment you want to plug in, and it won’t work,” he says. “Now you have a standardized plug, you will get current, and it will always work. The new plug is HTML, the Internet is the new grid, and the producing entities are in the cloud.”

Gregory T. Huang is Xconomy's Deputy Editor, National IT Editor, and the Editor of Xconomy Boston. You can e-mail him at gthuang@xconomy.com. Follow @gthuang

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