What are HP’s Chances in the Cloud?

Last year HP jumped into the public cloud computing business…late.  Thus, their future in the cloud has been the source of many questions I’ve had to address since then.  Now that we’re months into the availability of their OpenStack-based public cloud-based service, it’s time we take a quick look at their progress.  Also, at their chances of success.
HP unveiled HP Cloud Compute at the HP Discover event in December last year.  HP cloud was pretty much what we expected to see.  This includes looking to out-enterprise AWS, the current IaaS leader.  So, what does HP see as their added value?
First, a better SLA: Prices started at $0.04 per hour with a service level agreement (SLA) of at least 99.95 percent.  As a comparison, AWS offers an SLA of 99.95 percent per year but requires very specific configurations before you’ll see a reimbursement for bad service.
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Second, it’s a new and improved approach to the cloud: HP differentiates its cloud through security, global availability, and consistency.  In short, they are looking to build a better AWS for their enterprise customers.  AWS, to be fair, has already solved these issues, for the most part.  They just lack the enterprise penetration that both IBM and HP already have.
HP has built its public cloud based upon ProLiant servers running OpenStack.  However, there is a much more sophisticated and costly configuration called CloudSystem.  CloudSystem is based upon its BladeSystem blade servers and a bunch of management and provisioning tools, that, in essence, creates private clouds for enterprises in the HP public cloud.  CloudSystem is really an upgraded version of the BladeSystem Matrix which HP created nearly four years ago.  This is 2 years before the release of OpenStack.
Since the release of HP’s cloud, I’ve not seen much in the way of new announcements, other than an internal executive shakeup.  Hewlett-Packard that Zorawar “Biri” Singh, senior vice president and general manager for Cloud Services, left the company in January.  Roger Levy, the group’s vice president of technology and customer relations, replaced him on an interim basis.  I suspect they will make some major hires this year, if they are smart.  HP does like to promote from within, but some fresh eyes could do them good.
So, will HP make it in the cloud?  Will they ever overtake their large counterparts, such as AWS, Microsoft, Google, or IBM?  While we’ll know more toward the end of this year, there are a few interesting issues to note.
First, it’s HP versus IBM, for the most part.  IBM recently jumped into OpenStack with both feet, providing pieces and parts of OpenStack technology in their offering.  Thus, two enterprise powerhouses are both armed with OpenStack public cloud technology, have the enterprise contacts and golfing buddies to sell these services, and now it’s game-on as to who will make the most progress in the least amount of time.  IBM has a huge lead, and while their cloud computing strategy has been somewhat confusing, they will be difficult for HP to beat.
Second, in some instances, it’s good to be late to the market.  HP can take a good, hard look at what the IBM, AWS, Google, and Microsoft clouds are doing right and wrong.  Thus, they can come out of the gate with something that capitalizes on the weaknesses of others.
In the case of AWS, its lack of focus on the enterprise, and the perception that they lack support for open standards.  However, AWS has recently gotten a clue, and I’m seeing much higher visibility of the AWS cloud within larger Global 2000 enterprises.  Microsoft is considered a proprietary cloud by many, and the cloud strategies of Google and IBM are not at all clear to enterprise IT leaders.
HP will have a year or so to define themselves better than their close competitors.  While the focus on SLAs and security is a good start, it’s a story that is really not compelling enough for them to catch up with the existing cloud computing leaders.
Finally, there is the fickle nature of cloud computing buyers.  While AWS will do beyond $2 billion in sales this year, cloud computing is still in it’s early days.  Thus, there is still room for innovation and diversification in this space.  HP can capitalized on that opportunity if they hire more smart people and take some well-defined risks.  They have a new CEO, now is the time.
While it’s easy to count HP out of the running, due largely to their late entry, as well as the well-published internal issues, it’s still early in the game for them.  However, I will say that, in order to win, they need to make all of the right moves, and very few mistakes.