Cloud, Commodity Infrastructure and Company Valuations

Last week was another interesting week with more changes and activity in the cloud management ecosystem. It was Eucalyptus Systems’ turn to double down and make some management changes bringing Marten Mickos in as the new CEO. Om Malik at GigaOM wrote a good summary of the change. But what really caught my eye in the article was the potential valuation of Eucalyptus at $100M (wow!).

In this early market there are many opportunities for innovative new players (like Eucalyptus and Platform Computing) to challenge the status quo of incumbent enterprise management and virtualization vendors who have long term (read:“locked in and costly”) relationships with enterprise users. The open source approach that Eucalyptus is taking typically succeeds in companies where there are already well defined solutions (SQL, UNIX) and open source is a way to lower the price. In the case of IaaS (Infrastructure as a Service), which is an emerging and early market there isn’t the same dynamic for open source to play off against. The potential for a high valuation for an organization like Eucalyptus or Platform is tied to the ability to deliver on the promise of cloud, which can enable enterprise customers to usher in a shared commodity architecture.

Platform Computing has a track record of delivering on commodity architecture for more than 18 years, having helped many of our large enterprise customers break down their silos through the adoption of our cluster and grid middleware. We see the cloud market evolving in a similar way, as organizations look to adopt a commodity architecture for a larger part of their enterprise infrastructure. We agree that there is a lot of opportunity for the creation of value in this move, but also believe that enterprise users will demand industrial solutions and nimble vendors who can deliver to their demanding enterprise requirements.