Cisco ups its stake in Piston Cloud Computing by converting its earlier investment into full ownership of the business. The OpenStack ecosystem has seen a number of $100m+ exits in the past 12 months, including Cisco’s own $149m acquisition of Metacloud. The space has also seen a few tuck-ins and modest exits, such as EMC’s Cloudscaling buy and the closure of heavily funded Nebula. Though terms of this deal weren’t disclosed (nor were they in IBM’s just-announced Blue Box Group purchase), consolidation in OpenStack has clearly begun and still has a long way to go. According to 451 Research’s Market Monitor report on OpenStack , 56 of the 76 vendors in this sector generated less than $5m in 2014 revenue.
OpenStack continues to gain momentum among enterprise IT leaders. Now five years old, the project has evolved into a top priority for many IT professionals and suppliers. Cisco’s purchase of Piston Cloud removes a competitor to its Metacloud-based offerings and adds rare OpenStack engineering talent and intellectual property. The acquisition probably saved Piston Cloud from turning out its own lights as the small firm likely found it difficult to compete with larger players with much more sales capacity.
The transaction highlights a couple of things about the current OpenStack market. First, there is still a demand for and dearth of OpenStack talent and expertise. Piston Cloud’s staff is among the most experienced supporting large enterprise OpenStack deployments, which Cisco – a gold sponsor of the OpenStack Foundation – is interested in driving and supporting. Second, the deal highlights how the market is still largely in a services and support phase, whereby enterprise and service-provider customers, even large ones, need intensive support deploying OpenStack. The transaction may also signal that the Metacloud acquisition and integration has been successful for Cisco and helped encourage it to pull the trigger on the Piston Cloud pickup.
We’ll have a full report on this deal in tomorrow’s 451 Market Insight.
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