OpenStack Revenue To Hit $5 Billion By 2020

451 Research doubles its previous estimate of the value of the OpenStack marketplace and predicts the majority of OpenStack revenue will come from private cloud deployments.

Charles Babcock, Editor at Large, Cloud

October 27, 2016

3 Min Read

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Revenue from products based on open source cloud computing project OpenStack are increasing at an impressive 35% compound annual growth rate, according to 451 Research's OpenStack Pulse report for 2016.

The Pulse report is compiled by the 451 Research Market Monitor & Forecast service, where analysts there said a year ago that the OpenStack market will amount to $2.5 billion a year by 2017. This year, the Pulse report upped the ante to say the OpenStack market will exceed $5 billion annually by 2020.

Revenues so far have been associated with the public cloud vendors that pledged to offer OpenStack infrastructure-as-a-service, including HPE Helion, Rackspace Public Cloud, Internap AgileCloud, and public IaaS.

In the future, OpenStack private clouds are going to constitute a larger market than the public clouds, according to the Pulse report, which was released Oct. 24. Many private companies, including PayPal, The Gap, 20th Century Fox, and Del Monte, have instituted OpenStack clouds, but "in general it remains a platform for test and development environments, web hosting and pilot projects," the report claimed.

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In addition, many cloud vendors, including Rackspace, HPE, Internap, and, offer virtual private cloud services or bare metal private cloud services based on OpenStack infrastructure.

The research firm said it believes "OpenStack's success going forward will be in the private cloud space and in providing the orchestration for public cloud integration with on-premises and hosted OpenStack environments," according to the announcement of the report.

"We continue to believe the market is still in the early stages of enterprise use and revenue generation. We expect an uptick in revenues from all sectors and geographic regions," said Al Sadowski, vice president at the market research firm, in the report. The OpenStack vendors targeting enterprises will be the main benefactors of the revenue growth, Sadowski said.

They would include firms such as Mirantis, Red Hat, Ubuntu, Novell, HPE, and Dell.

OpenStack is a major open source project that has subsystems being developed for compute (Nova), block storage (Cinder), virtual networking (Neutron), object storage (Swift), identity management (Keystone), and software image management (Glance).

[Want to see what another research group has to say about cloud? Read Cloud Security, AI, IoT Make List of Hot Technologies for 2017.]

OpenStack has become "a credible option," said Sadowski in the report, even though it "still has shortcomings." Among those hurdles, most frequently cited are its complexity of implementation, its rapidly changing software components, and the technical skills needed to keep its subsystems working together.

Given the amount of time it takes for an open source project to mature, OpenStack is showing promise at what is still an early stage of its evolution. It's likely to become the software stack of choice for those who want their private data center to more closely function like the public cloud, Sadowski said.

The Pulse report was released ahead of the OpenStack Summit, which kicked off Oct. 25 in Barcelona and runs through Oct. 28.

About the Author(s)

Charles Babcock

Editor at Large, Cloud

Charles Babcock is an editor-at-large for InformationWeek and author of Management Strategies for the Cloud Revolution, a McGraw-Hill book. He is the former editor-in-chief of Digital News, former software editor of Computerworld and former technology editor of Interactive Week. He is a graduate of Syracuse University where he obtained a bachelor's degree in journalism. He joined the publication in 2003.

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