Nebula, OpenStack cloud vendor, just shut down with no notice

Nebula One

Nebula, one of the first OpenStack hardware resellers and integrators, closed its doors April 1st. And, no, it wasn’t an April Fool’s joke.

The company was founded in 2011 by Chris Kemp, who had been chief technology officer for IT at NASA where he helped create OpenStack. Kemp left NASA to push OpenStack forward. As Kemp explained to Tech Republic in the fall of 2014, “I wanted the project to live on beyond the work we were doing … I knew that if we could open-source this work under a very flexible open-source framework, and really get a community gathered around contributing to it, the project could live on.”

At first, things went well for Nebula. The company seems to have customers for its Nebula Cloud Controller, an appliance that integrated up to forty x86 white-box servers into a turnkey OpenStack cloud. The company also had a fat war-chest of almost $40 million from top-tier VCs such as Kleiner Perkins Caufield & Byers and Highland Capital Partners.

So what went wrong? In their closing statement, the Nebula management team said, “the market will likely take another several years to mature. As a venture backed start up, we did not have the resources to wait.”

As for their customers, support has ended immediately. The company recommends that its former customers turn to “OpenStack products from vendors including Red Hat, IBM, HP and others.”

So what really happened and what lessons can we draw from this?

First, venture capital money, as the former employees of Gigaom can attest, can be a poison pill. If your business accepts VC cash, be aware that you’re now on a ticking clock and you’ll need to deliver sooner rather than later.

Second, the OpenStack space was, and still is, crowded. Besides OpenStack-specific private cloud companies, such as Mirantis and Rackspace, there’s a host of big-name operating system and services companies involved. These businesses include Linux powers, Canonical and Red Hat, and hardware/server giants like IBM and HP. It’s no wonder that smaller OpenStack companies, such as CloudScaling and Metacloud, have been acquired by top-tier companies, EMC and Cisco respectively.

Some companies weren’t going to make it. Nebula was the first major one to go under. It won’t be the last.

Finally, as I know from my own experience, OpenStack is not easy to deploy. The project is in a state of constant evolution. To put it into play as a private cloud requires a lot of work from any system integrator. As for installing OpenStack using your own IT staff … just don’t. Unless you have OpenStack experts in-house, you’re just asking for a world of pain.

For enterprise cloud users, the moral of the story is that you should look very carefully at your partners. Putting together a cloud with cutting-edge technology is hard enough by itself, but you must be able to count on your system integrator, value-added reseller, whoever, to be there when you need them. If you can’t, then you too may find yourself, like Nebula’s customers, looking desperately for support with no notice.

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