Consolidation has been a big trend among both service providers and their equipment suppliers and vendors in recent years. On the carrier side, in the wake of scuttled acquisition bids from AT&T and Sprint, T-Mobile may now be in the early stages of looking at a merger with Dish Network, the second largest provider of satellite TV in the U.S.
The deal, if it ever happens, would give T-Mobile access to Dish's roughly $60 billion in licensed spectrum as competition between carriers - as well as between carriers and hyperscale organizations - heats up, while creating a new company that would have leading offerings in voice, video and data. Other transactions such as the bid for Time Warner Cable by Charter Communications underscore how central M&A has become to many service providers' modernization strategies.
Vendor consolidation and the evolution of OpenStack
Shifting gears to vendors and the cloud software space for a moment, there's a similar thread of consolidation running right out in plain view. In May 2015, Cisco picked up private cloud OpenStack company Piston Cloud Computing at around the same time that IBM acquired Blue Box, another OpenStack specialist.
Cisco's move also follows its similar deal for Metacloud. Since late 2014, organizations such as CloudScaling and Nebula have also been snatched up by the various major incumbents that are increasingly controlling the direction of OpenStack development and shaping the project to their own ends.
While service providers explore consolidation as a way of acquiring more infrastructure and expertise, these vendors are making a play for deeper partnerships with carriers by burnishing their cloud management and integration credentials, especially when it comes to OpenStack. Writing for Light Reading, Mitch Wagner highlighted how service providers are increasingly using cloud management platforms to roll out and iterate their services, meaning that vendors with expertise in hybrid cloud and connectivity become particularly appealing partners.
"Many cloud automaton strategies are only starting to take shape."
"Service providers are turning to cloud services as a new channel for business growth," explained Wagner. "Through Intercloud, Cisco offers a partnership opportunity that can help enterprise customers connect with cloud providers - such as IBM OpenStack. IBM and Cisco are both potential partners for carriers, as well as competitors in providing cloud services and consulting."
Digging into some of the specifics of these acquisitions, Cisco is getting access to Piston's CloudOS, which is an operating system for OpenStack that allows for Mesosphere-esque management of disparate server clusters as if they were one common pool of resources. Piston's assets will likely be used in the ongoing refinement of Cisco Intercloud.
Meanwhile, Blue Box gives IBM a potential leg up in hybrid cloud. Its technologies allow for integration of cloud-based applications as well as on-premises systems into OpenStack environments. Blue Box could also be a useful addition to IBM Bluemix, allowing private clouds to behave more like public clouds by simplifying the management process.
Amidst these acquisitions, it is important to remember that adoption of OpenStack has been slow and that many organizations' cloud strategies are only now beginning to take shape. The consolidation that we see from Cisco, IBM et al hints at incumbents making the most of the opportunity to hone their OpenStack chops while the project is still relatively young and not yet deeply ingrained in infrastructure.
The takeaway: Service providers are consolidating in order to get ahead in terms of infrastructure and knowledge, while their vendors are also on an M&A hot streak as they try to assemble the right cloud expertise to partner up with these carriers. Cloud automation and management platforms have been central to the consolidation of the OpenStack community in particular.