OnApp announced that it has signed a definitive agreement to acquire SolusVM, a virtual server management system used by thousands of service providers. Prior to the announcement, OnApp had established itself as the most widely deployed IaaS automation platform for service providers, with more than 3,000 customers in 87 countries. Neovise believes this acquisition to be a smart move by OnApp and a significant momentum builder for the OnApp Federation. It also involves some risk as OnApp is breaking new ground in the area of cloud service brokerage.
The OnApp Federation is based around OnApp Market, which is a wholesale marketplace for service providers to buy and sell compute, RAM, storage, and CDN capacity. It currently covers more than 170 global locations, and the addition of 2,000 SolusVM service providers to the federation is hoped to create significant new demand.
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In June, Neovise examined the nascent cloud federation space in the blog, Cloud Federation: Dream or Reality? We noted that several other companies were talking about cloud federation, but not making significant progress. We also described the substantial progress OnApp had already made, and indicated the need for further validation on the demand side.
Since that blog, OnApp has made steady progress in building demand, albeit less than the company had expected. The SolusVM customer base will both expand the OnApp federation and also serve as an additional source of demand. The installed base of SolusVM customers tends to be smaller with less access to capital for expansion. These attributes should make them a better match for reselling services from the OnApp Market than many of the existing federation members. We are looking forward to seeing the results in several more months.
While the strategic purpose of the SolusVM acquisition is to increase demand within the OnApp Federation, OnApp stands to gain regardless of the outcome. With SolusVM, OnApp now enables service providers to offer basic cloud servers in addition to integrated cloud, bare metal, hybrid smart servers, storage. and CDN services. A relatively small percentage of SolusVM customers may also decide to upgrade to the more extensive OnApp cloud platform capabilities.
In summary, the acquisition has limited downside and very large potential for accelerating the OnApp Federation. With SolusVM, OnApp seems to have the right pieces in place to help prove the viability of the federation model one way or another – both for itself and the industry at large.
