Will Sun’s Q-Layer deal end its cloudy days?

Sun Microsystems Inc.’s purchase of Belgium-based cloud computing vendor Q-Layer NV could be the first step in rescuing the company from declining revenues and a struggling hardware business, according to industry observers.

The server and storage giant said Q-Layer’s technology will allow it to deliver simplified cloud management and instant provisioning of servers, storage, bandwidth and software for private and public cloud computing environments. According to Sun, making cloud management easier and speeding up application deployment times will enable users the ability scale their own environments to meet their specific requirements.

Sun did not disclose the financial terms of the purchase, but said the value of the deal would have little to no impact on the company.

Charles King, principal analyst at Pund-IT Research Inc., said that application deployment and management is a critical area of cloud computing and a very complex technology to develop in-house. The acquisition, he said, fits in nicely with Sun’s other integrated data centre offerings, such as Project BlackBox and its data centre design and construction business.

“The larger enterprises as well as the hosted service providers are the first organizations that are likely to buy into the cloud idea,” he said. “It’s important for Sun to chase or produce a competitive offering in this where it can.”

Jean Bozman, research vice-president of enterprise servers at IDC Corp., said that cloud computing efforts from companies like IBM Corp. have looked at cloud enablement by leveraging virtualization technologies. Some vendors have also begun outlining how they are going to provision the software stacks that get put onto the hypervisor, she said.

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“That’s what allows for on-demand scale-up,” she said. “By pushing more of these software stacks through virtualization and then provisioning them as needed to IT.”

The Q-Layer purchase and its ability to do automated deployment and management, she said, helps Sun respond to what the other major vendors have been doing.

Darin Stahl, lead analyst at London, Ont.-based Info-Tech Research Group, said vendors will continue to link internal virtualized infrastructure with external cloud computing, mostly because internal virtualization is much further along and can easily have the cloud name attached to it.

The cloud plays from VMware Inc., Microsoft Corp., HP Inc. and IBM Corp., he added, are all about seizing the high ground of federating internal and external cloud management.

“Based on what we’ve seen with this Q-Layer announcement, the offering that Sun is getting will certainly fit this camp,” Stahl said.

As for why Sun chose to buy rather than build, King said the company was simply running out of time and had to keep pace with other industry giants.

“Buying Q-Layer should allow Sun to hit the market running and avoid costly trips and falls along the way,” he said. A 12- to 18-month development project to create this type of technology, King added, would have been a fatal delay in the rapidly developing cloud market, especially considering that Sun has stumbled out of the gate on this technology.

Last year, Sun laid out a plan to transform its utility computing business, which allowed companies to buy computing power from Sun’s data centres at a fixed rate per hour, into a new cloud-focused unit.

“That was kind of an early attempt at cloud computing. We got some features right and some not right,” Dave Douglas, senior vice-president in charge of Sun’s Cloud Computing division, told press and analysts – including the IDG News Service – last December. “We still think that model totally makes sense,” he added.

Bozman said that the company has all the building blocks needed to play multiple roles in the cloud computing, including Solaris OS, MySQL database, xVM virtualization software and ZFS file system. It will be how Sun brings these tools together, she said, that will determine how successful they are with the technology.

“We still haven’t heard about the go-to-market strategy,” Bozman said. She added that whether or not Sun looks at delivering on some of these services with another company, such as Amazon Web Services, remains to be seen.

And the right go-to-market strategy will be a crucial factor in how Sun ultimately profits from this move.

Last October, IDC estimated that about US$16 billion will be spent worldwide on cloud computing services in 2008. The consultancy said that number should grow to $42 billion in 2012. Over the same period, cloud computing is expected to grow from four per cent of the total IT spend in 2008 to nine per cent of total IT spend in 2012.

King said that in even in an extremely difficult economy, the cost that is typically found in a cloud infrastructure sale tends to be on the high-end – which could present a strong opportunity for Sun in the coming year.

“It tends to involve a lot of hardware, software, and consolidating,” he said. “From the standpoint of income and revenue generation, this is exactly the kind of deal that Sun and other vendors want to pursue right now.”

Sun spokespeople declined a request for an interview.

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