PayPal has just announced its intention to embrace OpenStack cloud architecture, ripping out software from rival VMware in more than 80,000 servers to make room for the open-source solution, according to a report in Business Insider this morning.

The plan was revealed by the OpenStack Foundation’s board member Boris Renski, one of the co-founders of OpenStack consultant company Mirantis, which is backed by Intel and also has ties with PayPal. To begin with, PayPal will replace VMware on around 10,000 of its servers, with this first phase of the new deployment set to be up and running by the summer. But the changes won’t end there, as PayPal and its parent company eBay are ultimately looking at replacing all of their VMware virtual infrastructure on the estimated 80,000 servers they run across their data centers.

PayPal’s Switch Puts VMware In A Quandry

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The move is fairly surprising even though PayPal is a long-time member of the OpenStack Foundation. The online payments provider also happens to be one of the heaviest VMware users around too, currently running VMware’s vSphere software, but Renski says that the OpenStack adoption is about adding flexibility to its virtual servers by integrating a new layer of orchestration into them. Unfortunately for VMware, PayPal seems to think that OpenStack is the best provider to deliver this new layer for them. All of this only lends weight to the view that large-scale enterprises are shifting away from the traditional all-in-one infrastructure approach, towards “packaged” open-source software alongside specialized consulting services.

Meanwhile VMware now finds itself in the unusual position of being both a competitor and a contributor to OpenStack. As a member of the OpenStack Foundation, VMware has teamed up with Piston Cloud to integrate its Cloud Foundry platform-as-a-service, while lending its support to both Nicira’s Quantom virtual networking project and its own ESX hypervisor in OpenStack. In addition, its RabbitMQ middleware application has also seen heavy adoption by members of the OpenStack community.

VMware appears to be in something of a quandary at the moment. The cloud computing/virtualization software environment is rapidly changing, and while it might think it’s playing things safe by embracing both traditional and modern approaches to virtual infrastructure, the reality seems to be that the longer it ‘sits on the fence’, the more easily it could be left behind.

Here with more analysis is Wikibon Co-Founder and CTO David Floyer on today’s edition of NewsDesk: