Mystery telco leads $14M round for OpenStack hosting provider Blue Box
Private cloud hosting provider Blue Box Inc. has completed its second financing round three months after securing the first infusion to bump its net funding past the $33 million mark. The latest $4 million leg saw an unnamed US telco come aboard as the second strategic investor in the startup, triggering speculation about which carrier would throw its weight behind an OpenStack hosting provider.
There are good reasons for telcos to show interest. The cloud operating system is the default provisioning engine in OpenDaylight, a controller that Cisco Systems Inc. and other industry bigwigs hope to position as the unifying standard for software-defined networks.
OpenStack is also a key component of OPNFV, a recent offshoot of OpenDaylight geared specifically toward addressing the requirements of telco environments. AT&T Inc. is the only American carrier that actively participates in all three projects, a fact that puts it on the short list of mobile network operators with an interest in buying a stake of a fast-growing OpenStack services provider.
Another possible investor is Verizon Communications Inc., a fellow contributor to OpenDaylight that is also transitioning toward a software-defined operating paradigm. The wireless giant has a much bigger public cloud presence than AT&T thanks to its 2011 acquisition of Terremark Worldwide, Inc.. Having a horse in the OpenStack race could help cement its position amid intensifying competition from Amazon Web Services and other providers.
Adding to the likelihood of Verizon being the mysterious backer is that some of the technical groundwork has apparently already laid for supporting the project. The company has promised to provide interoperability with OpenStack even though its cloud is based on other technologies.
But regardless of who is behind the anonymous contribution, the strategic investment suggests that an acquisition is in the cards at some point, given the surging demand for OpenStack expertise among incumbent carriers. The investment comes only three months after EMC Corp. bought OpenStack distributor Cloudscaling Inc., a deal that followed hot on the heels of Cisco picking up Blue Box rival Metacloud Inc. to bolster its own services portfolio.
Because of the explosive interest in OpenStack, any telco potentially seeking to buy the newly-funded firm may find itself contending another unnamed strategic investor that led the first part of the round. In contrast, existing backers Voyager Capital and Founder Collective chose to reveal their contributions to the investment, which also saw the participation of Blue Box executives. That’s another hint that an exit may be on the horizon.
The company plans to spend the new capital on hiring more engineers to help build out its proprietary management suite and expand business operations. Eric Mandl of Guggenheim Securities advised Blue Box on the funding.
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