Intel pulled funding for the OpenStack Innovation Center (OSIC), which it co-founded with Rackspace in 2015.  The center's goal was to speed the development of the open-source, cloud management platform and encourage large companies to use OpenStack.

The funding cut forced Rackspace to eliminate 45 jobs associated with OSIC, Rackspace said.

In an email, Intel spokesperson Daniel Francisco confirmed that the company decided to end its participation in the OpenStack Innovation Center but will continue to contribute to the project.

“Intel and Rackspace are very proud of the accomplishments of our joint teams working in OSIC and of its contributions to the OpenStack community,” Francisco wrote.“Both companies believe strongly in the future of OpenStack and will continue to contribute to, and collaborate in, the community.”

Intel did not respond to questions about why it cut funding for the project. Rackspace said it expected the funding to continue until “at least July 2018.”

“As a result, Rackspace unfortunately had to notify 45 U.S. employees working on OSIC that their positions are being eliminated, effective April 28,” said Scott Crenshaw, Rackspace’s senior vice president, strategy and product, in an email. “Rackspace has already identified other jobs within the company for at least a third of those employees and is working to find new positions for the others, either within Rackspace or at other companies. All departing Rackers will receive severance and outplacement benefits.”

In February, Rackspace CEO Taylor Rhodes said in a blog post that the company was initiating layoffs to reduce its U.S. workforce by 6 percent.

When Intel and Rackspace founded the OpenStack Innovation Center in 2015, housed at Rackspace’s San Antonio, Texas headquarters, the two organizations said the center aimed to “accelerate the development of enterprise capabilities and significantly add to the number of developers contributing to upstream OpenStack code.”

Crenshaw said OSIC accomplished its goal to create the “world’s largest OpenStack developer cloud.” He cited a December 2016 Forrester Research report that described OpenStack as “the dominant platform for private cloud.”

Adoption of OpenStack private clouds is growing at a compound annual rate of 39 percent, according to 451 Research, which forecasted the total OpenStack market will be worth $5.7 billion by 2020.

“More than half of the global enterprises in the Fortune 100 use OpenStack, including many who purchase OpenStack private clouds as a service from Rackspace,” Crenshaw said in an email. “The OSIC Rackers who are departing represent fewer than 10 percent of the hundreds of Rackspace employees who will continue to contribute code to OpenStack, and to support the tens of thousands of customers who use it — both on our OpenStack public cloud and our Rackspace Private Cloud powered by OpenStack. Those customers will continue to receive the highest levels of expertise and service.”

In an April 5 blog post, Crenshaw labeled recent media reports citing the death of OpenStack as “fake news.” He’s referring to Hewlett Packard Enterprise (HPE) selling its OpenStack assets to Linux provider SUSE and Mirantis eliminating staff focused on OpenStack.

“Let’s get real here: HPE’s divestiture of Helion is no more a harbinger of OpenStack’s demise than its divestiture of Vertica foreshadows the end of the Big Data market,” Crenshaw wrote. “Similarly, Mirantis’ widely publicized layoffs don’t indicate a decline in OpenStack demand; instead, its newfound focus on managed services shows a shift in that demand.”