Recently I read an article in which the author claimed that Amazon EC2 was seeing competition from Eucalyptus, a partially open-sourced clone of Amazon's EC2.  Eucalyptus, available in a free open source version and an enterprise edition, provides a framework for creating and managing a cloud using the same syntax and semantics as Amazon EC2 and S3.  While several of my colleagues have called this "competition" for Amazon, i think the existence of Eucalyptus is actually a tremendous benefit for Amazon.  In essence, I believe it to be a highly complimentary product.

The concept of Private clouds (aside from the hardware and software companies that use the terms cloud and private cloud to hype and justify their products by association with cloud computing - for example, here we have a Microsoft Cloud Mouse or the iTwin Cloud Computing USB flash drive) are clouds managed by a single enterprise for their own use, and are a great paradigm for the pooling and management of enterprise IT resources.  While private clouds don't bring all of the same benefits of public clouds, they bring plenty enough benefits to be a valuable methodology and strategy for the delivery of IT services.  For further reading on this see my article Private vs Public clouds.

Eucalyptus provides a way for companies to build hybrid cloud solutions compatible with Amazon EC2 providing uniform ways to provision and administer both private and public  cloud resources.  Hybrids allow companies to take advantage of both their own existing infrastructure using highly agile provisioning and scaling techniques, and also leverage the "on-demand" resources and economies of scale offered by public cloud computing.   Eucalyptus, instead of competing directly against Amazon EC2, provides a much needed option that completes a solution for Amazon.

Eucalyptus' EE edition appears to have a rich feature set for enterprises that which build private clouds, with or without hybridization.  Their open source edition, according to their website is currently missing things like:  VMware hypervisor support, Virtual-to-virtual image support for VMware, Microsoft Windows Guest Support, direct SAN integration, quota management and accounting, user group and access management, and high performance MySQL database back-end.  The current lack of these features, makes the open source edition little more than an educational toy, but it's definitely an interesting toy to play with and a way to become more intimately aware of what it takes to build a cloud.

In general, beyond the private clouds that may be built with Eucalyptus, it's hard to imagine (but not 100% impossible) that Eucalyptus would enable any serious competition to Amazon EC2 in the public cloud arena.  The scale at which EC2 operates enables Amazon to take advantage of incredible economies of scale in datacenter costs, internet data costs, and overhead.    Also, given the choice between placing trust in an unknown cloud provider with unknown depth of resource vs Amazon (who also doesn't reveal their depth of resource), I believe most would trust Amazon first.   For those inclined to build a private cloud or a hybrid that includes Amazon EC2, Eucalyptus provides a powerful and compelling solution.