Update:: Eucalyptus Goes Commercial with $5.5M Funding Round. This removes my objection that it's an academic project only. Go team go!
Rich Wolski, professor of Computer Science at the University of California, Santa Barbara, gave a spirited talk on Eucalyptus to a large group of very interested cloudsters at the Eucalyptus Cloud Meetup. If Rich could teach computer science at every school the state of the computer science industry would be stratospheric. Rich is dynamic, smart, passionate, and visionary. It's that vision that prompted him to create Eucalyptus in the first place. Rich and his group are experts in grid and distributed computing, having a long and glorious history in that space. When he saw cloud computing on the rise he decided the best way to explore it was to implement what everyone accepted as a real cloud, Amazon's API. In a remarkably short time they implement Eucalyptus and have been improving it and tracking Amazon's changes ever since.
The question I had going into the meetup was: should Eucalyptus be used to make an organization's private cloud? The short answer is no. Wait wait, it's now yes, see the update at the beginning of the article.
The project is of high quality, the people are of the highest quality, but in the end Eucalyptus is a research project from a university. As an academic project Eucalyptus is subject to changes in funding and the research interests of the team. When funding sources dry up so does the project. If the team finds another research area more interesting, or if they get tired of chasing a continuous stream of new Amazon features, or no new grad students sign on, which will happen in a few years, then the project goes dark.
Fears over continuity have at least two solutions: community support and commercial support. Eucalyptus could become community supported open source project. This is unlikely to happen though as it conflicts with the research intent of Eucalyptus. The Eucalyptus team plans to control the core for research purposes and encourage external development of add-on service like SQS. Eucalyptus won't go commercial as University projects must stay clear from commercial pretensions. Amazon is "no comment" on Eucalyptus so it's not clear what they would think of commercial development should it occur.
Taken together these concerns imply Eucalyptus is not a good base for an enterprise quality private cloud. Which they readily admit. It's not enterprise ready Rich repeats. It's not that the quality isn't there. It is and will be. And some will certainly base their private cloud on Eucalyptus, but when making a decision of this type you have to be sure your cloud infrastructure will be around for the long haul. With Eucalyptus that is not necessarily the case. Eucalyptus is still a good choice for it's original research purpose, or as cheap staging platform for Amazon, or as base for temporary clouds, but as your rock solid private cloud infrastructure of the future Eucalyptus isn't the answer.
The long answer is a little more nuanced and interesting.
The primary purpose for Eucalyptus is research. It was never meant to be our little untethered private Amazon cloud. But if it works, why not?
Eucalyptus is Not a Full Implementation of the Amazon Stack
Eucalyptus implements most of EC2 and a little of S3. They hope to get community support for the rest. That of course makes Eucalyptus far less interesting as a development platform. But if your use for Eucalyptus is as an instant provisioning framework you are still in the game. Their emulation of EC2 is so good RightScale was able to operate on top of Eucalyptus. Impressive.
But even in the EC2 arena I have to wonder for how long they'll track Amazon development. If you are a researcher implementing every new Amazon feature is going to get mighty old after a while. It will be time to move on and if you are dependent on Eucalyptus you are in trouble. Sure, you can move to Amazon but what about that $1 million data center buildout?
Developing software not tied to the Amazon service stack then Eucalyptus would work great.
As an Amazon developer I would want my code to work without too much trouble in both environments. Certainly you can mock the different services for testing or create a service layer to hide different implementations, but that's not ideal and makes Eucalyptus as an Amazon proxy less attractive.
One of the uses for Eucalyptus is to make Amazon cheaper and easier by testing code locally without out having to deploy into Amazon all the time. Given the size of images the bandwidth and storage costs add up after a while, so this could make Eucalyptus a valuable part of the development process.
Eucalyptus is Not as Scalable as Amazon
No kidding. Amazon has an army of sysadmins, network engineers, and programmers to make their system work at such ginormous scales. Eucalyptus was built on smarts, grit and pizza. It will never scale as well as Amazon, but Eucalyptus is scalable to 256 nodes right now. Which is not bad.
Rich thinks with some work they already know about it could scale to 5000 nodes. Not exactly Amazon scale, but good enough for many data center dreams.
One big limit Eucalyptus has is the self-imposed requirement to work well in any environment. It's just a tarball you can install on top of any network. They rightly felt this was necessary for adoption. Saying to potential customers that you need to setup a special network before you can test this software tends to slow down adoption. By making Eucalyptus work as an overlay they soothed a lot of early adopter pain.
But by giving up control of the machines, the OS, the disk, and the network they limited how scalable they can be. There's more to scalability than just software. Amazon has total control and that gives them power. Eucalyptus plans to make more invasive and more scalable options available in the future.
Lacks Some Private Cloud Features
Organizations interested in a private cloud are often interested in:
Control
Privacy and Security
Utility Chargeback System
Instant Provisioning Framework
Multi-tenancy
Temporary Infrastructure for Proof of Concept for "Real" Provisioning
Cloud Management Infrastructure
Eucalyptus satisfies many of these needs, but a couple are left wanting:
The Utility Chargeback System allows companies to bill back departments for the resources they use and is a great way get around a rigid provisioning process and still provide accountability back to the budgeting process. Eucalyptus won't do this for you.
A first class Cloud Management Infrastructure is not part of Eucalyptus because it's not part of Amazon's API. Amazon doesn't expose their internal management process. Eucalyptus is adding some higher level management tools, but they'll be pretty basic.
These features may or may not be important to you.
Clouds vs Grids
Endless pixels have been killed defining clouds, grids, and how they are different enough that there's really a whole new market to sell into. Rich actually makes a convincing argument that grids and clouds are different and do require a completely different infrastructure. The differences:
Cloud
Full private cluster is provisioned
Individual user can only get a tiny fraction of the total resource pool
No support for cloud federation except through the client interface
Opaque with respect to resources
Grid
Built so that individual users can get most, if not all of the resources in a single request
Middleware approach takes federation as a first principle
Resources are exposed, often as bare metal
Related Articles
Get Off of My Cloud by M. Jagger and K. Richards.
Rich Wolski's Home Page
Enomaly
Nimbus
Sunday, June 14, 2009 at 9:29PM 
. Stephen explains is 