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6/18/2013
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VMware Fights Rival Amazon With 'Cloud Credits'

VMware says pre-paying for hybrid cloud services gives customers more control over "rogue IT spend," hopes it will keep them in the VMware fold.

VMware Vs. Microsoft: 8 Cloud Battle Lines
VMware Vs. Microsoft: 8 Cloud Battle Lines
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VMware has implemented Cloud Credits for its customers to purchase hybrid cloud services from VMware or a VMware partner. By putting Cloud Credits in place, virtualization managers "can reduce the rogue IT spend" on public cloud services, according to the program's explanation on the VMware website.

By "rogue IT spend," think of enterprise business units taking their computing needs to a fresh account at Amazon Web Services (AWS). The constant migration of enterprise computing from inside the data center, where VMware dominates, to the outside is what worries VMware these days. Countering AWS's appeal has been a target since February.

Cloud Credits came into existence Feb. 26, long before VMware announced plans to open four of its own vCloud Hybrid Service data centers May 21. The hybrid service became available on a limited basis this month in Santa Clara, Calif.; Dallas; Sterling, Va.; and Las Vegas. They are due to become generally available in the third quarter. VMware spokesmen didn't immediately say whether the Cloud Credits, originally intended to be used at partners' cloud services, could be used in its own facilities. But from its website description, they appear to be a fit.

The credits' purpose is to bring the outside cloud spending into one account, where it can be more easily supervised and managed. According to a VMware data sheet, with the credits "you can take advantage of cloud economics and improve business agility while reducing IT capital expenditures on new equipment. [The credits] give you increased budget flexibility and you maintain control and visibility of your cloud spend through your My VMware account."

[ Want more about VMware's new vCloud Hybrid Service? See VMware's Hybrid Cloud: Not Amazon's Model. ]

Cloud Credits are purchased from VMware to set up a kind of revolving account for cloud use through a vCloud partner. In the U.S., one dollar purchases one cloud credit. In the U.K. one British pound equals one cloud credit for a service provider there. The Australian dollar governs Cloud Credits one-for-one in Australia and the yen in Japan.

There are three vCloud data center partners in the U.S., and hundreds of regional vCloud "powered" partners. However, only nine of the vCloud powered partners are approved to take Cloud Credits. The U.S. data center partners are AT&T, Bluelock and CSC. Dell dropped off the list on May 20 when it left the infrastructure-as-a-service business (although it is still listed on the VMware data center partner list). In Europe, Colt is a data center partner.

Data center partners implement the full VMware vCloud suite and represent the most fully equipped partners to serve VMware customers. Bluelock and Colt are listed as Cloud Credit program participants among data center partners. "VCloud-powered" partners represent a less full implementation but are prepared to take workloads from VMware customers.

Out of many vCloud-powered partners, Peak Colo, Earthlink, Iland, RackForce and Savvis are among the 10 service providers that are Cloud Credit participants.

There are no markdowns on cloud services or credits earned through the purchase of VMware products in the Cloud Credit program. It's simply a more flexible way to administer the purchase of cloud services from within the VMware ecosystem. An account is set up in the MyVMware license and permissions management portal. The buyer deposits a Cloud Credit amount purchased from a service provider. The credits are good for one year from the date of purchase.

"Customers will work closely with their (VMware) partner to identify potential workloads and estimate the credits required to deploy the workload in the cloud," wrote Geoff Thompson, director of the Cloud Credit strategy, in a Feb. 26 blog heralding Cloud Credits' introduction. The program "provides a very effective mechanism to control cloud spend," he said, limiting users to the credits established in their name and showing Cloud Credit expenditures alongside on-premises license expenditures on the MyVMware portal.

The credits are another tool with which VMware is trying to help customers reach outside the enterprise data center into cloud services, without risking the possibility they will cease to be the firm's customers. Cloud credits are "a new way for customers to take advantage of public or hybrid cloud as a key component of their comprehensive IT strategy," wrote Thompson.

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