VMware's Stealth Strategy: Gain Public Cloud Revenues - InformationWeek

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9/2/2015
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VMware's Stealth Strategy: Gain Public Cloud Revenues

VMware thinks it's gained more ground in the public cloud market than analysts realize; it won't be pushed out by Amazon.

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VMware vCloud Air barely registers on the Gartner and Forrester cloud meters.

Nevertheless, the VMworld show in San Francisco this week is about everything from end-user workspaces to VMware's offerings in the public cloud. Between the lines of the announcements is the message: Virtualization is the key to the secure digital company of the future.

Indeed, it's clear from this year's VMworld that VMware has passed beyond server virtualization the way an F-16 breaks the sound barrier. It hits it and just keeps going faster. VMware is now telling customers to convert their VMware virtualized servers to VMware virtualized networks, which are tied to VMware's Virtual SAN (VSAN) storage.

The fully virtualized data center then is a natural fit with the vCloud Air public cloud. If there are benefits to vMotioning or live migrating virtual machines within the data center, think what you might do once you can vMotion between data centers.

Disaster recovery or simple system recovery becomes a no-brainer for many more systems; duplicate VMs are stored at an alternative site. Cloud bursting, in which the public cloud subs for a further buildout of the data center during short periods of peak demand, is also no-brainer.

During his Tuesday, Sept. 1, keynote, CEO Pat Gelsinger told the 23,000 attendees in San Francisco's Moscone Center that small companies in the digital economy can disrupt large, established ones because they can move faster. The way an established company should respond is not to try to lock in customers but to learn to move faster itself. Virtualized servers, virtualized VMware NSX networks, and virtualized storage, all tied to a public cloud service, will help them do that, he said.

VMworld 2015 
(Image: Charles Babcock/InformationWeek)

VMworld 2015

(Image: Charles Babcock/InformationWeek)

"Innovate like a startup. Deliver like an established company," he advised during his keynote.

Asked during a Q&A session whether VMware, as an established company, was moving fast or slow, he declined to say it was moving fast enough. His firm had just launched release 6.2 of its ambitious virtual networking, NSX; release 6.1 of its complex configuration and capacity manager, vRealize Operations; upgrades to its vCloud Air public cloud; and a Photon Platform for running containers. Gelsinger nevertheless responded: "Are we slow? No, I don't think so. Are we as fast as we need to be? No, I don't think so. I think we need to go faster."

Some customers are finding the pace at which VMware is moving is almost fast enough. One of its customers' top requests is to make vSphere version upgrades less challenging and less time-consuming. Most are using physical networks; VMware is urging them to convert to virtual nets on the strength of its newfound expertise there. Virtual storage is less of leap because storage management systems have been pooling resources for years. Nevertheless, VMware urges customers to adopt its VSAN.

[Learn more about VMware's plans. See VMware Advances Hybrid Cloud At VMworld.]

Gelsinger and COO Carl Eschenbach were asked in a post-keynote Q&A session how VMware was going to gain traction in the public cloud, as it aspires to, when Amazon Web Services, Microsoft, Google, and IBM services are all growing much faster than it is.

Eschenbach responded that VMware already had significant traction in "hybrid cloud" computing, where much computing is still done on-premises, but cloud data centers take on large tasks, disaster recovery, and "bursting" out of the enterprise data center when traffic demands it. The current implementation of long distance vMotion, a function familiar to the virtualization manager inside the data center, will greatly increase use of VMware's public cloud, he said.

Saying cloud-related revenues represented 7% of revenues in the past quarter and probably 10% in the current one, Eschenbach said: "It's the most rapidly growing piece of our business."

That's less than obvious to a casual observer.

Continued on page 2

Charles Babcock is an editor-at-large for InformationWeek and author of Management Strategies for the Cloud Revolution, a McGraw-Hill book. He is the former editor-in-chief of Digital News, former software editor of Computerworld and former technology editor of Interactive ... View Full Bio

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Charlie Babcock
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Charlie Babcock,
User Rank: Author
9/2/2015 | 5:30:16 PM
VMware both offers cloud services and sells the software needed to run cloud services
Customers can turn to a regional service provider, such as Bluelock, and make use of that provider's implementation of a vCloud, and VMware still benefits. That's because third parties have to acquire VMware's cloud software to establish their services. As VMware itself gains expertise in offering vCloud services, it shares that know-how with third parties trying to keep themselves up to date, Ajay Patel said.
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