Chris Wolf

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Chris Wolf
Research VP
6 years at Gartner
19 years IT industry

Chris Wolf is a Research Vice President for the Gartner for Technical Professionals research team. He covers server and client virtualization and private cloud computing. Read Full Bio

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Is VMware a Provider or Enabler?

by Chris Wolf  |  April 12, 2011  |  5 Comments

Today VMware announced the launch of Cloud Foundry – a cloud service that makes it easy for developers to get started with VMware’s Open Platform-as-a-Service (Open PaaS) offerings. VMware CTO Steve Herrod offered good insight into VMware’s plans for Cloud Foundry in this post. In case you missed it, last week Steve Herrod blogged about VMware taking over operations for EMC’s Mozy cloud-based data protection service.

So in the past week, VMware has quietly announced that it will host two cloud service offerings. I say “quietly” because there were no press releases or the usual fanfare. VMware has long positioned itself as an enabler for cloud service offerings. One can clearly say that today they still are. Cloud Foundry is a beta service that for now, is free. In the case of Mozy, VMware runs operations for the cloud data protection service, but doesn’t actually sell it (that responsibility stays with EMC).

With the past two announcements, you could say that VMware isn’t stepping on the toes of its provider partners, but it is standing so close to their toes that it is making them uncomfortable. VMware’s not a provider in the traditional sense today, but they are building an infrastructure and operational processes that can allow them to become a provider at the flick-of-a-switch. To me, the last two announcements equate to simple math.

Mozy + Cloud Foundry = Insurance

Right now VMware is moving forward as an enabler to cloud service providers and is doing well selling infrastructure and associated management software. By hosting some of their own cloud services, VMware can now test and perfect new innovations at an enterprise scale – all before releasing new software to end user organizations and provider partners. With Cloud Foundry, VMware is making a significant investment to further seed the Open PaaS community with expectations that it can grow to rival Microsoft’s .NET platform and Azure.

In the future, if there is massive consolidation in the cloud provider market due to economies of scale, the few providers left standing may determine that they no longer need VMware. If that happens, VMware needs insurance to ensure its survival in an increasingly cloudy world. In addition, it’s no secret that rivals Microsoft, Citrix, and Oracle are optimizing their hypervisors and application stacks to work better on their own products than rival hypervisors. As I’ve said before, VMware can’t remain primarily as a platform for Windows applications in an area where Microsoft is a direct competitor. That story always ends the same. So the success of Open PaaS is very strategic to VMware because in my opinion VMware needs a strong application platform to compete against the likes of Microsoft and Oracle long term.

Maybe I’m wrong here and all VMware will ever be is an enabler for cloud services. If you just consider Cloud Foundry, you might be able to draw that conclusion. When you combine the Cloud Foundry announcement with the recent Mozy announcement, it’s easy to see that VMware is building more in-house provider expertise that will strengthen its products. However, that expertise could easily evolve into a provider business if market demands warrant.

5 Comments »

Category: Cloud Server Virtualization     Tags:

5 responses so far ↓

  • 1 Marc Farley   April 12, 2011 at 3:23 pm

    Hi Chris, Marc Farley from HP (3PAR) here.

    Nice piece. It appears that the momentum of industry consolidation and the frantic move toward cloud markets is impacting every major vendor’s strategy. It’s as if the life cycle expectations for strategies in technology all were cut in half and it’s leading to much more interesting co-opetition with higher stakes. If the hypervisor market becomes a pawn for some other growth opportunity in the future then VMware appears to have prepared themselves for that – without blowing up their current business. Well-played.

  • 2 Brian Madden   April 12, 2011 at 3:55 pm

    Another instance of VMware becoming a provider is with Project Horizon, the internal apps-to-SaaS authentication & provisioning bridge offering that’s due out soon. In that model VMware will also be the service provider acting as the middleman between the corporate and SaaS apps.

  • 3 Chris Wolf   April 12, 2011 at 4:52 pm

    @Marc – You’re the famous Marc Farley – no intro needed. ;) Good points. Agreed.

    @Brian – Good point on Horizon.

  • 4 VMFan   April 12, 2011 at 9:44 pm

    VMware has no business plans of being a cloud provider or hosting service. Ask me how I know. VMware doesn’t step on their partners like Microsoft!

  • 5 Mariano Maluf   April 14, 2011 at 4:35 pm

    Very good, article Chris, thanks. I agree with Marc and Brian’s thoughts, as well, and I believe the balance is still on the Enabler side. (as a quick example, Zimbra already had ~200 hosting SPs when VMware acquired it, and that has not changed yet)

    In regards to more changes, while we’ve seen weird things before and many things are possible in the future, from a short/mid-term horizon there are quite a few things to consider:

    The vCloud play is huge for their future (successful transactional business has been Hypervisor-based so far), and that initiative depends on a diverse Cloud Provider ecosystem model (unlike other models out there), in order to ensure customers have choice for their Hybrid Clouds.

    From a competitive advantage standpoint, their goal is to differentiate from others, not to follow their same strategy. In my view, becoming a single, central vCloud-providing entity eventually would seem to go against their competitive strategy, the vCloud initiative itself, the VSPP program, and the “standardized container model” for workload mobility being developed by DMTF (OVF, etc.)

    While their traditional cash machine has been hypervisor SW sales to enterprises, there was actually $1.3B of partner ecosystem business; it would be hard to walk away from that. Additionally, they had 40% growth YoY in the Partner business (33% faster than others); probably not wise for them to want to disrupt that piece (~85% of business comes from Partners). Also, it took them 13 years to reach $10B in cumulative years’ growth, and to reach their stated goals they know they can’t do it without Partners. (their Sr. Leadership message to Partners during PEX was (verbatim) “We don’t compete with you”)

    If we look at some stats out there predicting (3 year horizon) that 15% of enterprise workloads will be on the Cloud and 85% will still reside in customer’s datacenters, then rather than disrupting the vCloud initiative it would seem logical for them to strengthen it, so that when enterprises get closer to the Hybrid Cloud model, the ecosystem is grown and mature.

    Again, time will tell, these are just my thoughts at this time.