Kyle Hilgendorf

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Kyle Hilgendorf
Research Director
3 years with Gartner
13 years in IT industry

Kyle Hilgendorf works as a Research Director in Gartner for Technology Professionals (GTP). He covers public cloud computing and hybrid cloud computing. Areas of focus include cloud computing technology, providers, IaaS, SaaS, managed hosting, and colocation. He brings 10 years of enterprise IT operations and architecture experience. Read Full Bio

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vCloud Hybrid Service: My take from VMworld 2013

by Kyle Hilgendorf  |  August 28, 2013  |  12 Comments

This week at VMworld 2013, VMware announced the general availability of vCloud Hybrid Service (vCHS).  vCHS has been in an early adopter program for the last couple of months but will enter GA on Monday.

vCHS is VMware’s public IaaS offering which will attract comparison against AWS, Azure Infrastructure Services, and other’s in Gartner’s Cloud IaaS Magic Quadrant.  However, vCHS will be limited for a while.  At launch, vCHS is a US-only hosted service, although sure to expand to Europe and Asia in 2014.  Q4 of 2013 promises services like DR-as-a-service and Desktop-as-a-service, but more basic services that have come to be the norm at competing services like object-storage services will be missing for the foreseeable future.  In fact, many developer-enhancing and cloud-native services (e.g. auto scaling, continuous deployment, packaging) are not part of vCHS at launch.

My expectation is that the interest from enterprise customers will be very high around vCHS, so what is my early take?

First, VMware had to create a public cloud service offering.  AWS has changed the industry and created a market and VMware had no choice but to compete with a public IaaS offering.   VMware is the private datacenter virtualization and private cloud behemoth.  Yet, increasingly, customers are considering public cloud deployments for future state (cloud-native) applications.  As organizations are using public clouds for cloud-native applications and dev/test workloads, an inflection point is on the horizon for the 80-90% of all other workloads possibly moving to public cloud environments.  VMware did not want to find themselves left out of that future shift.  Therefore, VMware had to try on their own to enter this market.  If not that, then they would have had to find a way to partner with AWS.  As of today, they’ve not found such a partnership.

Second, VMware has a compelling opportunity.  Clients are hugely invested in VMware technology and there is reason to believe these same organizations are looking for quick and easy runways into the public cloud for traditional workloads.  Migrating or converting traditional workloads into AWS or Azure has been minimal at best.  No one vendor or provider has a better chance for success of “holding onto” VMware workloads than VMware itself.  VMware understands the importance of the network in a hybrid cloud environment and their opportunity with SDN, the NSX offering from Nicira and the ability to cross connect into vCHS data centers will help their hybrid cloud story.  Finally, a true hybrid cloud story centers around management, and VMware has a management opportunity in a better position than most major public CSPs who struggle greatly with native management.

Third, I don’t see vCHS impacting AWS negatively.  I do see it impacting a large market of many smaller or regional vCloud providers.  Because vCHS will be missing many of the features that AWS users have come to depend upon, I do not expect to see any exodus of AWS customers to vCHS.  VMware claims that vCHS and AWS will attract different buyers and that AWS does not focus on enterprise-grade or compliant workloads.  I disagree.  From 2006-2012, AWS did struggle capturing the enterprise buyer, but every movement AWS has made in 2012 and 2013 (and all future movements) are positioned directly at enterprise buyers and enterprise-grade applications.  Furthermore, few providers can compete with AWS on security and compliance capabilities.  However, with the price point of vCHS and with the traditional VMware feature set, many VMware providers, including VSPP’s will face a very fierce new competitor in vCHS.  VSPP’s will have to be extremely clear what value proposition they bring against vCHS (for example industry vertical specialization) or be relegated to reselling into vCHS.

Fourth, I’m intrigued by the vCHS franchise service design initially rolling out with Savvis.  VMware must expand domestically and internationally quickly.  They cannot do that on their own.  vCloud Datacenter Services was VMware’s first attempt to do this, but it mostly failed due to the various providers differing enough to erode compatibility.  With the vCHS franchise program, VMware owns and operates the vCHS architecture and the franchisees provide the location, network and facility hosting services.  VMware does not have a large portfolio of datacenters to compete on their own, nor do they have any significant ownership in WAN networking or Internet peering.  Savvis with Century Link brings the networking breadth to the relationship and other future franchisees will do much of the same internationally.  Expect the cross connects to be similar to AWS Direct Connect and that is a win for customers.  Both VMware and the franchisee can sell into the service and the benefit for the franchisee is potential viral hosting growth of vCHS in their facilities as well as the opportunity to upsell customers into managed hosting, colocation and network cross connects.  Franchising will not be easy though.  VMware will have to manage it very closely to ensure quality and consistency, much like McDonald’s corporate tightly oversees all franchise restaurants.  It’s about ensuring a consistent and stable user experience and that should not be understated.  But it is VMware’s opportunity to enter new locations very quickly.  It would not surprise me if vCHS is in as many or more locations as AWS and Azure within 12-18 months through franchising.

Fifth, expect there to be growing pains.  VMware hired a fantastic leader in Bill Fathers, formerly from Savvis.  Bill brings a great leadership background in running services and is already pushing vCHS into a 6-week release cycle – a concept foreign to traditional VMware products.  But vCHS is not a commodity, its a uniquely created service. Multiple vCloud providers have told me that VMware is in for a surprise with their own products in that VMware will start to find the breaking points of product scalability.  Therefore, I expect vCHS to go through similar growing pains that other major CSPs have gone through over the past few years.  vCHS will not be perfect, it will have outages and it may not be as seamless between franchisees as promised. Customers should know this and pay attention to how VMware responds in the midst of issues, rather than hold them to perfection.  And if customers cannot accept this risk today, they should wait on the sidelines or look to a provider with more years in the market.

Finally, the public IaaS provider market is starting to show some interesting segmentation lines.  AWS is the dominating force, but mega vendors in the form of Microsoft, VMware and Google have made their intentions known and the service development and innovation each company possesses is creating a line between mega providers and the rest of the market.

So what does vCHS mean to you?  Well, I think long term, many organizations will not be able to avoid using it in some capacity.  Even some of the largest AWS adopters will find a place where vCHS shines past AWS.  Perhaps its the DRaaS or DaaS offerings on the horizon.  Perhaps its simplified lift and shift of large pools of VMs.  Maybe its more seamless management between the private datacenter and a public Iaas offering.  Whatever the use case ends up being, there is plenty of room in this market for multiple providers and most organizations will want at least 2-3 strategic IaaS partners for properly placing workloads based on individual requirements.  WIth the saturation of VMware in the enterprise, vCHS will surely be a logical endpoint for many of those workloads.  But vCHS will come with a ramp up and improvement period.  For organizations that want to assess it on day 1 and on-going, Gartner’s “Evaluation Criteria for Public Cloud IaaS Providers” can help you there.

What are your thoughts on vCHS?

12 Comments »

Category: AWS Cloud Hybrid IaaS Microsoft Providers vCloud VMware     Tags: , , , , ,

12 responses so far ↓

  • 1 Steve Gorton   August 28, 2013 at 10:57 pm

    Informative article Kyle – thank you.

    Any DRaaS offering from VMW will suffer from point 5 – Growing Pains – as the VMW Site Recovery Manager offering (DRaaS) does not scale well.
    I fear the VMW inability to robustly scale their product offerings and make those same services integrate at scale will cause VMW and vCHS to have limited success and hence appeal.
    I wish them well though as robust scaling is difficult.

  • 2 Preetam   August 29, 2013 at 2:25 am

    On vCHS, businesses will have less trouble on compatibility part. It will be smooth move between On premises and off premises.So it is gain for the business but how does the cost model turns out is a thing every CIO would look for. Another trend we see in the market is vendor lock-in. AWS is doing amazing but then OpenStack is emerging. Primary reason OpenStack is emerging because AWS forging ahead. So OpenStack can be looked at a collaboration of all big companies to have something vendor neutral and not get into AWS forever. Similar thing can be said about vCHS. It is vendor lockin. Another bigger problem especially is US is about partners. Partners (CSP) already have cloud ready DC but now they need to compete with VMware directly or rent out their facility to vCHS. This is significantly changing their business model.

  • 3 Kyle Hilgendorf   August 29, 2013 at 7:05 pm

    @Steve: Thanks for the comment. I agree 100% with you. I can also say that VMware is keenly aware of the SRM scalability issues and I can only imagine that the vCHS team and SRM team will be partnering closely together to make this work for DRaaS. But the devil will be in the details. Will DRaaS have limitations at launch? I’d expect obviously so.

  • 4 Kyle Hilgendorf   August 30, 2013 at 1:28 pm

    @Preetam: Thanks for the comment. I mostly agree. Competition is fierce. OpenStack is maturing rapidly. Azure also shows strong promise. vCHS will likely do well also. And of course AWS is AWS – still a dominating force.

    I think an interesting battle to watch will be vCHS vs Azure…because the more I consider it, I think the traditional workloads will be looking at those two services increasingly. Azure has a big advantage right now in the breadth of services (IaaS and PaaS), but VMware has a different advantage, the density of existing vSphere clients and promised seamless migration. vCHS will bring CloudFoundry and Pivotal into the mix and Azure is working hard on more seamless migrations from VMware.

  • 5 Marcel van den Berg   August 30, 2013 at 2:36 pm

    Great post Kyle!
    Can you explain a bit more on the ‘Azure is working hard on more seamless migrations from VMware’ line in your last comment?

  • 6 Brad   August 30, 2013 at 5:22 pm

    Do you think this strategy of not owning the underlying physical infrastructure can succeed long-term or will VMW be forced to buy physical datacenter assets like IBM recently did with Softlayer?

  • 7 Kyle Hilgendorf   August 30, 2013 at 8:35 pm

    @Marcel: Sure. Azure now offers Infrastructure Services, their take on IaaS. However, the process to migrate from an internal VMware environment currently involves using Microsoft Virtual Machine Converter to convert the VMDK to VHD and then you upload the VHD into Azure VMs. Its less than a seamless process today with a few manual steps, but I can assure you Microsoft has heard the feedback from customers for more seamless migrations and with the competition coming from vCHS, I can only help but think that it will be a further automated process via System Center and the Microsoft suite in the future. I found a Microsoft lab link that might give more useful details:
    http://blogs.technet.com/b/keithmayer/archive/2013/05/30/guided-hands-on-lab-migrate-vmware-vms-to-windows-azure-20-key-scenarios-with-windows-azure-infrastructure-services.aspx#.UiEAwGRAQUw

  • 8 Kyle Hilgendorf   August 30, 2013 at 8:38 pm

    @Brad: Yes I do think it can work. In fact, most public cloud IaaS providers do not own the underlying physical data center facilities (buildings, power, cooling, network), and most of them are doing quite well. The franchise model between VMware and Savvis is not 100% clear yet in terms of ownership, but VMware does own the architecture, design and implementation of the vCHS service. Savvis will surely own the facilities and the stack up to somewhere in the middle. Where exactly they meet in the middle like the network, cages, racks, etc is not clearly known. But I believe it can work.

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  • 11 Mojo Nixon   September 4, 2013 at 4:42 pm

    @KyleHilgendorf when you say “Customers should know [franchise will be bumpy] and pay attention to how VMware responds in the midst of issues, rather than hold them to perfection” can you elaborate on what you mean?

    Thanks, and great insights.

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