After Virtualization: VMware’s Valiant Plan to Co-opt the Cloud
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share workloads with private clouds running vCloud Suite. Not only does VMware’s public cloud run on vSphere, but the core hypervisor has been engineered to manage virtual machines across the boundaries between private and public clouds.
While VMware executives would probably blanch at the comparison, you can think of vCloud Hybrid Service as VMware’s version of Amazon EC2. The difference is that it’s guaranteed to run the 90 operating systems and 3,700 applications that are already certified to work with vSphere, so VMware customers can seamlessly transfer jobs running in their own data centers into the cloud.
VMware doesn’t expect the same kinds of startups who use EC2 to tap into vCloud Hybrid Service. It’s designed for enterprise users who have been yearning to try public clouds—and may even have moved some test applications to Amazon or other services—but who haven’t been able to take the plunge, since public clouds often don’t support legacy enterprise applications.
“The challenge for our customers is that they are not like startups,” says Mathew Lodge, VMware’s vice president of cloud services. “There are any number of companies that can get you to the cloud tomorrow, as long as you forget about everything you currently have. That is the challenge we have decided to tackle. We are a bridge—a blend of what you have today in your existing data center, plus the public cloud.”
The perfect customer for vCloud Hybrid Service, Lodge says, might be a big media company that manages all of its digital content—say, streaming TV shows and movies—from its corporate data center. The company might want to move some of its operations, such as marketing campaigns, to public cloud servers, since they’re fundamentally more flexible. “The cloud automatically scales based on demand, so you never need to do forecasting again,” Lodge says. “But typically, [marketing] has to interact with a customer database sitting in the data center. In that scenario, customers are like, ‘How do I network these things together?’ That is a great example of a hybrid cloud use case.”
To run the new hybrid cloud services business unit, Gelsinger recruited Bill Fathers, the former president of Savvis, which offers colocation and managed hosting services to 2,500 business and government clients from a network of 50 data centers around the world. Fathers has brought to the company’s cloud division “an operational discipline that we haven’t had in the past,” in Jacques’s words.
To some extent, vCloud Hybrid Service is a case of “If you can’t beat ‘em, join ‘em.” VMware knows many of its customers would defect to public clouds if they could. “Ultimately, where this is going is, you are going to say, ‘I have a workload. Where is the cheapest place to run it? Public, private, hybrid?’” Adams says. By offering its own cloud service, VMware can keep these customers in the family, whatever their final choice.
But it’s also a good business play—not as good as software licensing, perhaps, but almost, Lodge says. “Because your cost of goods is almost zero for software, the gross profit is huge—-there is no better business than that,” he says. “But this [the hybrid cloud] is still a good business for us, because we get much greater share-of-wallet than we do with software alone. A customer that is licensing vSphere from us might be buying some networking gear from someone else. This way, we will be renting them the server, storage, network, and everything else.”
Solving Bigger Problems
If public clouds were true utilities, like the electrical grid, it might be game over for VMware. It would almost always be cheaper for enterprises to rent computing power than to build giant data centers, then hire the administrators and license the software needed to run them. But they’re not—most applications have to be tailored to run on public clouds, and others won’t work at all, or have privacy and security requirements that preclude putting them in the cloud. And that, for the moment, has left a window of growth open for VMware.
The company’s challenge now, as ever, is to keep finding ways to help customers get more out of the expensive hardware they’ve already bought. “We are doing to networking and storage what we did to the x86 servers,” says Mahesh Kumar, VMware’s director of enterprise management marketing. “We did not come out and say, ‘You don’t need x86 servers.’ We said, ‘We know you have an existing investment, and we will make it that much more economical to use.’”
That means, in part, making a private data center look and act as much like a cloud service as possible. In the software-defined data center, “every aspect of the data center that needs to be managed and provisioned is now managed by a piece of software rather than a human,” says Davie, the former Nicira engineer. The big win, he says, is not that companies can consolidate more computing into a single data center and a single network—they could already do that. Rather, he says, it’s that “you can change the provisioning model to one that is more automated.”
The vCloud Automation Center portion of vCloud Suite lets customers send parts of their computing workload to public clouds such as Amazon Web Services and Windows Azure, providing a sort of release valve for companies who want to experiment. But with vCloud Hybrid Service, the company is providing a unified environment that’s free of compatibility hassles, and hoping companies will stay in-house.
Meanwhile, VMware in the Gelsinger era is becoming more streamlined. Sales staff and channel partners are being trained to sell all the parts of the vCloud Suite as a bundle, rather than having to go back to customers over and over. Pieces of the company that weren’t related to software-defined data centers, hybrid clouds, or end user computing areas are being spun off. After Maritz stepped down at VMware, for example, he moved to Pivotal, which is building an enterprise-friendly cloud application development platform, using pieces from VMware’s Cloud Foundry business and Maritz’s SpringSource and GemStone acquisitions. (Pivotal is a joint venture between EMC and VMware, with General Electric as part owner.)
As Greene’s tenure was ending back in 2008, the big question at VMware was: what comes after virtual machines? Now that question has an answer. “Eventually we’ll get to the point where every x86 server is 100 percent virtualized,” says Lodge. “Our customers want us to help them solve bigger problems, and cloud is one of those.”
But it will all come down to execution, which happens to be Gelsinger’s specialty. “We are one of the very few companies that is well positioned to take advantage of the cloud,” says Adams, the vSphere group manager. “We have the major pieces. It’s just a matter of bringing them together in the right way, and doing the right thing for the customer at the right time. That is the key challenge that keeps us coming to work on a daily basis.”
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