I’ve been thinking more about the VMware on AWS announcement. Here’s some points that don’t seem to have been covered.
Hardware vendors haven’t changed to compete with public clouds and this is hurting VMware today. Putting VMware on AWS is a strategic move that has several possible outcomes.
Here is how I see it:
- VMware is highly dependent on hardware partners like Dell, HPE, Cisco, Lenovo, Intel etc., to produce products that ESX/vRealize can operate on and compete with public cloud companies.
- These vendors haven’t changed their products, technology or sales strategies to reduce the friction of ownership. It remains difficult to buy, build and operate a private cloud after, at least, five years of transition.
- VMware attempted to drive this market with vxRack/vxRail and produce a viable convergence strategy that would reduce customer anxiety.
- Hardware vendors responded by producing their own converged/hyperconverged products such as Cisco HyperFlex. New companies like Nutanix emerged to fill the niche. None of them support VMware wholeheartedly (or at all)
- A major attraction of AWS is the relative simplicity of executive engagement. Executives think they understand the ‘building blocks’ offered by AWS. And AWS is dramatically simpler than dealing with incumbent IT infrasructure vendors who have tens of thousands of SKUs, require dozens of meetings, and waste vast amounts of project dollars on establishing bills of material and project scopes.
- VMware knows that OpenStack remains a threat–not in the Enterprise but in the Service Provider market, where avoidance of structural cost has become a mantra. OpenStack is likely to be forged into a workable solution by carriers before re-emerging into the Enterprise market.
The outcomes I’m thinking about:
- VMware is sending a strong message to its hardware partners. We will go where customers go and AWS is the simplest, fastest way to stand up our product and make revenue.
- The diversity of competing private cloud strategies and the lack of a clear winner is undermining customer confidence in picking a solution. In aggregate, customers are not experienced in choosing for themselves and have limited technical & business capacity to start learning.
- VMware is a software company. Embracing AWS as a hardware platform isn’t a huge deal and gives VMware leverage in future partnerships.
- VMware has great technology in NSX and VSAN but their growth isn’t replacing ESX license stagnation. They are forced to act to prevent shrinking.
- vCloud Air, and partners in the vCloud Air Network, are not a successful competitors to AWS/Azure et al. No one wants to build a public cloud using VMware software (probably because it isn’t good enough at an operational level).
- Resellers continue to lose out. No surprise there, as vendors use ‘software defined’ to take away the value that resellers offer (and the profits that accrue from it).
- The Dell/EMC merger could be looking for short-term cash outcomes and driving short-term revenue solutions.
The EtherealMind View
VMware is taking a substantial risk. Offering easier access to AWS Services by placing workloads in AWS data centers means they must compete with AWS to retain customer spend. You can read this as:
- Defensive – protecting the wind-down of a legacy, shrinking business
- Offensive – keep the enemy close, work with them, and profit from their growth
- Rebirth – embrace AWS and add value to the AWS platform in addition to its own and emerge as a bigger player, perhaps in control of AWS services.
But what drives the VVMware to act ? They could wait. I think the most significant driver has been “All in with cloud” customers. A number of substantial organizations are declaring an intent to move everything into the cloud to execute a ‘digital transformation’ of their IT.
Many workloads simply do not work on AWS systems and I’m sure that companies like BP, GE etc know this and have been asking/demanding AWS and VMware to cooperate. This is difficult to judge but, hey, “customer comes first” even when its kills your company is a regular occurrence.
We just have to wait and see.