Your Cloud, My Cloud, or Our Cloud? Rethinking VMware Public Cloud Strategy

About two weeks ago, CRN published an article about VMware Zephyr project. According to the article, VMware plans to launch a public IaaS cloud to compete with Amazon EC2, Microsoft Azure, and more directly with existing VMware vCloud service providers. The reason for the move is “because none of its service provider partners are moving fast enough. Look at the adoption rate of vCloud Director with service providers — it is non-existent.”

While everyone tended to think the rumor is true, VMware just announced vCloud Service Evaluation in which “a 1Gb Linux VM with one vCPU is $0.04/hour – and you are free to run the VMs you need until you are done.” The blog article in particular pointed out that “we commissioned a VMware vCloud service provider to build and operate the service on our behalf. We’re giving you a vanilla example of how a vCloud Powered service – delivered by a VMware vCloud service provider – would work.” Note that it’s free to run, but not free of charge for evaluation. I kind of think both should be free as is MS Azure for 90 days free trial.

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In my opinion, the Zephyr project makes a lot of sense for more reasons than quoted in the CRN article even though it may alienate existing service providers in the vCloud program.

As I pointed out in my last article What VMware Didn’t Tell You About Nicira Deal, most service providers have never committed to massive deployment with VMware due to price and limited scalability. But they still partner with VMware to get businesses from enterprises that have already standardized on vSphere. The partnerships are in general rather passive than active. What VMware wished for – service providers aggressively promote VMware vCloud – is not true in reality. I think the value of vCloud program is very limited for VMware. I also believe although the existing partners won’t be happy with Zephyr, they will continue the partnerships because VMware’s strong hold in enterprises will continue to bring them businesses.

Offering cloud services has lots of benefits and solves many problems that bother customers. Technically speaking, VMware can feel better the pain points of operating big data centers, and do better on scalability and automation in its products. The “eat your own dog food” always helps.

Business wise, customers will have a single point of service. The existing vCloud program does not give customers best experiences. The service is offered by service providers, the related APIs/Portals are controlled by VMware but customized a little. That means you cannot easily switch service providers as claimed. But if everything the same, how would service providers differentiate their services?

If we look at Microsoft, it’s pretty much in a very similar situation. It’s a product company and relies heavily on its partners on almost everything. Based on similar analysis as above, Microsoft had decided to take on cloud services by itself. As I can see today, the strategy has worked and the adoption is very good.

I think VMware has made a good decision on the Zephyr project if the rumor is true, and it should act quickly. In IT industry, moving fast is the key to success once the direction is clear. This is of course not an easy task for a product company like VMware that does not have service expertise. If the project is successful, VMware can change its “Your Cloud” to “Our Cloud.”

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2 Comments

  1. Posted March 21, 2013 at 1:20 am | Permalink

    The recent announcement from VMware regarding the vCloud Service Evaluation in which “a 1Gb Linux VM with one vCPU is $0.04/hour” makes a lot of sense given the recent strategy of Adobe for all of their suite of products. The Adobe Cloud strategy is a risky move and will surely turn off some people but it is a smart move nonetheless. Are you familiar with Adobe’s cloud offering and what are your thoughts on it?

  2. Posted March 22, 2013 at 10:44 am | Permalink

    Thanks Stefan,
    I am not familiar with Adobe offering. The price seems good.
    Steve

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