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VMware: Enterprises Still Need Data Centers

VMware's Gelsinger tells VMworld that cloud services can't yet handle tough compliance, governance and service level requirements.

The enterprise data center is going to be with us for a long time, despite the growth in off-premises cloud computing, according to VMware CEO Pat Gelsinger.

He didn't make this assertion in his keynote address at VMworld Monday or in his press conference on Tuesday. Gelsinger's prediction of legacy data center longevity happened after Marc Andreessen, former Netscape developer and now a venture capitalist, stated in an executive roundtable on the first day of VMworld that Silicon Valley startups shun building their own data centers.

"It's extremely rare to see a capital expense budget in a Silicon Valley startup anymore. It consists of four laptops [and cloud computing]," Andreessen said.

Gelsinger responded, "We disagree. People who say put everything into the cloud have never met a highly regulated customer. A lot of people like Graeme [Graeme Hay, head of infrastructure architecture at Credit Swisse] have real service-level agreements, real governance, real compliance needs that can't be easily met in the cloud."

In this response, Gelsinger gave a nod to Hay as a fellow participant on a roundtable panel titled "The Data Center Is Dead. Long Live the Data Center."

[ Want to learn more about how the VMware cloud first appeared different from Amazon's? See VMware's Hybrid Cloud Not Amazon's Model. ]

When it comes to everything moving into the cloud, "We couldn't agree less," Gelsinger threw in for good measure. The data center is going to be a fixture of the enterprise for several decades to come, he assured the crowd, acknowledging that VMware has proudly virtualized a lot of legacy systems and would continue to play a role in the data center for many years to come.

Gelsinger's response contained a spark that had been missing in his other appearances at VMworld. VMware's position on the future of IT is a conservative one. The company sometimes seems loathe to voice it. In fact, VMware's own nervousness over the growing role of cloud computing would seem to belie Gelsinger's words. At its partner conference in Las Vegas last April, VMware president Carl Eschenbach urged third-party companies to "own the whole enterprise workload" and not lose out to a "bookseller" who also happens to be the market leader in public cloud services.

Asked about that statement, Eschenbach responded Tuesday, "I said it with tongue in cheek." In fact, he acknowledged, VMware and Amazon Web Services tend to go after different types of customers. The notion that VMware is entering the cloud market to compete with Amazon is somewhat overblown.

At the same time, VMware executives realize cloud computing is growing fast, and some of their customers are participating in it before VMware has staked a claim. It announced its vCloud Hybrid Service on May 21, ten years after Amazon got into the infrastructure-as-a-service business. At that time, VMware said it would establish four of its own public cloud data centers. Two are up and running, in Las Vegas and Santa Clara, Calif. The company will add data center space in Sterling, Va. in September and in Dallas, Texas in October.

Bill Fathers, the former Savvis executive recruited to lead the VMware vCloud Hybrid Service, declined in an interview to specify how many square feet of space or how many servers are located in each site. He said the centers are positioned in wholesale data center space built by third parties in the business of renting it.

But Fathers also picked up Gelsinger's point that operators of enterprise data centers need somewhere to go when it comes to cloud computing. VMware is in a strong position to supply that outlet because its public cloud services will be compatible with the data center operations it's already virtualized.

Arne Josefsberg, CTO of ServiceNow, a SaaS company that offers IT service management applications, pointed out in an interview that some VMware customers will migrate work to Amazon rather than buy more products from VMware. The advantage of this approach is a highly automated infrastructure at a competitive price. But once Amazon gets the workload it will convert it into an Amazon Machine Image, the virtual machine format unique to Amazon. That means that once it's inside Amazon, original VMware-based applications will lose the ability to communicate back to enterprise software with which it might have been closely associated.

VMware promises the opposite approach. Gelsinger explained that customers using vCloud Automation, VMware's cloud provisioning tool, on premises will be able to use the tool to prepare workloads for its public cloud. The tool can be used to monitor the workload through vSphere 5.5 and change or move it around using the vCenter management console. That approach is in line with VMware's name for its public cloud offering: the vCloud Hybrid Service functions as an extension of a private cloud operation on premises; it extends -- but does not replace -- the enterprise data center.

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Shawn Douglass
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Shawn Douglass,
User Rank: Apprentice
9/6/2013 | 7:01:15 PM
re: VMware: Enterprises Still Need Data Centers
While data centers may never go away entirely, GelsingerG«÷s comment is off base. I work daily with highly regulated, Global 2000 enterprises that have moved critical business operations to the cloud, using a policy-based cloud management platform to assure security, compliance and risk management. Able to reap both increased business agility and security from cloud computing, these organizations are gaining significant competitive advantage and are not looking back. As Charlie describes, thatG«÷s exactly what VMware is afraid of. http://www.servicemesh.com/clo...

- Shawn Douglass, CTO, ServiceMesh
cbabcock
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cbabcock,
User Rank: Apprentice
8/29/2013 | 9:57:11 PM
re: VMware: Enterprises Still Need Data Centers
After encouraging many third parties to supply vCloud-based services, VMware is bringing its own service to market from its own or Savvis' data centers. Yes, agreed, Marcia, there is channel conflict. To me the question is whether VMware can expand the use of hybrid cloud fast enough to generate business for many participants, as well as itself. If it succeeds at that, there will be many happy third parties. If it doesn't, there will be third parties looking to offer OpenStack and other services in place of their vCloud efforts. There's a thriving third party ecosystem around server virtualizatoin. Can VMware do it again in virtual networking?
MarciaNWC
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MarciaNWC,
User Rank: Strategist
8/29/2013 | 9:24:55 PM
re: VMware: Enterprises Still Need Data Centers
Comments I heard on the VMworld show floor about vCloud Hybrid Service included "too late" and "channel conflict."
anon6042095198
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anon6042095198,
User Rank: Apprentice
8/29/2013 | 2:08:52 PM
re: VMware: Enterprises Still Need Data Centers
Great article, Charlie! I agree that it's certainly true that public clouds today can't meet the compliance, security and availability needs of some business applications, but today's public cloud platforms can be appropriate for many enterprise application scenarios - profiling and identifying the key applications is a crucial step that organizations should complete to determine how best to leverage public cloud platforms today to reduce capital costs, operational expenses and accelerate time-to-solution.

However, when evaluating public cloud platforms, cost and availability are two of the key decision criteria for enterprise customers ... if particular cloud platforms are much more expensive options in the industry or almost equal in cost to deploying on-premises, it's difficult to justify the business value of moving an application to that public cloud platform. Based on a review of the public pricing schedules across cloud providers, VMware vCHS certainly appears to be among the highest cost public cloud platforms that are available today.

Availability is worthy of particular scrutiny. Although at a service-level, the availability % guarantees between public cloud providers can look very similar, the "devil is in the details".

The SLA for VMware vCHS, for instance, declares 99.95% availability for their dedicated cloud offering, but excludes outages of less than 3- minutes of consecutive network downtime and 5-minutes of consecutive VM downtime. It also excludes downtime related to scheduled maintenance, viruses, hacking attempts, and bugs in the software/hardware/services that comprise vCHS. You can read the full details of this SLA at http://www.vmware.com/mx/suppo...

In summary, Gelsinger's broad commentary about the viability of Hybrid Cloud today may be very well based on the today's cost and availability limitations of VMware's Hybrid Cloud offering and not necessarily reflective of the total public cloud landscape.
ChrisMurphy
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ChrisMurphy,
User Rank: Apprentice
8/28/2013 | 8:51:05 PM
re: VMware: Enterprises Still Need Data Centers
Marc Andreesen's statement about clouds and startups is perfectly true, but it's also true that Andreesen, like VMware, is a realist about today's cloud + enterprise environments. Andreesen Horowitz invested $100 million into the cloud-based development and collaboration platform Github. And Github is happily selling an on-premises version of that software, aimed at industries such as aerospace where there's no way they're putting projects under development in a cloud environment.
cbabcock
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cbabcock,
User Rank: Apprentice
8/28/2013 | 5:04:24 PM
re: VMware: Enterprises Still Need Data Centers
Right now, many enterprises run many small, one of a kind applications. In the future they'll run fewer and much larger applications that power their core business. Routine stuff like CRM and payroll will run outside as software as a service. But those few big, mission critical applications will run on something that looks like a cloud, inside the enterprise data center..Data centers aren't going away, but their architecture is evolving rapidly. VMware is trying to be part of that.
RobPreston
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RobPreston,
User Rank: Apprentice
8/28/2013 | 4:24:35 PM
re: VMware: Enterprises Still Need Data Centers
Terrific overview, Charlie. Enterprise data centers will go the way of PCs and relational databases, which is to say they're not going away, even as compelling alternatives emerge. Gelsinger's comment is a keeper: "People who say put everything into the cloud have never met a highly regulated customer."
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