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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.

But what about price -- won't customers who opt for the VMware public cloud end up paying a stiff premium? Gelsinger himself contributed to such suspicions in an interview earlier this month when he said the VMware service will be priced at a premium over AWS. VMware will not join other public cloud service providers in a race to the bottom, he said.

When asked how VMware will price its hybrid service, Fathers was more circumspect. VMware is concentrating on the building the lowest-cost infrastructure possible in its four hybrid cloud locations. "If all I end up doing is selling infrastructure-as-a-service, I will probably get what I deserve," Fathers acknowledged. But the goal, of course, is to do more for the VMware customer than simply provision a virtual server. Additional services and workload management features will be offered on top of the infrastructure. Customers will be able to integrate their workloads with their on-premises operations in ways that other cloud providers will find hard to duplicate, he said.

One thing VMware can do easily with its like-to-like environments, Fathers pointed out, is "take the disaster out of recovery." It can handle the strain of supporting thousands of end users in virtual desktop -- especially BYOD -- environments.

The VMware cloud will be updated on a regular six-week basis, a pace that few enterprise shops can emulate. Virtualized networking, virtualized storage and advanced monitoring and management can be vetted by users in the VMware cloud before they implement them in their own environments.

And in Savvis, which has implemented the latest vCloud improvements in two of its own data centers, VMware has added a powerful ally. Savvis already offers its customers a vCloud-compatible environment, but in this latest agreement VMware will install, update and manage the service so that Savvis can provide its customers the latest version of the VMware cloud.

Other third parties that offer vCloud environments will manage these services on their own, although their ability to stay current will improve when VMware makes a service provider-oriented vCloud suite available in 2014. Third-party companies that install and manage the cloud services themselves will probably always be a few steps behind VMware and Savvis.

That could lead to changes if some of VMware's loyal service providers decide they would be better off casting their lot with OpenStack or another vendor's cloud. On the other hand, Fathers said, VMware is always striving to create new opportunities throughout the ecosystem via its innovations in virtualized networking and storage.

Other vendors will offer their own versions of virtualized networking and storage, but VMware has the advantage of adding features to the market-leading hypervisor that can recognize these attributes. Its vSphere 5.5 management system won't simply coordinate one aspect of the virtualized data center; it will expand over the next few years to coordinate all aspects of the software-defined data center.

At some point, some customers may say enough, if too much of their budget is going to the constantly expanding product line of their virtualization vendor. And some customers will evaluate the value brought to the data center by that product line and decide they can't live without it. Gelsinger, Eschenbach and Fathers are gambling that enough customers will decide the latter to keep VMware a continuing force in data center automation.

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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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