VMware: Enterprises Still Need Data Centers

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.

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.