If the news coming from GigaOM that VMware is spinning out Cloud Foundry, Greenplum and Project Rubicon is true, it'll be a good thing for VMware and EMC. VMware has lost some focus in the last few years in trying to branch out into applications and cloud services.
VMware built up its virtualization product suite in the early years with a single-minded focus on products that built on and augmented server virtualization. Add-on features like vMotion, Distributed Resource Scheduler, High Availability, Fault Tolerance and Site Recovery Manager added significant value to server virtualization, letting IT do things unheard of prior to the hypervisor. And VMware's been on the right track; features like those are highly desired, according to our 2011 InformationWeek survey, "State of Virtualization."
VMware was the only game in town for a long time, but the company hasn't sat idly by. It brought wave after wave of useful products to market. VMware also fostered a vibrant partner program, which further enhanced its products. Meanwhile, competitors like Citrix and Microsoft fumbled for strategies like a one-handed juggler.
As VMware added more features and integrated more of its own products with vSphere, there was always the threat that it would cross over the line with partners that offered competing products. Since VMware owned the ecosystem, it would naturally have an unfair advantage that it could exploit at the expense of its partners/competitors. Yet, due to VMware's overwhelming market share in server virtualization, vendors with competing products had nowhere else to turn.
When VMware announced Cloud Foundry, it was the company's big move into PaaS. It had both a commercial service run by VMware and an open source software archive hosted at CloudFoundry.org. This was VMware's first move to expand its reach outside of vSphere and server virtualization, but CloudFoundry.com never quite took off. PaaS is more attractive to startups that are launching new services where a PaaS offers a number of advantages, like low operational overhead and manageable costs over IaaS, or owning your own hardware. However, enterprises have been slow to adopt PaaS as a strategy. In fact, many organizations are still in the midst of getting their private cloud off the ground and haven't even considered a move to a PaaS service.
There's still a lot of opportunity in the server virtualization and private cloud markets. In our InformationWeek Report, "Private Cloud Vision vs. Reality, only 21% of respondents said they had a private cloud and 30% were starting a private cloud project. In both camps, VMware was the top vendor chosen as part of respondents' private cloud efforts. However, only 16% of the respondents had settled on a bundled private cloud offering. Thirty-eight percent were going to use best-of-breed products, 30% were undecided, and 16% will use open source and commercial offerings. Neither VMware's continued dominance in server virtualization nor its ability to expand its share in private cloud are assured.
Given the strong interest in private cloud, the large majority of organizations that have yet to move to a private cloud and the company's market share, VMware is well positioned to thrive. Cutting loose distractions like Cloud Foundry, Greenplum and Project Rubicon will let VMware focus on its core strengths in a very lucrative market.
And while the company is of a mind to spin out products, the acquisitions of slideware service SlideRocket, miro-blogging platform Socialcast and collaboration service Zimbra still seem off the wall, with no supporting strategy. VMware should spin them out, as well.