Competition today is about speed
The message to corporate IT shops from VMworld 2015 in Barcelona was that VMware intends to unify the hybrid cloud environment to allow any device to access any app on any public or private cloud – securely. The message to business was that the competition between incumbents and start-ups is being replaced with the competition between the fast and the slow – irrespective of company size. If a company is risk averse, it’s on the road to extinction – an acquisition target for faster moving competitors. VMware’s view (and hope) is that cloud will play a pivotal role in that respect.
Cloud services today store about 10% of the global data with the rest in on-prem data centres. VMware CEO Pat Gelsinger estimated that cloud will account for 50% of stored data by 2030. This indicates a long growth curve ahead for the whole cloud business – one which VMware wants to grab a large share of. However, VMware is up against OpenStack as well as the many variants of this (HP Helion, Cisco’s cloud offering, even IBM’s SoftLayer OpenStack offering). As the on-prem incumbent, it now has to walk-the-walk of its talk – it may well not be the incumbent that wins out overall.
The new VMware Stack
The undisputed market leader in virtualisation and aspiring cloud software leader put on an impressive show for the 10,000+ participants (with 150 press & analysts jointly designated as ‘influencers’) at this year’s VMworld event in Barcelona. Just six weeks after VMworld in the US, the company still managed rapid-fire announcements of new products and partnerships from projects to develop secure points-of-presence on a guest device to ensure integrity and protect critical data, through to a new security architecture focusing on security of people, apps and data. The presentations by corporate management were technical and couched in acronyms that put even hardened analysts on the back foot.
What does the VMware Software Defined Data Centre looks like these days?
VMware’s SDDC, their version of a software-defined data centre has essentially four layers:
The announcements from the US VMworld focused on the Unified Hybrid Cloud to bridge between public and private clouds, with EVO:Rail SDDC and vSAN 6.1 in the data centre. On the development front announcements focused on vSphere Integrated Containers and the Photon developers’ platform. The main security annoucement centered on Identity Manager and Project A2 for universal apps delivery and device management. Barcelona announcements then added the management layer updates with:
vRealize Automation 7.0 delivering unified blueprints for integrated multi-level application environments,
vRealize Business 7.0 for costing and business planning, and
vRealize Operations 6.1 to deliver heterogeneous support and the customer experience with an event broker solution especially in the upgrade process. Intel uses the new vRealize Operations to manage IoT edge gateway that collect and analyse data and raises alerts, e.g. in vending machines.
he Dell-EMC acquisition
Annual vendor events rarely take place right on top of momentous changes to the company’s environmentt. So what greeted arriving participants at this year’s VMworld event in Barcelona was game-changing – though in exactly what direction remains ‘up in the clouds’.
Will Dell with its announced intent to acquire EMC, the 81% owner of VMware make life harder for VMware with its core agnostic approach to hardware? Well, Michael Dell was on the big screen at the opening keynote emphasising that VMware will remain an independent, publicly traded company and that the continued profitability of VMware represents an important financial contribution to paying off the sizeable ($67bn) debt incurred by Dell. On top of that the 81% EMC ownership of VMware will be halved inasmuch as half of the EMC stock will become publicly tradable (so-called tracking stocks) owned by EMC investors.
CEO Gelsinger believes that getting the global Dell sales force economically incentivised to sell VMware products along with their hardware sales will generate additional sales of $1bn within two years. He also mentioned that their acquisition of Pivotal a few years ago was not going to stop Pivotal management from opting for an IPO exit from the VMware family, if they decided that was in the best interest of the company.
However, as I made the rounds in the VMworld exhibitor area in Barcelona there were tensions – one carrier customer noted that they are delaying their VMware investments to see how the acquisition pans out before going ahead with their unified hybrid cloud service plans. Another partner expressed concern about the changes in relationships between HP and VMware, if Dell now becomes the preferred server platform. So we may see existing VMware business partnerships that will deteriorate or go away. I would certainly expect Lenovo and HP to expand relations with virtualisation vendors KVM and Citrix Zen where possible.
So, it seems most likely that there will be no attempt to subvert or cramp VMware’s business plans or product range. And for the record, Dell is already a very significant VMware distributor – at least in Europe. Cooperation between Dell-EMC and VMware will certainly be initially strengthened in areas where there is already working relationships. In other areas of network management and security, VMware will continue to compete with Dell – unless of course Dell opts to exit business areas that conflict with VMware. This is highly unlikely, as Dell needs to build on its hyperconverged systems based around FX2. It is far more likely to slowly move away from VMware, allowing VMware to be more independent, first, getting rid of any investment in the EMC/VMware/Cisco joint venture of VCE.
The future, whichever way it pans out for VMware, is looking pretty good. It will either be embraced more closely by Dell, while Dell has to leave it to continue with existing partnerships with Dell’s competitors, or it will be a completely independent company that can invest in its own strategy. Quocirca believes that this new future for VMware will be a high growth one: Dell’s future is slightly less apparent.