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VMware Enters Public Cloud as Dell Exits

It's not quite a changing of the guard, but VMware this week revealed plans to launch its widely anticipated public cloud service just a day after Dell pulled the plug on its plans to provide multiple Infrastructure as a Service (IaaS) offerings.

At a launch event webcast Tuesday, VMware said its vCloud Hybrid Cloud Service is an IaaS that the company will offer based on its vSphere virtualization and vCloud Director management platform. VMware will offer an early-access program next month in the United States, with general availability slated for the third quarter of this year.

VMware will offer the service in two modes. The vCloud Hybrid Service Dedicated Cloud will consist of reserved compute instances that are physically isolated and require an annual contract at a starting price of 13 cents per hour for redundant 1 GB virtual machines with a single processor. The other offering, vCloud Hybrid Service Virtual Private Cloud, is based on similar hardware but is multitenant, but will require only monthly terms with pricing starting at 4.5 cents per hour.

For now, it doesn't appear VMware is offering on-demand cloud services in shorter increments. "VMware's put together a solid initial offering for these emerging cloud buyers," said Forrester analyst Dave Bartoletti in a blog post. "This isn't an Amazon Web Services, Google Compute Engine, or Azure killer. It's a familiar and simple way for IT to extend what they already own and love to a public platform to save some money, get access to elastic resources on demand, and widen their options for deploying existing and new virtualized apps."

VMware is not building out datacenters and said it has no plans to do so, but rather has lined up providers with facilities in Las Vegas; Sterling, Va.; Dallas; and Santa Clara, Calif. The company is not naming the providers of the datacenter facilities. In 2014, VMware will expand to EMEA and other parts of the world.

By offering a public cloud service, VMware is expanding from its roots as a provider of software to that of a service provider, a key strategic shift for the company. "This is the launch of a major new area for VMware," said VMware CEO Pat Gelsinger, who said the company has 500,000 customers using its virtualization wares in their datacenters. Any of the current 3,700 applications certified to run on VMware infrastructure can run on the service without requiring any changes or tuning to them, Gelsinger emphasized.

"We are enabling those 500,000 customers to seamlessly go to the public cloud environment and that seamlessly starts with the software-defined datacenter, the same underlying technologies, exactly the same software bits, running here and running there," he said.

VMware's move to offer a public cloud service, while rumored over the past few months, is a change of heart. The company once promised not to do so and instead enable third-party providers to deliver cloud services based on vSphere and its vCloud Director suite. Over the years, some had predicted VMware would ultimately launch a service. VMware didn't get the momentum it had hoped it would to create an ecosystem that would enable it to maintain that strategy, noted Gartner analyst Lydia Leong in a blog post

CSC is the only partner that gained significant market share, according to Leong, with Bluelock following way behind. Dell's decision to discontinue its IaaS offering, and the decision to use vSphere but not vCloud Director, has also diminished the success of VMware's ecosystem, according to Leong.

With its decision to offer its own IaaS, the company is poised to have more success, Leong added. "No one should underestimate the power of brand in the cloud IaaS market, particularly since VMware is coming to market with something real," she noted. "VMware has a rich suite of ITOM capabilities that it can begin to build into an offering. It also has CloudFoundry, which it will integrate, and would logically be as synergistic with this offering as any other IaaS/PaaS integration (much as Microsoft believes Azure PaaS and IaaS elements are synergistic)."

As for Dell, its decision to pull out of the public cloud market is not very surprising. As Leong noted, Dell never gained much traction with its VMware-based service, and while it was a major contributor to OpenStack, its service never quite got off the ground. Dell's acquisition of Enstratius earlier this month was a further signal that the company was going to focus on helping service providers and enterprises manage multiple clouds.

Also, it's not surprising that Dell was reticent to invest in building out multiple public cloud services, given its current plan to go private. Ironically, as VMware goes direct (though it insists it's still committed to offering its software and services through its partners), Dell's cloud strategy now goes deeper on enabling enterprises to manage multiple clouds offered by third-party providers.

"Dell is going to need a partner ecosystem of credible, market-leading IaaS offerings. Enstratius already has those partners -- now they need to become part of the Dell solutions portfolio," Leong noted in a separate blog post. "If Dell really wants to be serious about this market, though, it should start scooping up every other vendor that's becoming significant in the public cloud management space that has complementing offerings (everyone from New Relic to Opscode, etc.), building itself into an ITOM vendor that can comprehensively address cloud management challenges."

Posted by Jeffrey Schwartz on 05/23/2013 at 12:49 PM


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