VMware's vCloud service provider partners have also failed to make a compelling business case to entice VMware channel partners to sell their services, and VMware is fed up with waiting for them to do so, another source familiar with the situation told CRN.
"VMware thinks that if it does not take this matter in their own hands they will lose market share," said the source. "Microsoft is the big influencer here: VMware may feel that if customers can drop and drop workloads from VMware private cloud into Azure, then Microsoft could start capturing VMware customers."
VMware's service provider partners are not going to be pleased with Project Zephyr, especially those that have made significant investments in VMware cloud infrastructure. But with Microsoft coming on strong with Azure, and getting its channel on board with the platform, VMware has apparently decided to accept the risks of channel conflict with its vCloud partners, sources told CRN.
"A build like [Project Zephyr] would not be that big of a surprise, as it would give VMware a way to show customers a path to a public or hybrid cloud model with a destination that VMware controls, but at the cost of competing with some partners," said another source familiar with the initiative.
Despite the potential for conflict, some VMware partners see potential opportunities with Project Zephyr.
For example, solution providers could help with upfront consulting and manage the process of transitioning customers to Project Zephyr, said Jamie Shepard, executive vice president of technology solutions at ICI, a Marlborough, Mass.-based partner, when informed of VMware's plans for Project Zephyr.
Shepard is hoping VMware will allow its partners to white label IaaS services through Project Zephyr. "If VMware lets us put our name on it, this would create opportunity for us to offset some of the missed revenue of selling the components as a separate piece," he said. "Then we still would take first and second level calls and help customers with support issues.
In addition to launching VMware into the IaaS space, Project Zephyr could also serve as a showcase for VMware's software-defined data center vision, sources said. This vision, which came into sharper focus last month with its acquisitions of Nicira and DynamicOps, is based on the idea that software can handle all functions of the data center, from hypervisor and virtual machine management to security, backup and recovery and big data analytics.
"We’re trying to provide a solution that will fit existing data centers and not require you to throw out everything," VMware CTO Steve Herrod told CRN in June in describing the software defined data center strategy.
NEXT: Where Will VMware's Data Center Be Located?