VMware CEO Isn't Worried About OpenStack Ruining The Cloud Party


In VMware's third-quarter earnings last week, CEO Pat Gelsinger gave some insight into how VMware is working with OpenStack, a set of open source tools for building and managing infrastructure-as-a-service clouds.

"We are building a strategy that will support OpenStack in a very effective way," Gelsinger said in a Q&A during the call, when asked if he's concerned that some VMware customers are testing out OpenStack.

At the same time, Gelsinger described OpenStack as "immature" and "an incremental opportunity" for VMware, suggesting VMware's strategy of selling to OpenStack customers will take time to develop.

[Related: VMware Rides vCloud Enterprise Licensing Deals To Solid Q2]

OpenStack was founded in large part due to fears about organizations getting locked into VMware's proprietary cloud stack. While OpenStack competes with some of VMware's management products, it's not a direct competitor -- or replacement -- for the many enterprises that are running on VMware.

The way VMware sees it, organizations that embrace OpenStack are still going to need VMware products. "We are embracing the OpenStack APIs, adding them to our product and then selling our best-in-class common technologies into this OpenStack framework," Gelsinger said in last week's earnings call.

Blaine Kahle, director of engineering at Five Nines Technology Group, a Lincoln, Neb.-based VMware partner, believes VMware is willing to deal with the competitive implications of OpenStack because it opens the door to getting its own products included in larger deals.

"They have to be betting that they'll always have feature-complete products from their large portfolio that can layer under and over OpenStack frameworks," Kahle said in an email.

"VMware knows they won't be making huge money on hypervisor and vCloud sales anymore, but potentially being able to sell their other software, such as Horizon Suite, to everyone regardless of hypervisor or management platform, is critical for them," Kahle added.

VMware got involved in OpenStack last July when it bought Nicira, a startup that helped create Quantum, the networking piece of OpenStack.

Last September VMware officially joined the OpenStack Foundation, a 3-year-old organization with more than 230 member companies, including IBM, Red Hat, HP, Cisco, Intel and Dell.

Since many of these companies compete with VMware in cloud, there were concerns that VMware might try to influence the direction of OpenStack. But, those haven't yet materialized.

If anything, VMware appears to be trying not to make waves within the OpenStack community, Dan Weiss, managing partner at Varrow, a Greensboro, N.C.-based VMware partner, told CRN. "My opinion is that VMware has adopted a strategy of 'Don't make enemies' with Openstack," he said in an email.

Gelsinger's strategy makes sense to VMware partners, but not all of VMware's field sales teams are on board with it yet, one partner told CRN, speaking on condition he not be named.

"They're not embracing OpenStack -- they view it is competition," the source said of VMware's field sales teams. "We have developers that work with OpenStack, and that has caused some friction."

PUBLISHED JULY 29, 2013

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