VMware is preparing to pull back on its vCloud Air hybrid cloud service in favor of a full-court press with the EMC Virtustream enterprise cloud platform, sources said.
In fact, EMC is moving aggressively ahead with the Virtustream cloud services initiative incorporating and aligning the service with VMware's software assets and the EMC Infrastructure business, sources said.
The Virtustream push comes after VMware Monday disclosed in a Securities and Exchange Commission filing that it will not participate in the formation of the Virtustream Cloud Business that it had agreed to be part of just two months ago.
EMC acquired Virtustream for $1.2 billion in July as the center piece of its cloud strategy, with Virtustream CEO Rodney Rogers leading EMC's cloud business going forward.
"Over time, VMware is going to de-emphasize and back off vCloud Air in favor of Virtusream," said one source close to both companies with knowledge of their cloud plans. "There is a doubling down on VIrtustream and an elegant retreat for vCloud Air in favor of Virtustream, which has got real differentiation in enterprise mission-critical use cases."
A VMware spokesperson insisted in an email that VMware "will now continue to operate the VMware vCloud Air business, focused on helping customers seamlessly extend their data center applications to the cloud."
At the same time, the spokesperson said : "VMware and Virtustream will continue to partner closely as part of the EMC Federation. Virtustream will continue as an active member of VMware’s vCloud Air Network, with its service built on a VMware vSphere foundation."
Finally, the VMware spokesperson said it will continue to deliver cloud software and solutions to "cloud providers through VMware's vCloud Air Network."
Sources familiar with the behind the scenes drama said that VMware will maintain vCloud Air commitments to customers, but over time will "wind down" the hybrid cloud service. "Virtustream is the service provider that EMC and VMware will bet on first and foremost," said a source."Virtustream has carved out a real lucrative market at the high end of the market. No public clouds can offer a service level for Tier One applications like SAP as Virtustream can. The feeling with vCloud Air is the service is too generic, not focused enough and therefore not profitable enough. EMC and VMware can't go chasing Amazon and Google's tail lights."
Andres Rodriguez, president and CEO of cloud storage firm and EMC competitor Nasuni, said as vCloud Air's momentum has disappeared, so too will the business unit. "I think eventually, it disappears," Rodriguez told CRN. "There's no momentum behind it anymore. I think it'll be reborn as some sort of internal VMware effort. It's very hard for VMware to transition from software to services. It's hard to turn big successful companies away from core business."