Q&A: VMware's Eschenbach Outlines Channel Opportunities In The Virtual Cloud

This is the first of its kind. But this is where you can see the power of virtualization. It is the transformation technology that is driving what is happening in the data center.

When can solution providers expect to see those kind of opportunities that you're talking about?

Today. We don't have to wait for this whole big cloud initiative to actually take place and become a reality, because we're already seeing this happening in the enterprise today. When we start to talk about moving things from an enterprise cloud to a service provider cloud, that's to come. What exists today for us is this enterprise opportunity that our solution providers are taking advantage of. They don't have to wait for anything to be able to get more margin around VMware and the drag and the coefficiency they're gonna get.

Those are the opportunities that exist for them now around VMware. When can they expect to see the enterprise cloud opportunities?

The enterprise cloud, I would say, is actually here as well.

So somebody could go out and build an enterprise cloud using the VMware technology?

Yeah, absolutely. The enterprise cloud is just a new definition for building a highly-scalable shared business services platform for the enterprise today. So it's nothing new. The enterprise cloud is just something that's a new terminology. But we have many customers today building a shared services model on top of VMware.

We're already taking pools of resources -- storage, server, and network -- today, deploying them together, aggregating them, and serving them up as nothing more than a big shared compute capacity for an on-demand provisioning of applications.

So that exists today. We're just renaming and talking about this enterprise cloud and, if you will, this service provider cloud, and pulling them together to become this federated computing model. If you go talk to business partners, this enterprise cloud terminology we're using is what they're providing today through the use of VMware technology. So it's not completely new. We're already providing the building blocks for what will become a true cloud compute model that's being built and being laid out today with our existing technology.

Getting to the other part of your question, when thinking about this from a service provider perspective, if a service provider is providing an on-demand compute cloud for the enterprise, what does that mean for a solution provider? How are we going to ensure they're going to get a piece of the pie, right?

They're concerned about recurring revenues...

Right.

...and loss of customer control.

We think there's a potential. And we're doing some studies right now with some of our larger solution providers, looking at whether there's a possibility that they not only sell VMware SKUs into the enterprise, but if that enterprise customer wants to take advantage of cloud computing from a service provider that our VARs, our resellers, actually sell the service providers' SKUs. So, not only are they selling into the enterprise data center, but now if that customer wants to take advantage of additional capacity that exists outside the four walls of the data center, why couldn't our solution providers, our VIP resellers, resell a SKU that Verizon or Savvis or SunGard or BT is offering into that customer. So they can have the capability of selling into the enterprise cloud and the service provider cloud on two different SKUs and still maintain the relationship with the customer.

They'll look at that. But they will be worried about the service provider taking over the customer account and the fact that the service provider gets all the recurring revenue, if it's not set up the right way.

That could potentially be the case. But it's not a lot different from a solution provider today selling into an account a VMware license that's perpetual. Now, if you're selling a perpetual license and you're moving away from that and [your customer is] buying capacity on demand from the cloud, every time they need to do that, if they have an arrangement through a VAR or a solution provider to get access to that capacity, and they're buying the SKU from them, they're still engaged.

But time will tell. This all has to form over the next 12 to 24 months. And that's why we're starting to do focus group studies with our VARs to ensure that they can get access to both the enterprise cloud and the service provider cloud so they'll be able to make margin and be profitable.

OK, thank you very much, Carl, for spending some time with me.