VMware Intros Cloud Computing And Expands Programs For VARs

VMware gave solution providers this week a preview of its moves into cloud computing and ubiquitous virtual desktop technology, and introduced a few changes to its partner programs.

At the VMworld conference, Paul Maritz, VMware president and CEO, told approximately 2,200 solution providers and vendor partners in attendance that the industry needs to think beyond server consolidation using server virtualization technology.

"We've all benefitted from server virtualization to consolidate servers," Maritz said. "We're by no means done with it. There's still a lot to be done. But we need to move forward."

Maritz said that future opportunities will come from building on the server virtualization infrastructure that is now being built to provide new products and services, including finding ways to help customers move to take advantage of cloud computing.

VMware is enabling that move with the introduction of its Virtual Data Center OS, or VDC-OS, initiative, which it unveiled Monday.

VMware has evolved its Virtual Infrastructure, or VI3, offering into VDC-OS as a way to help customers move into cloud computing with APIs to make it possible to virtualize compute resources and work with third-party networking frameworks, and to do it before any other technology supplier, Maritz said.

"Whether or not it comes from VMware, every company in the world will have a strategy to build the virtual data center infrastructure," he said. "And we believe that, with our business model, we're the best able to do it."

Maritz also introduced channel partners to vCloud, which allows customers to turn their current application loads into virtualized services. vCloud enables those applications to be turned into virtual appliance loads which can then be served by service providers, of which over 100 have already signed on with VMware, he said.

VMware is also doubling down on the nascent virtual desktop business with technology that in the next year or two is expected to allow users to access their desktop loads from any computing device, and not just thin client-type devices as is possible today, Maritz said.

"We believe this is a huge opportunity," he said. "This opportunity could be as big as VMware is today."

VMware knows the expansion of its technology into virtual data centers and ubiquitous virtual desktop products requires a foundation of technology and channel partners to work, Maritz said. "We have to build on our strength," he said. "We will work with our hardware and software partners. And we will work with our channel partners to bring this to the customer."

Rich Baldwin, president and CEO of Nth Generation Computing, a San Diego-based solution provider, said VMware's talk about moving virtualization into cloud computing comes at a time when customers are looking at how to take their own infrastructures into the cloud.

"A lot of customers were not talking about it before," Baldwin said. "But they're starting to jump on it."

VMware is talking about the ability to either build external cloud-based virtual data centers or internal clouds, and there is a big difference for the channel, said Dan Molina, CTO of Nth Generation.

"External clouds still don't appeal to customers," Molina said. "But internal clouds have a greater appeal because of security issues."

Baldwin said that the cloud computing initiative is still too young to draw any conclusions about how successful it will be. "Look at storage as a service," he said. "Five to ten years ago, people said, 'I'm not putting my data out there.' Now they're adopting it internally."

Next: VMware's Partner Support Strategy

Carl Eschenbach, executive vice president of worldwide field operations for VMware, told solution providers that VMware will continue to support its partners as the virtualization business continues to evolve.

"We respect our relationship with you," Eschenbach said. "But more, we respect your relationship with your customers. And we promise that we will never stand between you and your customers."

VMware worldwide has over 18,000 channel partners and over 120,000 distinct customers including all the Fortune 100 companies and 99 percent of the Fortune 1000 companies, Eschenbach said. About 80 percent of VMware's business goes through the channel, he said.

The opportunities for partners working with VMware continue to grow as the market looks to virtualization, Eschenbach said.

For instance, he said there are over 30 million servers worldwide that have a utilization rate of between five percent and ten percent. Only five percent to six percent of all servers are virtualized. But as hardware partners take servers to market, they're finding those servers to be more powerful that in the past, making them more suitable for virtualization of smaller servers, he said.

Meanwhile, the virtualized client market is expected to hit $3.8 billion by 2011, compared to $2.1 billion in 2007, Eschenbach said, quoting IDC figures. The average virtual desktop deal today is already over $200,000, he said. "If you sell server virtualization and leverage it for VDI (virtual desktop infrastructure), your opportunities will be much greater," he said.

IDC expects by 2012 that the server virtualization software business will be worth $5.3 billion, the client virtualization business will be worth $3.8 billion, and the virtualization services will be worth $9.7 billion, giving the channel a total $18.8 billion opportunity, Eschenbach said.

Solution providers also find server virtualization to be the launch pad for a wide range of adjacent sales and services opportunities, Eschenbach said.

For instance, over the next couple years, solution providers could take part in $3.5 billion worth of application and system management, $8.2 billion worth of business continuity and disaster recovery services, $4.0 billion in security products and services, $2.4 billion in networking, and $8.5 billion in server and storage sales and services related to their server virtualization practice.

He also said that it will be VMware partners, not Microsoft, who will be best positioned to take advantage of that opportunity.

Microsoft last week had its big Hyper-V launch conference and announced a road map that looks similar to what VMware has already been doing for the past two or three years, he said. "Their one big announcement? That their VMotion-type capability will be ready by 2010," he said.

VMware this week also beefed up its channel program with the addition of nine vendors to its Alliance Affiliate program, a program it introduced in May.

Under the Alliance Affiliate program, storage and other vendors pay solution providers a bonus rebate when they bundle VMware with their products.

Starting this week, new members of the Alliance Affiliate program include BMC, CA, Cisco, Emulex, Force10, Hewlett-Packard, IBM's information management software business, Kingston, and Symantec.

Starting next quarter, VMware is also investing $14 million in its first-ever global "air" campaign, Eschenbach said, drawing applause from the solution provider audience. Under the program, VMware will invest in print and broadcast advertising in an effort to increase the company's brand awareness among solution providers' potential customers, he said.

VMware also plans to change the way it handles its solution provider summits with plans to hold a specific three-day partner exchange conference in April or May of next year instead of a one-day meeting before VMworld, Eschenbach said.