VMware To Partners: Virtualization Is Great, But Cloud Is Better

VMware and its channel partners have built a tidy revenue stream from virtualization, but that's nothing compared to the opportunities that lie ahead in the cloud.

This was a prevalent theme in a wide-ranging Wednesday morning keynote speech at VMware Partner Exchange, in which VMware executives outlined how partners can move the scope of their business beyond virtualization and into new emerging business areas like cloud infrastructure, applications and devices.

The IT industry is moving toward a post-Windows world, VMware CEO Paul Maritz told an assembly of some 3,300 partners from 65 countries. Virtualization lets companies continue using legacy apps, but that's just a stopgap measure. To stay relevant in the future, they're going to have to embrace cloud computing and that's going to create lots of work for channel partners, according to Maritz.

"The cloud demands a new approach," Maritz said. "In the next five years we will see a transformation of the IT stack, starting with the infrastructure layer and moving on to apps and devices."

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The good news for the channel is that the cloud opportunity is "many times larger" than the core virtualization opportunity VMware and its partners have been tapping into for the past decade, said Ragu Raghuram, VMware's senior vice president and general manager of virtualization and cloud platforms.

But cloud cuts across all aspects of IT, which means the intricacies of management, security and business continuity must be accounted for. To tackle these challenges, VMware is asking partners to move beyond their virtualization practices and stretch their skills into new competency areas.

"Partners can no longer just do virtualization," Raghuram said. "We're still surfing the virtualization wave, but at the same time we're laying down the foundation for the cloud."

VMware is investing in new competencies this year to help get partners started along the road to cloud business. Many companies that have deployed virtualization are now looking to extend their investments to tier one apps, not out of a desire for greater efficiency but because virtualization is a better way to handle management, availability and security of these apps, said Raghuram.

VMware launched a new solution competency called Virtualization of Business Critical Applications that's designed to help partners identify and deliver on these business opportunities, and Raghuram said the hope is that partners will drive virtualization from its current penetration rate of around 30 percent up to 50 percent.

Business continuity is another emerging area of business for the channel. Raghuram said it's difficult to deploy in Linux environments but is easily delivered through virtualization. Business continuity deals are also lucrative: Deals that include VMware's Site Recovery Manager are three times the size of those that don’t, and partners that have achieved the business continuity competency generate twice the revenue of other partners, Raghuram said.

VMware is working on a new competency, Cloud Infrastructure and Management, and will launch it in the first quarter through its Cloud Computing Partner Lighthouse program. VMware's vCloud Director product has been available for less than one quarter but is already the fastest growing product, in terms of unit growth, in recent memory, said Raghuram.

"This shows that customers are ready for the cloud and they're trying to figure out how to get to automated IT," he said.

VMware is building a new platform that's designed for better manageability and automation, one that can account for SLAs and performance levels. VMware in the next few weeks will debut an offering that tackles challenges at the operations management level, Raghuram said.

"This is a massive market opportunity for all of us. This assures that virtual machines and the apps inside are running without bottlenecks and meeting service levels," he said.

Next: Action At The Application Layer

There is also plenty of business happening for partners at the application layer. Tod Nielsen, VMware's newly minted president of application platform, said VMware now has 3,600 vCloud partners offering integrated services with vSphere and vCloud Director.

VMware will continue working to expand its IaaS portfolio but also plans to sell platform-as-a-service, and the expectation is that partners will so the same. "Developers are going to soon be comfortable having an integrated stack delivered to them instead of buying different components, and this stack will be managed as a service for them," Nielsen said.

VMware's vFabric cloud application platform, which includes the Java development framework from its Springsource acquisition, allows VMware to offer a multi-framework environment to developers that also supports multiple clouds, Neilsen said.

VMware is aware that developers aren’t typically versed in the arts of business development, and Nielsen said VMware will continue to offer guidance in this area. Helping customers cope with mountains of corporate data is one near term area of need.

"The data problem is tremendous and it's getting out of control," Nielsen said. "Data scalability, and bringing together different sets of data and integration it for business value is a big opportunity."

VMware's desktop virtualization business is gaining steam, and channel partners delivered some 12,000 new customers that transacted business with VMware in 2010, said Chris Young, vice president and general manager of VMware's End User Computing group. VMware also saw 97 percent in partner bookings and a 6x growth in partners achieving VMware's Desktop Competency, he noted.

Next month, VMware will deliver an iPad client for VMware View, and it's also working on improvements to WAN optimization and reduced capex for desktop virtualization deployments, according to Young.

Saas apps are proliferating in many companies, often without the knowledge of IT, and to help customers get a handle on this VMware is working on Project Horizon, a single sign-on mechanism for Saas apps that includes automatic provisioning and policies, Young said. "Think of Project Horizon as an App Store for the enterprise," he said.

2009 was a big year for VMware because it was when server apps deployed on virtual infrastructure exceeded server apps on physical infrastructure for the first time. It was also when the number of copies of Windows or Linux that didn't touch the underlying hardware surpassed those that did.

But to stay high on the hog VMware is moving boldly into the wilds of cloud computing, and it's counting on partners to deliver the services associated with this move. The one thing that's crystal clear at this point, according to Maritz, is that the traditional role of the OS co-ordinating the underlying hardware is yesterday's news.

"That's the job of this new layer we are collectively laying down," Maritz said.