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VMware's 'Project Zephyr' Challenges Amazon, Microsoft In Public Cloud Battle

VMware is fed up with the slow pace of its server provider partners' embrace of the cloud, and so the virtualization kingpin is giving them a crash course in infrastructure-as-a-service.

VMware is planning to launch a public cloud infrastructure-as-a-service initiative, code named Project Zephyr, that will catapult the virtualization kingpin into one of the industry's hottest markets, CRN has learned.

According to sources familiar with VMware's plans, VMware has purchased a large amount of data center space in Nevada for Project Zephyr, an initiative aimed at showcasing its cloud software stack. Project Zephyr runs the vCenter Operations Management Suite, vCloud Director and Site Recovery Manager for failover and disaster recovery, along with with EMC storage gear and Cisco's Unified Computing System (UCS) as the computing platform.

Project Zephyr isn't just for show, however: VMware is planning to use it to offer a public cloud infrastructure-as-a-service that will compete with cloud services from Amazon, Microsoft and other players in this segment.

Though similar in some ways to VCE -- the converged infrastructure joint venture between VMware, EMC and Cisco -- Project Zephyr is fully controlled by VMware and runs on data center space that it owns, sources told CRN.

"VMware basically purchased an entire data center; they have a lot of metal in a pretty massive building," said one source with knowledge of VMware's plans, who requested anonymity. "It's like a big neon sign saying, here are the benefits if you go with VMware end-to-end."

[Related: Analysis: Nicira Buy To Bring VMware Closer To OpenStack, Networking Vendors ]

Project Zephyr is VMware's way of lighting a fire under its vCloud service provider partners, which have been slow to build out the infrastructure and business model for cloud services, sources told CRN. Dell, AT&T, Bluelock and CSC are members of VMware's vCloud program in North America.

"VMware is doing this because none of its service provider partners are moving fast enough. Look at the adoption rate of vCloud Director with service providers -- it is non-existent," said the source, who requested anonymity.

VMware has been working on Project Zephyr since last year's VMworld conference, and the company may use this year's event to unveil the program and share more information about what it entails, sources told CRN.

A VMware spokesperson reached by CRN on Wednesday declined to comment on Project Zephyr, citing the company's policy of not responding to rumors or speculation.

NEXT: How Project Zephyr Could Impact VMware's Channel


VMware's vCloud service provider partners have also failed to make a compelling business case to entice VMware channel partners to sell their services, and VMware is fed up with waiting for them to do so, another source familiar with the situation told CRN.

"VMware thinks that if it does not take this matter in their own hands they will lose market share," said the source. "Microsoft is the big influencer here: VMware may feel that if customers can drop and drop workloads from VMware private cloud into Azure, then Microsoft could start capturing VMware customers."

VMware's service provider partners are not going to be pleased with Project Zephyr, especially those that have made significant investments in VMware cloud infrastructure. But with Microsoft coming on strong with Azure, and getting its channel on board with the platform, VMware has apparently decided to accept the risks of channel conflict with its vCloud partners, sources told CRN.

"A build like [Project Zephyr] would not be that big of a surprise, as it would give VMware a way to show customers a path to a public or hybrid cloud model with a destination that VMware controls, but at the cost of competing with some partners," said another source familiar with the initiative.

Despite the potential for conflict, some VMware partners see potential opportunities with Project Zephyr.

For example, solution providers could help with upfront consulting and manage the process of transitioning customers to Project Zephyr, said Jamie Shepard, executive vice president of technology solutions at ICI, a Marlborough, Mass.-based partner, when informed of VMware's plans for Project Zephyr.

Shepard is hoping VMware will allow its partners to white label IaaS services through Project Zephyr. "If VMware lets us put our name on it, this would create opportunity for us to offset some of the missed revenue of selling the components as a separate piece," he said. "Then we still would take first and second level calls and help customers with support issues.

In addition to launching VMware into the IaaS space, Project Zephyr could also serve as a showcase for VMware's software-defined data center vision, sources said. This vision, which came into sharper focus last month with its acquisitions of Nicira and DynamicOps, is based on the idea that software can handle all functions of the data center, from hypervisor and virtual machine management to security, backup and recovery and big data analytics.

"We’re trying to provide a solution that will fit existing data centers and not require you to throw out everything," VMware CTO Steve Herrod told CRN in June in describing the software defined data center strategy.

NEXT: Where Will VMware's Data Center Be Located?


It's unclear where VMware is setting up Project Zephyr, but the company already uses SuperNAP, the massive 400,000 square foot data center in Las Vegas, to run its Cloud Foundry platform-as-a-service. Many other cloud providers are tenants at SuperNAP, which is widely regarded as one of the most technologically sophisticated and secure facilities in the world.

Northern Nevada is another possible site for VMware's data center. Apple is planning to invest $1 billion over the next decade to build a data center and other facilities in the northern Nevada city of Reno, according to a report in June from the Reno Gazette-Journal.

In any event, these are interesting times for VMware, which in the past month has changed CEOs and made the largest acquisition in its history, Nicira, which also marked its entry to the networking space.

Given the speed and scope of VMware's recent moves, partners told CRN they would not be surprised to see the vendor make more blockbuster moves in the coming weeks.

"VMware is reacting extremely aggressively -- in a good way -- to the rapidly changing IT landscape," said one source. "Strategically, this has [outgoing VMware CEO] Paul Maritz written all over it."

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