VMware Exec: We Built Public Cloud IaaS With Partners In Mind

Aware that some partners might be freaked out by its entry to public cloud infrastructure-as-a-service, VMware is endeavoring to show them there's no cause for alarm.

VMware's vCloud Hybrid Service, unveiled Wednesday and slated for launch in the second quarter, marks VMware's entry to public cloud IaaS, which had previously been the exclusive domain of its service provider partners. The service lets customers move workloads between on-premise private clouds and public cloud infrastructure that VMware manages and operates.

With vCloud Hybrid Service, VMware is extending its on-premise management, orchestration, networking and security model to the public cloud, which at this stage lacks some of the higher-end features that enterprises crave.

[Related: VMware Confirms Public Cloud IaaS, Launches Hybrid Cloud Unit ]

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In VMware's conference with Wall Street analysts Wednesday, COO and Co-President Carl Eschenbach said channel partners will play a central role in selling the service. "We're not going to do it alone," he said at the event. "We think it's critical for VMware and partners to bring this to market together."

VMware is putting a hybrid cloud SKU into distribution that partners can sell without having to invest in building out their own infrastructure, Eschenbach said. VMware is also creating a mechanism to allow partners to handle billing and invoicing for VMware's public cloud component.

Service providers who've spent millions on building out VMware infrastructure might not be thrilled at the prospect of competing with the vendor. To smooth ruffled feathers, VMware plans to share with service provider partners the intellectual property it has worked on for more than a year, which includes services and software-defined networking architecture, Eschenbach said.

"We will provide all of this IP to service providers that want to leverage our software-defined data center stack and the automation and provisioning tools on top," he said.

VMware still isn't talking about its pricing model for vCloud Hybrid Service, though Eschenbach did reveal that there will be two options: A fixed capacity model, similar to a virtual private cloud, and a variable consumption-based model. VMware will be "price-competitive" with other service providers, Eschenbach said.

Though not unexpected, VMware's public cloud debut stands to shake up the business models of at least some of VMware's partners. For Tom Nats, managing partner at Bit Refinery, a Denver-based VMware service provider, vCloud Hybrid Service is not a welcome development.

"Many partners have built up [their infrastructure] and stayed true to VMware, and now all of a sudden we are competing with them," Nats told CRN.

NEXT: What VMware's Largest Service Providers Think

VMware service providers that are competing with Amazon in public cloud, and have chosen to use services and high-level support to make their offerings more attractive, aren't as concerned by the competitive implications of VMware stepping into their turf.

"A VMware that continues to innovate is positive for our longstanding partnership and for the enterprise cloud market," Siki Giunta, vice president of cloud computing at CSC, a Falls Church, Va.-based service provider, said in an email.

ViaWest CTO Jason Carolan sees VMware Hybrid Cloud as "a big plus" for the partner ecosystem and expects it to increase interest in vCloud from partners and developers.

"Our differentiated services will continue to allow us to compete successfully with public cloud companies, but overall we view more vCloud customers, products and hybrid support as a plus to our market and customers," Carolan said in an email.

According to VMware's internal calculations, the size of the hybrid cloud opportunity will be $14 billion by 2016, and it will grow at a 30 percent annual rate during that period. And with a common platform spanning private and public cloud, with more than 85 percent of its revenue going through channel partners, VMware is set up to succeed in this space, Eschenbach said.

Eschenbach said VMware already has what it takes to succeed in hybrid cloud: A single pane of glass for provisioning, managing and deploying applications; a unified networking architecture; a common security model and a common support model for workloads, regardless of whether they're running in private or public clouds.

In VMware's view, public clouds are difficult to use because they have a different support structure and operating model than private clouds. But with VMware infrastructure on both sides, customers will get faster provisioning and time to market, Eschenbach said.

"This is the clear differentiation we are bringing to market with vCloud Hybrid Service," Eschenbach said.

VMware investors sure seemed to like the vCloud Hybrid Service and the updated guidance VMware executives gave Wednesday, as shares rose more than 8 percent to close at $81.37 in Wednesday trading.