VMware's vCloud Hybrid Service: Key Issues For Partners

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It's important to remember that VMware is owned by a hardware company (EMC). With that in mind, I believe what we're seeing with vCloud Hybrid Service is the beginning of a strategy to drive hardware revenue by focusing on data center customers to provide cloud computing capacity. To do so, they need channel partners to influence the customers with a value proposition that makes the end-user customer see value in that specific hardware or platform.

This is very similar to the value propositions of the 1970s and 1980s made by the makers of mainframe computers such as IBM, Burroughs and UNIVAC. Today, the more common names are HP, Dell and EMC, and they are facing the same consolidation in the hardware market that happened in the 90s when microcomputer designs could be deployed at a fraction of price.

The issue is that the hardware manufacturers are being driven by investors to sell more as they don't fully understand the new economy.

In the book "Consumption Economics," tech consultants J. B. Wood, Todd Hewlin and Thomas Lah wrote, "If you're a tech company, the most dramatic effect of megatrends like cloud computing, managed services, and the rise of consumer technology won't be felt in your company's product line. The true disruption will be to your business model. Future customers won't want to pay you high prices out of big CapEx budgets anymore. They will expect lower cloud prices paid from OpEx budgets only when and if they successfully consume the business value of your products."

So it is clear the hardware manufacturers are looking for a way to bring the massive compute power needed today at a price that makes sense for a consumption-based economy while also enabling them to survive the centralization of hardware purchases. However, this is causing issues in adoption as channel partners continue to adjust their business models to offering services rather than hardware to their customers.

Channel partners today need to quickly adopt a strategy that supports both internal and external private clouds. You need to strongly support the consumption of hybrid solutions that include multiple hypervisors to accelerate economic value for customers and margins for you. Begin to hire staff or create partnerships to support new architectural designs that include integration with public cloud and SaaS offerings. More than ever, being agnostic and agile is important for you now.

Hybrid IT and the emergence of software-defined technologies mean more flexibility and capabilities for the consumer without the need to understand the hardware or the need to buy it. Remember that as you listen to VMware's announcement on May 21.

John Ross is an IT consultant building new service offerings for channel-focused customers and partners. John holds positions with several leading manufacturer advisory councils and regularly works with IT analysts to help define major paradigm shifts in the technology industry. He previously was CTO of Kittery, Maine-based GreenPages Technology Solutions.


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