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How VMware Could Beat Amazon in the Cloud
Hybrid cloud will change the game

Over the last four years Archimedius has tracked the evolution of VMware from server virtualization leader to private cloud leader and the rise of Amazon as a public cloud leader.  Earlier in December I predicted the rise of the hybrid cloud in 2012, and later discussed the implications in greater detail in Top Five Cloud Predictions.  In short, I think that hybrid cloud promises to transform the way that enterprises and service providers deliver IT services, and the way that vendors develop and bring to market their products and services.

Over the next five years we will watch IT move from a feudalistic, hardware-bound model to a service and software-driven model, thanks in large part to the transformation of public and private clouds into hybrid clouds.  That will shift enterprise investment into cloud computing and shift tech market valuations from the stable and hardware-enabled to the nimble, service and software-driven. Trillions in market capitalizations are at stake, based on the timing and breadth of this transformation.

VMware as a Tech Leader
One could certainly make the case that this recent transformation started with VMware and the advent of server virtualization, unless you want to go further back to the days when IBM introduced time sharing on mainframes.  In late 2010 I speculated that VMware could be the Next Microsoft (or Netscape).

Yet 2013 promises to be a watershed year for several tech companies, from VMware, Cisco, Juniper, and Amazon to a wide range of service providers who have been traditionally viewed as niche or segment specialists.  Let's start with VMware, who perhaps fueled the march toward software and service-defined IT.

VMware has been architecting itself deeper into the enterprise data center thanks to its powerful server virtualization technology and a series of smart partnerships, acquisitions and internal development strategies that have been paying off consistently since its 2007 IPO.  Early last year VMware acquired SDN(software-defined networking) startup Nicira for more than $1 Billion. The rationale apparently offered by VMware execs to a respected analyst I dined with in November 2012: "engineering expertise."

VMware, Networking and the Cloud
I wrote about the emerging importance of networks with cloud computing in November 2008; see, for example The Beginning of the End of Static Infrastructure.  That is why I think "engineering expertise" could be a carefully crafted understatement.

Let me offer an alternative answer: I think the team at VMware understands the role that networking and services will play in the evolution of virtualization in the data center and ultimately the hybrid cloud; it may be well on its way to extend from the private cloud into the hybrid cloud just as it extended from DevTest into production data centers in recent years. Part of this challenge is the economics and constraints of hardware-bound networking (in a software-defined cloud), the other are the core services required for apps to run across multiple environments (hybrid clouds).

With Nicira VMware gets an important part of the networking functionality needed to further enhance the ROI of virtualization in the data center, based on decoupling network functionality from dedicated (and often expensive) hardware.  As mentioned before, VMware could do to networks what it did to once expensive and custom ASIC-centric server hardware.

Validating the threat and opportunity posed by software-defined data centers and networks, Cisco announced "spin-in" Insieme Networks last year and Juniper recently announced its acquisition of Contrail Systems. Both are important first steps to an equivalent of VMware's broad software-defined data center initiative, but they are still missing key components that VMware already has on board. You can read more about the software-defined threat and opportunity at Cisco's Golden Age or Fleece.  HP made an OpenFlow Announcement early in 2012, but it is clearly grappling with "bigger picture" issues.

Higher up the OSI stack are critical capabilities related to hybrid cloud apps, services and storage technologies that promise to be hot in coming years.  See the buzz, for example, around the December 2012 launch of (my employer) CloudVelocity.  In the data center and shortly in the cloud, SDN could commoditize network hardware and make clouds more cost-efficient and easier to manage. Along with SDN come new solutions in 2013 that allow apps and services to be deployed across clouds (optimized across data centers) similarly to how VMware optimized apps and operating systems across server hardware. Payoffs also include devtest in the cloud (or cloud cloning) and cloud failover.

Amazon and the Public Cloud

As VMware advanced from its virtualization technology roots into the private cloud, Amazon, led by the brilliant Dr. Werner Vogels, has leveraged its operating strengths as an online retailer to become the undisputed leader in the public cloud.  Recently it has added more features and functionality around enterprise workloads, positioning itself for broader enterprise appeal.  Perhaps Amazon's only weakness at this point is its very public obsession with public cloud, to the detriment of its potential leadership in hybrid could development.

2013: The Year of the Hybrid Cloud

The pace and breadth of hybrid cloud adoption could have a significant impact on the fortunes of Amazon and VMware as well as a host of other technology companies, as discussed in Hybrid is a Whole New Cloud. Service providers who understand the cloud could outgrow and "outmargin" those who are trapped in colocation offerings locked into traditional, hardware-bound approaches to IT.

Hybrid cloud promises to drive the adoption of new architectures, new solutions and new capabilities in 2013 as venture-backed companies and even larger tech players introduce new cloud migration, cloning and failover solutions for multi-tiers apps.  These solutions could reduce the barriers to cloud adoption by allowing apps to run across multiple environments, limiting their exposure to regional outages and even natural disasters.  With that you get the notion of a boundless data center no longer confined by specialized hardware and bricks and mortar, optimized almost continuously. See a recent tech trade press prediction: 2013 The Year of the Hybrid Cloud.

The hybrid cloud offers VMware a strategic opportunity to flank Amazon's public cloud leadership by enabling enterprises to adopt lower risk and lower cost hybrid cloud operating models; ways of operating that would give them greater control over their applications across multiple cloud providers. In the case of a cloud service provider outage an enterprise could light up their apps and services in a new zone or with another provider; they are not dependent upon a single cloud provider's ability to deliver very high uptime.

Enterprises would be well advised to work with multiple cloud service providers and/or regions within a single provider as extensions of their data centers. A core promise of the hybrid cloud idea is to get away from a single point of cloud failure, which today is challenging.

While Amazon trumpets the public cloud (and reliance upon Amazon's great pricing and expertise), VMware offers a virtualization-standardized private cloud vision with dependence upon its platform.  The question becomes: who steps up first to deliver on the hybrid cloud promise?

In 2012 Amazon also made some strategic hybrid cloud moves.  But as of December 2012 they have remained steadfast in the future of the public cloud.  2013 promises to be a watershed year for both VMware and Amazon.

In addition to Amazon and VMware a host of other companies emerge as either service providers or critical solution providers. I mentioned several potential leaders in Hybrid Cloud is a Whole New Cloud.

About Greg Ness
Gregory Ness is the VP of Marketing of Vidder and has over 30 years of experience in marketing technology, B2B and consumer products and services. Prior to Vidder, he was VP of Marketing at cloud migration pioneer CloudVelox. Before CloudVelox he held marketing leadership positions at Vantage Data Centers, Infoblox (BLOX), BlueLane Technologies (VMW), Redline Networks (JNPR), IntruVert (INTC) and ShoreTel (SHOR). He has a BA from Reed College and an MA from The University of Texas at Austin. He has spoken on virtualization, networking, security and cloud computing topics at numerous conferences including CiscoLive, Interop and Future in Review.

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