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From: Glenn Petersen8/29/2017 10:57:33 AM
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What You Need To Know About VMware Cloud On Amazon Web Services

Janakiram MSV , Contributor
August 29, 2017

Almost after a year of the announcement, VMware Cloud on AWS is finally available to customers. At VMWorld 2017, both the companies highlighted the benefits of the partnership. Existing businesses using VMware stack can easily extend their virtualized data center to Amazon’s public cloud.

Source: VMware
VMware and AWS Partnership

VMware’s decision to embrace AWS as its public cloud surprised industry analysts as well as customers. After all, AWS was an arch rival that continued to threaten the core business model of virtualization and private cloud.

Subsequently, VMware sold vCloud Air, the original public cloud offering that was launched with much fanfare in 2013. It gave the company the opportunity to stay focused on its bets.

Will this deal help VMware in the long term? What does it mean to AWS, who is already the leader in the public cloud market? How will this partnership influence Microsoft? Let's find out.

VMware has done the right thing by getting rid of its public cloud business. Developing the data center management software is very different from managing the data center in itself. While VMware has proven track record of developing the virtualization platform and management tools, it realized it cannot handle massive data centers spread across the globe. Having taken the crucial decision of moving away from the public cloud, VMware swallowed its pride when it approached its key competitor for partnership.

Pat Gelsinger, VMware’s CEO and his leadership team were fully aware of the long-term implications of the deal. When you consciously exit a market segment to protect the interest of the core business, the next logical step is to partner with the leader in that segment. VMware has done precisely that – partnering with the public cloud leader. This move would also checkmate Microsoft, which is a much bigger threat than the public cloud. So, VMware hit two birds with one shot.

VMware's customers were already making a move to AWS eroding the revenue opportunity around vSphere and vCenter. On the other hand, Amazon started to build tools for vSphere to lure enterprises to its public cloud. With the IT spend moving to public cloud, it would be extremely challenging for VMware to convince customers to continue investing in its flagship products. The partnership with AWS eases the tension by enabling customers to use VMware products while still moving to the public cloud. The super aggressive sales teams at VMware can continue to push the envelope without ever fearing the public cloud threat.

When it comes to infrastructure, VMware can ride on top of Amazon's global footprint. Customers across the globe can choose a region closer to their data center for public cloud migration. VMware would not have built the kind of infrastructure that AWS delivers. When Amazon announces a new region, VMware can piggyback on it without the CapEx and the management expertise. This comes as a huge win to VMware and its ecosystem.

Here comes the best thing about the deal – VMware gets to run its own stack in AWS. It is not giving up on Sphere for Xen or NSX for VPC. For all practical purposes, VMware Cloud is the best rollout of its Software Defined Data Center (SDDC) platform running in 10+ regions. Customers consuming VMware cloud will not even realize that they are dealing with AWS. The whole user experience, tooling, pricing, licensing, and workflow is so familiar that customers wouldn’t even need to know that their virtual machines are running on Amazon’s infrastructure.
Source: Janakiram MSV
VMware Stack on AWS

The most interesting aspect of this deal is that AWS has become a co-location provider for AWS. Except for the underlying physical infrastructure, VMware stack doesn’t have any dependencies on Amazon’s cloud services. The bottom line is that VMware has got the most reliable and widespread real estate provider to run its public cloud.

If this is a such a strategic move for VMware, what’s in it for AWS? Andy Jassy, CEO of AWS is considered to be an incredibly shrewd businessman. His consent to this partnership means that it is certainly valuable for AWS in the long term.

Private cloud to AWS is what public cloud was to VMware. It is simply not their strength. Though AWS executives deny the potential value of private cloud, it is a known fact that many workloads can never move to the public cloud. Customers who benefited from the public cloud want similar capabilities in their data centers. This is, of course, the sweet spot for Microsoft. If AWS doesn’t have a strong on-premises to cloud migration story, Microsoft’s Azure Stack is waiting in the wings to take over the opportunity. Amazon’s partnership with VMware will counter the Azure Stack threat. With one stroke, AWS gained the foothold over some of the largest enterprises running VMware stack. It is now confident that even if customers run a different software stack, their workloads will ultimately run on AWS infrastructure.

With VMware cloud co-located with Amazon’s cloud, there is a potential opportunity to cross-sell and up-sell the services. Large enterprises, that are customers of VMware can easily move their data warehouses to Amazon Redshift. When their enterprise agreements with Oracle or Microsoft come for renewal, they can choose to go with Amazon’s relational database service. They can also take advantage of the emerging services related to Internet of Things, Machine Learning and Artificial Intelligence, where VMware has no role to play. Once the cross-pollination of services takes place, customers will never leave AWS. This will transform into an ultimate win for AWS. Amazon just got a very compelling value proposition for its hybrid cloud.

Finally, AWS will leverage the massive salesforce of VMware to drive their cloud adoption. Every new deal to VMware Cloud indirectly fetches revenue to AWS. This would open up additional GTM opportunities for the partner ecosystem.

Let’s shift gears and analyze the impact of this deal on Microsoft.

Microsoft has taken time to ship Azure Stack, its private cloud platform, a competitor to VMware’s vCloud Suite. The delay was mainly due to the changing market dynamics. Microsoft has learned from the mistakes committed by VMware. Redmond is clear that its private cloud offering should closely resemble the public cloud capabilities delivered through Azure. The modular architecture, parity with the public cloud and partnership with OEMs make Azure Stack a very compelling private cloud offering in the market. Microsoft’s goal is to move every System Center customer to Azure by making the migration seamless. The company is counting on Azure Stack to make this happen.

VMware Cloud on AWS will indirectly help Microsoft is telling a cohesive story to customers about its unified hybrid cloud strategy. It will emphasize on the fact that Azure on-premises and Azure in the public cloud is a better combination than VMware in enterprise and AWS in the public cloud. It will be interesting to watch how Microsoft will respond in the coming months.

These dynamics left Google in a strange position. Google got to fix its weak hybrid story. With AWS and Microsoft strengthening their hybrid offerings, Google is looking for a partner. It recently announced a deal with Nutanix for the same reasons. But Nutanix’s presence in enterprise data centers is much smaller compared to VMware and Microsoft.

The changing market dynamics will benefit enterprise customers. The platform vendors are sorting out issues to make it easy for the customers to move to the cloud, which is certainly a welcome sign.
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