VMware vs. Amazon … ROUND TWO … FIGHT! — VMW Conceding Impotence?

Two and a half years ago I wrote about the inevitable throwdown between VMware and Amazon Web Services (AWS), but recently VMware’s senior leadership appeared to outright admit defeat.  The message to VMware’s partners was simple:

“We want to own corporate workload,” said Pat Gelsinger, VMware’s CEO. “We all lose if they end up in these commodity public clouds.”

James Staten, who has lately been on an incredible roll in terms of his vision and foresight in recent research on cloud computing (paid research), nailed it in a cogent response on his blog.

I want to fill in some of the gaps.

Background
At various times since pretty close to the inception of cloud computing, I have engaged with the leadership at VMware and explained what is required to help them maintain dominance.  Unfortunately, on all these occasions I was rebuffed.  VMW’s hubris is to believe that their lead in enterprise virtualization will translate into success in the public cloud space.  Other voices have since joined mine in making this point, yet Gelsinger’s recent admittal at the partner conference is nothing less than a public statement of VMware’s impotence in this regard.

Simply put, VMware does not understand what is required to win in the public cloud space nor are they willing to listen to those who do.

The Emperor Has No Clothes
VMware’s failure to ‘get it’ stems, classically, from The Innovator’s Dilemma, as Staten so righteously points out in his blog post.  In this case, their value chain of partners and technology has simply kept them from being effective in managing the transition in what is clearly a disruptive upheaval to their business.

At Cloudscaling, I coined the phrase: “the two cloud model” which is at the heart of the disconnect.  Our product manager, Azmir Mohamed, put this into words and graphics in this blog posting.

Put more plainly, there is the way that cloud pioneers like Amazon and Google built their clouds and there is the way that VMware asks people to build clouds.  These are not the same in any manner.  The datacenter design, hardware, hardware architectures, network, networking architectures, software, software architectures, and applications, are all fundamentally different.

Enterprise Virtualization is the ASP Business Model Redux
In 1999 there were two competing business models: Application Service Providers (ASP) and Software-as-a-Service (SaaS).  The ASP model lost and SaaS won.  Why is that?

A quick glance at a representative 1999 press release from Oracle and Qwest at the time will tell you everything you need to know.  The ASP business model essentially said: “We’re going to use the same hardware, same software, and same labor pool as you.  We’re going to add a margin, own all of the hardware and software, and keep the entire bundle in our datacenter.  You’ll have your own isolated Sun server running Oracle software that you can access over the network.”

It was in truth, a pure outsourcing play.  This model, of course, lost horribly to the likes of Salesforce.com (SFDC), the canonical SaaS company, who defined the category.  SFDC won because they rethought the entire stack: hardware, software, datacenters, labor pool, and business delivery model (signup with a credit card).

Does that sound familiar?  That’s because it’s the exact same playbook as Amazon Web Services (AWS)…Read More

Source: Cloud Ave

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