Can VMware's vCloud Hybrid Service win the enterprise cloud market?

Beth Pariseau, Senior News Writer

SAN FRANCISCO – VMware made its vCloud Hybrid Service generally available here this week with hopes of winning potential enterprise cloud customers.

With its foot in the door through server virtualization and its competitive cloud pricing, VMware Inc. stands a chance -- though many of its customers still struggle to virtualize mission critical applications.

By VMware’s estimates, shown on a slide during a keynote presentation here at its VMworld 2013 conference, some 54% of its customers are in the advanced virtualization phase -- designated phase two of three on the virtualization-to-cloud path -- while 20% already deliver IT as a service with cloud automation.

It's hard to move out of a service provider.

Steve Schaaf,
CTO, FDF Ltd., expressing his VMware lock-in concerns

“We’re still on phase one,” said a systems engineer for a major retailer here who requested anonymity. “We’re not ready for the [vCloud] Hybrid Service yet.”

But other attendees were enthusiastic about the possibilities.

Kevin Dignum, IT director for Pima County Arizona’s Joint Technical Education District (JTED), expects to move most of his internal infrastructure to the vCloud Hybrid Service, which will result in more predictable costs every year, decreased electrical costs for maintaining a data center internally, and freedom from worrying about hardware replacement and disaster recovery, since vCloud Hybrid Services are backed up at no extra charge.

“They’re also more scalable than we’re ever going to be,” Dignum said.

Another VMware customer here said he’s more concerned with maintaining the private cloud he’s already built than extending it into the vCloud Hybrid Service, and worried about lock-in with VMware technology on both sides of a hybrid cloud scenario.

“It’s hard to move out of a service provider -- it requires a rip and replace,” said Steve Schaaf, chief technology officer for Francis Drilling Fluids (FDF) Ltd., based in Crowley, La.

VMware vCloud Hybrid Service pricing competitive with Amazon, HP, Rackspace

The vCloud Hybrid Service is available from data centers located in Las Vegas, Sterling, Va., and Santa Clara, Calif. with two classes of service: vCloud Hybrid Service Dedicated Cloud and vCloud Hybrid Service Virtual Private Cloud.

The vCloud Hybrid Service Dedicated Cloud will provide physically isolated and reserved compute resources, according to VMware, with pricing starting at 13 cents per hour for a backed-up virtual machine (VM) with 1GB of memory and 1 CPU. The vCloud Hybrid Service Virtual Private Cloud – similar in concept to Amazon Web Services (AWS)’ VPC -- will be priced at 4.5 cents per hour.

Cloud consumers can get a dedicated three-year reserved instance on AWS for as little as 3 cents per hour, but a $2 per-region fee is also assessed for every hour dedicated instances run in a particular region, and that price requires a three-year commitment with a $106 up-front fee. AWS also requires users to design in their own redundancy, which can add to cloud costs.

The 4.5 cent per-hour price for the vCloud Hybrid Service Virtual Private Cloud is more comparable with on-demand instance pricing from AWS, Rackspace Hosting and Hewlett-Packard Co. (HP), which charge 6.5 cents per hour, 6 cents per hour, and 4 cents per hour, respectively.

*Of course, given the nature of the hybrid cloud, users also have to factor in on-premises licensing costs for VMware vSphere 5.1 or higher, the minimum requirement for entry into the vCloud Hybrid Service.

This was also a deal-breaker for FDF’s Schaaf, but Dignum said since he’d already paid for vSphere, he doesn’t consider it an additional up-front capital expenditure.

Disaster Recovery as a Service coming in fourth quarter

Despite the lack of some awaited features, such as integration between vCloud Director 5.5 and VMware’s Site Recovery Manager (SRM) replication, and disaster recovery orchestration product, executives at VMworld said disaster recovery as a service (DRaaS) will be offered on the vCloud Hybrid Service in the fourth quarter of this year.

“Our replication products currently don’t understand multi-tenancy,” said Raghu Raghuram, executive vice president of cloud infrastructure and management for VMware. “They assume the source and destination are owned by the same organization.”

It will be a thorny problem for VMware to resolve before offering DRaaS.

Meanwhile, Hotlink Corp. recently released a product called DR Express, which will replicate VMware VMs through vCenter into AWS for disaster recovery at a price of $25 per VM per month.

*VMware clarified the service will work with vSphere 4.1 update 2 and higher, and that on-premise infrastructure is not needed to run vCHS.

Beth Pariseau is senior news writer for SearchCloudComputing.com. Write to her at bpariseau@techtarget.com or follow @PariseauTT on Twitter.

View the next item in this Essential Guide: VMware NSX brings advanced networking to virtualization: Is it enough? or view the full guide: VMworld 2013 conference coverage

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