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VMware cloud strategy to evolve toward hybrid in 2016

VMware made a number of updates to its cloud strategy in 2015, but there's more work to be done this year -- especially around hybrid cloud.

Cloud providers saw a lot of change in 2015, and VMware was no exception.

In October, VMware and EMC formed a joint cloud service under the Virtustream brand -- roughly one week after Dell's $67 billion acquisition of EMC. EMC and VMware said the Virtustream business, which EMC acquired in May, would include VMware's vCloud Air. The move suggests that VMware knows the market favors big battalions in cloud, and perhaps that it's looking to partner.

While it's difficult to predict exactly what's in store for 2016, hybrid cloud and new partnership opportunities will likely play a big role in the VMware cloud strategy.

VMware cloud strategy evolves, but challenges remain

Either because of complacency, or the belief that virtualization would hold the cloud at bay, VMware entered the cloud market late. Still, like many traditional players, VMware finally saw the light and got into cloud in 2014.

As a newbie, VMware faces tremendous challenges. The company is competing against mega-providers with huge market share. Moreover, these companies have been engaged in a race to the bottom on price, suggesting the market is price-driven, not feature-driven. And that's not VMware's natural market environment.

Even so, VMware is coming from a position of great strength in the virtualization arena. The company's installed base is a huge percentage of the cloud market, and this alone could give VMware an edge -- especially as IT shops evolve toward hybrid cloud.

The rise of hybrid cloud

Wanting greater stability and security, many organizations will evaluate or adopt a hybrid cloud model in 2016. On the surface, public cloud appears to collide with compliance standards like Health Insurance Portability and Accountability Act and the Sarbanes-Oxley Act. But, if public cloud providers offered either private cloud hosting or long-term agreements on cloud instance configurations, effectively they are hosting and are compliant.

To understand the implications of major public cloud providers moving into private cloud hosting, we need to look at the likely evolution of hybrid cloud. In the U.S., telecommunication companies have dragged their feet on the need for high-speed fiber connections to urban businesses. This lack of bandwidth between companies and the public cloud will seriously impede the rollout of hybrid architectures. There really are only two good near-term solutions: Move everything to a public cloud or keep it in house.

OpenStack has effectively wedged itself into the hybrid cloud market, due primarily to VMware's slow start. All of VMware's integrator partners offer OpenStack integration and support, and most are participating in code development. In some ways, OpenStack is the Linux of the cloud and that contrasts with the high costs typically associated with VMware offerings.

Amazon Web Services and Microsoft Azure are a long way ahead of VMware in both operational scope and market share. Right now, AWS doesn't offer an accessible private version of its cloud, but it has tested the concept with major players such as the U.S. government and the CIA. Azure already comes in a private version that is aimed at hybrid environments, and there are signs that 2016 will see a lot of activity from AWS and Azure in terms of private cloud hosting.

Rackspace has shifted from public cloud to offering hosted private clouds and managed services, and other cloud vendors, including IBM, SAP, Oracle and Hewlett Packard Enterprise, will likely make a similar move this year.

While the VMware cloud strategy evolved toward hybrid models in 2015, there's more work to be done this year. VMware has to choose a better game plan in cloud to win the hybrid battle. Hybrid cloud growth will affect VMware, possibly more than AWS or Azure. This leaves Google as the number three cloud provider to reckon with, behind AWS and Azure.

What a Google partnership could mean for VMware's cloud

Google could be a good match for VMware, and the two vendors already took steps to work together last year. From a Google perspective, VMware could bring the management tools expertise that is sorely needed in hosted private clouds, and make those tools work with VMware virtualization. From VMware's perspective, a deeper partnership with Google would allow it to shift from running a cloud to doing what VMware does best -- developing software tools.

If a tighter partnership with Google or another cloud provider fails to materialize, VMware has to make the same decision other smaller providers faced: hold or fold. Deciding to hold on would require bringing software-defined networking into the VMware cloud strategy. And by most estimations, Google is already ahead in this area.

That and creating tools to make apps more cloud-ready are two of the biggest technical initiatives in the market today. One might speculate that having better tools to migrate apps from VMware clusters to VMware clouds is also high on the enterprise wish list.

Next Steps

Ten key moments in cloud computing in 2015

Comparing VMware and OpenStack for private cloud

Five VMware tools for private cloud deployments

This was first published in January 2016

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