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Can VMware's hybrid cloud service reach beyond virtualization users?

The vCHS public cloud appeals to VMware's existing virtualization users, but it may struggle to attract new customers and succeed beyond IaaS.

The VMware hybrid cloud service has been generally available for about six months and has already drawn in hundreds of enterprises that want to stick with what they know as they move to the public cloud.

While IT pros that already use VMware Inc.'s virtualization software see the vCloud Hybrid Service (vCHS) as a simple path to cloud, others see reason to use Amazon Web Services (AWS) or other mature cloud options instead.

Some early adopters of the VMware hybrid cloud service have used other cloud services, but found skills within their organization better suited to vCHS. The service offers access through the vCenter Server management console along with a Web-based interface, and it is intended to be used as an extension to a private cloud built with the VMware vCloud Suite of management tools.

What's important is a broad set of enterprise-grade features, regardless of what underlying hypervisor they're running, and that's really why Amazon is dominating.
Kyle Hilgendorfanalyst, Gartner

"I didn't have a lot of strength in my engineering team for Linux and other things that you need when you go to Amazon," said Darryl Dugan, IT manager for Nexon America Inc., an online game publisher headquartered in Los Angeles.

Since he runs Microsoft applications, Dugan also uses Microsoft's Azure public cloud service, but doesn't want to deal with a hypervisor that doesn't have cross-compatibility with other platforms they use, as transferring machines between different virtual environments would be painful when quick movement is needed between the private and public cloud.

Even though it remains a customer of both AWS and Azure, the company brought some of its operations back in-house to a vSphere-based private cloud two years ago to cut costs, as hourly payments to run demanding workloads in the public cloud became expensive, Dugan said.

Now, that private data center needs expansion and extension to third-party game developers. Last year, Dugan turned to the VMware hybrid cloud service rather than try to re-integrate the private data center with Amazon or Azure.

"If my engineers have to contact support, they already know how the system is architected and what it's built on so they can have a good conversation and get rapid resolution to any problems," Dugan said.

Healthcare firm dumps Azure for vCHS

"I didn't choose VMware. I chose Azure," said Shawn Wiora, CIO of Creative Solutions in HealthCare, which runs a network of nursing homes in Texas.

That was last year, as Wiora simultaneously moved the company from an entirely physical infrastructure to a virtualized environment using VMware.

As the Azure project got going, it ran into a snag. Wiora couldn't get Microsoft Azure reps to put in writing that they would support self-managed Exchange in production on Azure, as opposed to the version of Exchange that comes with Office 365 -- even though it would technically work.

Hearing this story, VMware pounced.

"They just threw all these people into it," Wiora said. When he switched to vCHS, VMware threw in free training and implementation services, he said.

VMware has also pledged to work with the Microsoft Exchange support team should anything go amiss, Wiora said.

If all of that sounds drastically different from the approach taken by cloud service providers such as AWS, it should, according to VMware CEO Pat Gelsinger.

"We do expect there will be some competition with AWS over time for different workloads and customers," Gelsinger told Wall Street analysts on the January earnings call. "But today we're largely pursuing different customers with different value propositions."

Another contrast: Because the VMware hybrid cloud service model draws on existing VMware products, on-premises software features can be used in place of discrete secondary offerings in the cloud. So, for example, where Amazon has AutobScaling Groups, VMware advises that customers use vCenter Orchestrator, a free tool that ships with vCenter Server, to perform a similar function.

Beyond the VMware customer base

Despite collecting hundreds of customers so far, VMware still has its work cut out for it if it intends to be a major player in the Infrastructure as a Service (IaaS) market against AWS. Even hundreds of customers are a drop in the bucket compared with AWS' hundreds of thousands.

Some industry watchers say the differences between vCHS and other cloud services present a dilemma for prospective IaaS buyers.

AWS vs. VMware vCHS pricing

VMware vCHS pricing differs from Amazon's pay-by-the-hour service in that vCHS customers contract with VMware on at least a monthly basis and begin with a certain basic pool of resources within vCHS, which VMware refers to as Cores.

There are two Core types: Dedicated Cloud, a pool of 120 GB of vRAM, 30 GHz of vCPU, six terabytes of storage, 50 Mbps of bandwidth and three public IP addresses; and Virtual Private Cloud, which consists of a pool of 20 GB vRAM and 5 GHz vCPU with bursting to 10 GHz, two TB of storage, 20 Mbps of bandwidth and two public IPs.

While it requires a much bigger up-front commitment than AWS, vCHS' hourly pricing for compute in the Virtual Private Cloud, which starts at four cents per gigabyte of memory per hour, is in the same range as Amazon's Reserved Instance prices. Both services also charge separately for storage and bandwidth.

"Here's the dichotomy companies have to think about," said Anthony Pagano, director of a cloud brokerage service operating in the Northeast. "Do they create their own virtualized infrastructure and, when there's some seasonality, set the environment up so they can move into VMware's hybrid cloud? Or do they just go ahead and design the application from the start to be able to work in some kind of cloud environment?"

For Pagano, it's still very much an open question.

"[The cloud-native model] is what VMware's working against, and I don't know how well they're going to do with it," he said.

VMware's channel partners scoff at such doubts as the storage and other integrations in vCHS may make it valuable even to non-VMware customers.

Making it to the Mount Rushmore of cloud service providers

The vSphere-compatibility value proposition will also only go so far in the IaaS market, according to Kyle Hilgendorf, an analyst with Gartner Inc., based in Stamford, Conn.

While early adopters of vCHS praise the compatibility of the service with internal infrastructure, many cloud customers outside of the VMware customer base are now getting to the point that the migration of VMs isn't what they primarily care about, according to Hilgendorf.

"They're settling into the idea that public cloud services are for brand-new applications or for lifecycle and redesign of applications, not so much lifting and shifting," Hilgendorf said. "When you come to that conclusion, you realize it doesn't have to be VMware on the other side -- what's important is a broad set of enterprise-grade features, regardless of what underlying hypervisor they're running, and that's really why Amazon is dominating."

Still, Hilgendorf doesn't count VMware out as a major cloud service provider long term.

"Amazon and Microsoft are already two faces on the Mount Rushmore of cloud providers," he said. "Those other two faces are up for battle right now."

VMware is in the mix along with Google, Verizon and IBM, according to Hilgendorf.

"But a couple of missteps this year could almost spell the end of that as well," he said. "They're going to have to move fast and tread carefully, and moving fast and treading carefully don't normally go together."

AWS and Microsoft officials did not provide comment.

Beth Pariseau is senior news writer for SearchCloudComputing. Write to her at [email protected] or follow @PariseauTT on Twitter.

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