Virtustream is now the face of the EMC Federation's consolidated cloud strategy.
EMC and VMware have formed a new, jointly-owned cloud service business under the Virtustream brand as a means to pull together some of the disparate pieces of the federation's cloud services and to continue to push VMware's hybrid cloud mantra.
That shouldn't mean too much to customers in the near term, but the long-term success of the reshuffling will hinge on how well the companies are integrated to create a more competitive feature set for cloud users.
There will also be a Cloud Provider Software business unit that folds in Virtustream's software assets, including cloud management platform xStream.
In addition to the company's existing infrastructure as a service, the realigned Virtustream will include vCloud Air, VCE Cloud Managed Services, and EMC's Storage Managed Services and Object Storage Services. The unit will be overseen by Rodney Rogers, CEO of Virtustream. The Cloud Provider Software business unit will focus on service providers that build their own cloud services on top of vCloud Air, and it will be led by Ajay Patel, VMware senior vice president.
Despite all the machinations, don't expect any major shifts for customers or for this to bring in many new customers for now, said Carl Brooks, analyst with 451 Research LLC in New York.
"I don't think it portends to anything that we haven't already seen from Virtustream's platform or what customers are doing with vCloud Air," Brooks said.
Like VMware before it, EMC didn't seem to know what to do with a managed infrastructure provider when it acquired Virtustream, Brooks said.
"VMware has much better ideas on what Virtustream does and how they operate than EMC does, hence this new business unit," Brooks said. "What it boils down to is VMware gets to do what it wants with software development and investment into their platform, as well as kick over some customers into the VMware enterprise pipeline."
Creative Solutions in Healthcare, a midsize healthcare provider in Fort Worth, Texas, was an early vCloud Air customer. The company has seen a sharp increase in intelligent storage demands due to documentation requirements, so being able to use some of EMC's storage capabilities is welcome, said CIO Shawn Wiora.
Carl Brooksanalyst at 451 Research LLC
He isn't concerned about any implications the deal might have on the underlying vCloud Air technology because, regardless if there is a transition or not, the best technology will win out, which is ultimately a win for customers.
"If you're a vCloud customer, I don't know how you can view this as a bad thing," Wiora said. "You're riding an infrastructure that all of a sudden has two to three times the resources behind each and every product, including security."
Virtustream tops the EMC cloud food chain
Virtustream, which was acquired earlier this year by EMC for $1.2 billion, is respected in the industry and has carved out a niche by focusing on enterprise customers' mission-critical applications, with a heavy focus on SAP. It appears in the middle tier of the Gartner Magic Quadrant for infrastructure as a service and leads the Forrester Wave for hosted private clouds.
Hosting infrastructure is capital-intensive, so it makes sense to bring the pieces together for operational purposes, said Eric Hanselman, chief analyst at 451 Research.
"It's got the potential to simplify the relationship, but the emphasis there is 'potential,'" Hanselman said. "These are all growing businesses today and if you think about what those next steps are in terms of growth, a lot of it is going to be internal organic growth within each of these environments."
John Rymervice president and principal analyst at Forrester Research Inc.
Virtustream could provide more feature-rich environments higher up the stack, Hanselman said. Over time, this business unit can give customers a much wider choice, but that is predicated on how well the integration plays out.
News of the Virtustream business unit comes less than a week after Dell acquired EMC for $67 billion. While the new business unit was created independently, Dell was kept appraised and gave its blessing, Patel said.
EMC deserves credit for acknowledging the problems with its federated model and attempting to consolidate its cloud services, said John Rymer, vice president and principal analyst at Forrester Research Inc., in Cambridge, Mass.
"It all works well in a PowerPoint, but it works terribly in the field," Rymer said. "Customers are terribly confused by this."
Unfortunately, this doesn't completely solve the problem because there is still a federated feel to this move due to the joint ownership by two entities, he added.
The shift shouldn't be a major problem for customers simply because there aren't that many strategic commitments out there, with vCloud Air just starting to gain traction, Rymer said. Expect Virtustream's technology to dominate as the services become integrated into a single self-service and management portal for cloud services, he added.
"Reading between the lines it looks to me like there was competition inside the federation between vCloud Air and Virtustream, and Virtustream won," Rymer said.
Both offerings are built on core VMware virtualization technology, so they will integrate nicely and serve different, complementary purposes, Patel added.
"One is all about hybrid networking and the other is all about applications," Patel said. "One is bottom up infrastructure data center extension with elasticity and the other one is coming at it from a large SAP landscape."
Trevor Jones is a news writer with TechTarget's data center and virtualization media group. Contact him at firstname.lastname@example.org
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