Details are scarce since AppFog had no comment and Savvis could not be reached for comment but sources with knowledge of the deal expect the news to be announced Monday. Founded in 2010, AppFog garnered about $10 million in venture funding from Ignition Partners, Xen founder Simon Crosby, Madrona Venture Group, First Round Capital and Founders Co-Op.

Given that Savvis is a big VMware vSphere and vCloud Director partner, AppFog could give it a “house brand” PaaS of its own. AppFog’s PaaS builds atop standard Cloud Foundry technology, which came out of VMware. Its pitch was that AppFog abstracted out messy details of base cloud infrastructure so developers could move their apps from Amazon to Rackspace to HP or other public clouds at will. That eliminated cloud lock-in at least at the Infrastructure-as-a-Service (IaaS) layer. In April, however, AppFog dropped support for Rackspace and seemed to be narrowing its focus.

At the time, word was that VMware’s decision to spin off Cloud Foundry to Pivotal and offer it as a commercial PaaS hurt members of the ecosystem — including ActiveState, Uhuru and AppFog — it had recruited to build PaaSes atop that technology. That led to talk of a possible fork of Cloud Foundry.

Given this news, it looks like AppFog technology will be more tightly wedded to Savvis/VMware infrastructure, but no one’s saying.

PaaS as a category hasn’t gained a ton of traction in the enterprise — even some in the market concede that it lacks a killer app to convince CIOs to buy into the concept. Developers at companies often use these platforms hosted on outside cloud infrastructure to build and test software but when the time comes to deploy, the apps typically come in-house.

Pivotal trotted out General Electric’s $105 million investment in its new venture as proof that enterprise adoption of PaaS is on the upswing. Red Hat this week made its enterprise-focused OpenShift PaaS generally available. OpenShift adoption could be a bellwether for the category.

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On Tuesday the company plans to open up the public beta program for its vCenter Log Insight program for analyzing unstructured machine-generated log files before the software becomes generally available in the third quarter of the year. The product fits in next to VMware’s vCenter Operations Management Suite, which can analyze structured time-series data.

Initially, the product is targeted at helping customers troubleshoot errors and identify the root causes of technical issues, said Mahesh Kumar, director of enterprise management marketing at VMware. Later on, based on user feedback the company could tweak the product to tailor it to use cases around security and compliance, he said.

The product rollout comes following VMware’s 2012 acquisition of the Log Insight product and employees from startup Pattern Insight. Private beta testing got underway late last year.

The product will compete with plenty of log-management options currently available. In addition to Splunk, there’s Loggly (see disclosure), Papertrail and Sumo Logic, and open-source options such as logstash are also available. Then there’s Chronon, a startup seeking to replace log files with a record-and-replay process.

Source: VMware

Kumar believes the VMware offering stands out for its ease of use through a simple interface and its pricing model. Rather than charge by volume of data being indexed, Log Insight customers pay $200 per data source, he said. That means customers don’t have to worry about over-provisioning or under-provisioning without knowing what they will need.

While VMware keeps adding to its software lineup — the NSX network-virtualization software courtesy of the $1.26 billion Nicira acquisition is also on the way — the company is also preparing to make its public cloud available. These initiatives and other attempts to carry out on the software-defined data center vision will be on the table for discussion when Om sits down with VMware CEO Pat Gelsinger at our Structure conference on June 19.

Disclosure: Loggly is backed by True Ventures, a venture capital firm that is an investor in the parent company of GigaOM/paidContent. Om Malik, founder of GigaOM, is also a venture partner at True.

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Google last month got more incremental when it announced per-minute charges for Google Compute Engine although with a minimum buy of 10 minutes. Other cloud players — Cloud Sigma and ProfitBricks pioneered sub-hour charges but let’s face it, in this game, Amazon is the king of the hill. In April, when Microsoft rolled out its Azure Infrastructure-as-a-Service capabilities broadly, it said it would match Amazon pricing on all basic cloud computing components. What it’s done now is offer one of the most critical modules — a compute instance — available in a smaller increment.

Brad Anderson, corporate VP of Microsoft’s Server and Tools unit (pictured above), will announce the news at Microsoft TechEd on Monday.

Update: At the show, Microsoft Corporate VP Scott Guthrie also said that when an Azure user stops using a given VM, Microsoft will stop billing for that resource and that MSDN subscribers can now run some “select” MSDN licenses on Azure. Previously that software had to run on-premises.

Below is a pricing chart Microsoft provided for like instances from AWS, GCE and Azure:

Microsoft will also announce a broad timeline for the release of the next building blocks it hopes customers will use to build their own private clouds: Windows Server 2012 and System Center 2012 R2, both due later this year, and SQL Server 2014, due next year.

The company’s grand plan is for customers wanting private clouds to use those components, which mirror the technologies in Azure itself, and then be able to shift workloads between internal data centers and Microsoft-run Windows Azure at will. That vision is similar to what VMware is pitching with its new vCloud Hybrid Services. Both Microsoft and its partner/competitor VMware would like to be enterprise-friendly venues for cloud workloads that are now flowing to AWS.

“Our most direct competition is obviously AWS but at the same time, the framing of the market is important. We’re approaching it from an enterprise customer’s need for hybrid cloud,” Takeshi Numoto, corporate VP of Server and tools marketing for Microsoft told me last week.

The battle of the enterprise clouds heats up

Indeed, “hybrid cloud” deployment is seen as Amazon’s Achilles heel by competitors. While Amazon offers products like a storage gateway to forge ties between customer data centers and AWS, no Amazon cloud customer can run an AWS instance in house.  Last year, AWS also launched a partnership with Eucalyptus to enable a sort of hybrid cloud deployment. Cloudscaling, an OpenStack player, says it will support AWS APIs to enable customers running its clouds to move workloads to and from AWS.

Microsoft will also tout market share its Hyper-V virtualization technology (which comes bundled with Windows Server) has made at the expense of VMware. Server virtualization is a key underpinning of cloud computing since it allows more and different workloads to be packed onto the same server.

IDC numbers show that Microsoft’s virtualization share grew to 27.5 percent in 2012 from 20.3 percent in 2008 while VMware’s share fell to 56.8 percent from 65.4 percent in that period. IDC analyst Al Gillen cautioned that the comparison is tricky since product configurations have changed. “While VMware’s share has been diluted down somewhat, the industry has grown well through this period, and VMware today holds a smaller share of what is now a much bigger market than was in 2008. So VMware is not losing volume, it’s losing market share. Those two are not one in the same when the market is growing,” Gillen said via email.

At any rate, the battle is on with Microsoft, VMware, along with HP, IBM, Red Hat and others all vying for corporate workloads. But let’s don’t kid ourselves, AWS is in that mix as well and remains the cloud to beat.

All of this will be subject to discussion at GigaOM’s Structure event in a few weeks where VMware CEO Pat Gelsinger, Microsoft Server and Tools President Satya Nadella, and Amazon CTO Werner Vogels will be on hand.

This report was updated at 7:44 a.m. PDT with additional information coming out of TechEd.

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After all, AWS is by far the largest provider of public cloud services and many (including Morgan Stanley analysts) see that run continuing well into the next decade. As reported earlier, new Morgan Stanley research projected that AWS will hit $24 billion (with a B) in revenue by 2024 and poses a real threat to all legacy IT providers — companies like Oracle, HP, VMware,  IBM, SAP and — oh yeah — Microsoft.  I might quibble with the revenue figure — who can project a decade out? — but not with the fact that AWS is already starting to eat these companies’ respective lunches. If any of the top dozen IT vendors in the world aren’t worried about AWS, they should be.

Windows Azure launched three years ago, primarily as a Platform-as-a-Service, to underwhelming response at least to folks out side of Redmond, Wash. The problem was that developers, first at small startups, and increasingly at larger companies flocked to Amazon’s more granular and more basic Infrastructure-as-a-Service (IaaS) capabilities.

Amazon had a 3 year head start at that time and then it took Microsoft till April of this year to formally launch its AWS-like IaaS capabilities. When Microsoft subsequently claimed that Azure was already a $1 billion business, many (including yours truly) didn’t buy it. And a clarification of those numbers showed that $1 billion covered a lot of distinctly non-Azure-y stuff like Microsoft software sold via AWS and other cloud or hosting providers.

And in the years it took Microsoft to get its IaaS out the door, Amazon has churned out more, higher level services including things like its DynamoDB NoSQL database.

It doesn’t take a genius to see that Microsoft will respond, not only to AWS, but to an array of other upstart clouds — especially the new Google Compute Engine  including VMware’s vCloud Hybrid Service. When it rolled out its IaaS services in April, Windows Azure GM Bill Hilf said the company would meet AWS pricing on all basic compute and storage y services and that Azure pricing will be uniform across all geographies and data centers — a not-so-veiled reference to Amazon’s variable pricing. Microsoft runs 8 data centers worldwide, 4 in the U.S., 2 in Europe and 2 in Asia.

So brace yourselves for lots of messaging this week about how Windows Azure is a better, more IT friendly way to set up and run public and especially hybrid — cloud workloads. Microsoft’s pitch is that Azure — which runs Microsoft data centers — will act in concert with outside data centers running the latest Windows Server and Systems Center releases — as a hybrid cloud that can shift workloads back and forth seamlessly (to borrow VMware’s favorite word.)

Microsoft has come into markets way late before and by dint of huge spending and iterative improvements, caught up. Internet Explorer was a pipsqueak compared to Netscape Navigator. Anyone use Navigator now? Didn’t think so. (Of course I’m not sure how many IE users there are any more either.) Still even Windows bashers have to acknowledge that Microsoft’s installed base is humongous. If it can move even a fraction of into Azure, it will be a factor.

Microsoft: 50% of global 100 already use Windows Azure. < Microsoft needs to tell this story better. Developer traction too. #tenasummit—
Matt Eastwood, IDC (@matteastwood) June 02, 2013

As to whether Microsoft can dent AWS and fight off incursions by archrival Google  –  hey if I knew that I’d be on Nantucket now instead of writing tech blogs.

For a lively discussion on the cloud computing competitive landscape, check out GigaOM’s Structure conference where Satya Nadella, president of Microsoft’s Windows and Tools unit; Werner Vogels, CTO of Amazon, and Pat Gelsinger, CEO of VMware will be front and center.

Other cloud computing news from around the interwebs

From GigaOM: Here’s why CERN ditched OpenNebula for OpenStack

From NetworkWorld: Rackspace beefs up cloud networking with Brocade’s Vyatta technology

From Nasdaq.com: Microsoft Hyper-V gains ground against VMware ESX

From ZDnet: User-centric tools go a long way to reaping benefit from big data projects

From Forrester Research: Surprise! CIOs have a radical vision of their world

From SiliconAngle: What CIOs should know about Google Compute Engine.

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The research facility is trying to develop a private cloud to serve 11,000 physicists around the world and, with the Large Hadron Collider currently being upgraded, the amount of data that will need to be managed is set to see a major increase.

CERN has been testing various virtualization and cloud options over the last few years and, according to infrastructure manager Tim Bell, it’s currently got two environments: around 3,000 virtual machines running in a high-availability configuration on Microsoft’s System Center Virtual Machine Manager (SCVMM); and three OpenStack deployments, the main one running around 500 or 600 hypervisors. The plan is to scale up to 15,000 hypervisors, with 150,000 VMs, by 2015.

Bell, who has spoken at several of the OpenStack Summits over the past few years and is a member of  the OpenStack board, explained that the OpenNebula trial was stopped at the start of this year. He said “all those resources are now part of the OpenStack environments”:

“We’ve been investigating how to use cloud technology for physics. We did a test with OpenNebula and ran various scenarios. It was useful to explore the concepts of cloud computing but, when we were looking at deploying at scale, we wanted an environment where we wouldn’t be the largest. We didn’t want to be pushing the limits of scalability ourselves; we wanted to be building on the works of others.

“We also wanted to take advantage of the ecosystem – load balancing, orchestration and so on. These things float around OpenStack or become part of it, and that’s part of the momentum of that as a solution.”

One of the key OpenNebula deployments had been within CERN’s engineering department – an OpenNebula cloud running on top of VMware. However, as OpenNebula project director Ignacio Llorente confirmed to me today, that department is now using vCloud instead.

But, as regards Bell’s explanation for why CERN has dropped OpenNebula, Llorente hit back very hard indeed:

“They have never been our largest deployment. We have much larger deployments in several telcos. They only ran 16,000 VMs on 400 physical boxes. Regarding the technical aspect, I do not agree OpenStack has a wide ecosystem. The ecosystem around the Amazon API is much wider, and as far as I remember CERN used our AWS API implementation.

“Moreover OpenNebula better meets the requirements of cloud deployments for HPC and Science regarding job orchestration, load balancing … We have a very wide user base in research and supercomputing: FermiLab, European Space Agency, SARA Dutch Supercomputing Center, NASA Langley, CESGA, DESY, NCHC, CSIRO, KIT, PIC, CESCA, CHPC, most of the cloud sites at the European Grid Initiative…

“As far as I know this movement was not a technical issue, it was a hype-driven decision… The management of the cloud project at CERN changed and the new management decided to leverage the hype around OpenStack. Although we spent a lot of time helping CERN build its cloud, they never contacted us to comment about this movement.”

Harsh words. So, did CERN buy into hype or did it make a smart move? Such is the nature of experimentation that we can’t draw a firm conclusion at this point. All we do know for sure is that OpenStack has a significant amount of momentum in Europe right now and OpenNebula – a more mature stack with a stronger local heritage, remember – isn’t going down without a fight.

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These numbers factor in AWS and Amazon’s Elastic Beanstalk on the PaaS side; Google App Engine; IBM’s SmartCloud and SmartCloud Application Services; Microsoft Azure and Cloud Services for Windows Azure; Salesforce.com’s Heroku and Force.com (but not its bigger Software-as-a-Service applications business.)

Key takeaways:

• Amazon Web Services remains alone atop the heap with  27 percent of total IaaS and PaaS revenue in Q1, up from 24.7 percent for the year-ago period.
• Salesforce.com is second largest but it’s revenue share decline year over year to 6.8 percent from 7.9 percent.
• North America accounts for more than half the worldwide IaaS/PaaS revenue.

These figures won’t surprise folks who already see Amazon Web Services at a $2 billion-a-year revenue rate. Morgan Stanley thinks AWS alone will hit $24 billion in revenue in the next decade. While other players — Microsoft, IBM, Google and Fujitsu all saw slight growth.  Some of the major telcos – AT&T, NTT and Verizon — were off slightly year over year.

These numbers beg the question of whether anyone can catch Amazon. Google just made its Google Compute Engine IaaS generally available, and Microsoft launched its Azure IaaS capabilities in April. Those well-funded entries along with VMware’s hybrid cloud service coming online, will pose more competition for the AWS monolith.

AWS  boosters say the company’s 6-year-head start makes it invincible, but many workloads have yet to migrate: IDC estimates that just 5 percent of total IT spend is now in the cloud. That leaves lots of upside opportunity for the companies who delivers the best, most flexible and cost efficient services.

Who that might be is up in the air, but one place you can hear all about the top candidates will be at GigaOM’s Structure where a list of cloud powerhouses including VMware CEO Pat Gelsinger, Amazon CTO Werner Vogels and Microsoft Server and Tools group president Satya Nadella will all be on hand to talk up their companies’ cloud strategies.

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Oh, and the researchers project that AWS will hit $24 billion in revenue by 2022. Amazon doesn’t break out AWS revenue, but most pundits figure it passed the $2 billion-a-year mark about a year ago.

The fact that AWS has a huge lead in cloud over the rest of the world is not news to anyone who’s been watching, but these projections could be a wakeup call to investors who think tech incumbents — companies like IBM, Microsoft, HP, VMware, Red Hat, as well as every telco and hosting provider — can challenge Amazon in cloud computing.

“Applying retail economics to the delivery of technology services well positions Amazon Web Services [to be] a Top 5 vendor within the $152 billion TAM [total addressable market], ” according to Morgan Stanley analysts Scott Devitt, Keith Weiss and team.

Nobody’s immune

The move to cloud computing means fewer companies will buy huge numbers of servers and storage arrays for their own use. Over the next five years, Morgan Stanley’s expects that 3 percent to 17 percent of current spending could be sucked up by cloud-based IT service providers. AWS represents a key risk for infrastructure vendors EMC, Brocade, NetApp, VMware and Qlogic, in particular, according to the report.

Other key takeaways:

• “We expect on-premise server growth to remain negative long-term on the back of smaller footprints post the adoption of server virtualization combined with new workloads moving to the cloud. Partially offsetting the decline is 20% growth in servers shipped to cloud providers, though some of the demand is fulfilled by whitebox makers like Quanta and Wistron.”
• “Storage market at risk of decelerating growth that isn’t fully baked into expectations (unlike servers which already declined in 2012). We expect 0-5% storage revenue growth going forward, down from 5-10% historically. EMC and NetApp likely gain share from server vendors, like IBM. We downgrade BRCD to UW, given over 30% of revenue derived from server OEMs.”

AWS as enterprise software power

And then there is enterprise software, where Amazon threatens VMware and Red Hat in the virtualization market. And, as we’ve reported, Amazon is pushing hard for enterprise workloads with its DynamoDB NoSQL database and RedShift data warehouse. Those AWS efforts represent a long-term threat to Oracle, SAP and Microsoft. In content delivery, where Amazon’s CloudFront is a factor, Akamai faces a long-term threat.

Morgan Stanley isn’t the first analyst firm to up the ante on AWS expectations. In January, Macquarie Capital projected that AWS would account for $38 billion of an overall $71 billion cloud services market by 2015. If you don’t like Morgan Stanley’s take on AWS, hold on — there are bound to be others.

The growth of Amazon’s public cloud infrastructure and its push beyond startups into the enterprise,will doubtless come up at GigaOM’s Structure event, where Amazon CTO Werner Vogels will speak.

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VMware CEO Pat Gelsinger

Both execs, Javier Soltero and Kevin Henrikson, joined VC company Redpoint Ventures as entrepreneurs in residence.

Soltero joined VMware by virtue of its acquisition of SpringSource in 2009 — after having joined SpringSource by virtue of that company’s acquisition of Hyperic. At VMware he was the CTO of SaaS and application services.

Henrickson was senior director of R&D for Zimbra, the open-source email product VMware acquired from Yahoo also in 2009. The dual departures were first reported by TechCrunch.

It was clear last year that VMware was scaling back on applications — which had been a key part of former CEO Paul Maritz’s strategy. It subsequently spun off the Java-based Spring framework along with Cloud Foundry and other assets to Pivotal where they will be part of that company’s universal PaaS push.

Selling off the non-essentials

It’s fairly clear that VMware would like to divest itself of Zimbra, which doesn’t fit into its new IaaS worldview, just as it sold off SlideRocket to Clearslide and Wavemaker Java technology to Pramati, both in March. (Pramati just announced Cloudjee a new company pushing a cloud development platform incorporating Wavemaker technology.)

Early this month, Patrick Chanezon, who led developer relationships for both Spring and Cloud Foundry efforts at VMware, joined Microsoft as director of enterprise evangelism.

We can’t say that VMware didn’t warn us. In January, CEO Pat Gelsinger clearly stated the company’s need to focus and eliminate distractions. At about that same time CTO Stephen Herrod left the company for General Catalyst. Oh, and by the way, Gelsinger will be on hand at Structure 2013 to discuss VMware’s IaaS plans.

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The news came out Friday as part of a flurry of SAP announcements. Another of those also relates to a departure – that of human resources chief Luisa Delgado, whose responsibilities will be taken on by CFO Werner Brandt – but the big non-quitting-related news is that SAP is consolidating its business to better reflect its newfound cloudiness.

SAP’s cloud “go-to-market” strategy will now all be under the purview of Bob Calderoni, CEO of Ariba (alongside SuccessFactors, one of SAP’s major cloud buys of the last two years). And development will all be under the control of technology chief Vishal Sikka.

SAP is pitching this new structure as an innovation accelerator, but does it finally signal a streamlining of the company’s sprawling and often confusing portfolio (a condition I like to call IBMitis)? Yes! And no.

As Sikka said on a conference call today:

“We see an opportunity to not only consolidate and streamline the portfolio, but bring incredible efforts… to transform that in the power of the cloud. We will get into areas that are truly unprecedented – applications for new industries that weren’t possible before [such as] healthcare, banking, oil and energy.”

Which is nice, but – as co-CEO Jim Hagemann Snabe chipped in – SAP has “a lot of commitments” to its existing customers too, and “we’re a company that stands by our commitments.” This may mean we should expect some redundancy within the portfolio to continue for a while yet, in order to keep those with more old-school SAP systems in place happy.

As for SAP’s ongoing cloud strategy, co-CEO Bill McDermott promised that Dalgaard’s exit would lead to “zero business disruption”:

“Our cloud DNA is now embedded across 65,000 minds and hearts and it’s become the soul of SAP. While it’s nice to have one evangelist for the cloud, it’s even better to have 65,000.

“Lars took us from $20 million in terms of revenue to a $1 billion run rate in the cloud. Now it’s about scale because everything is cloud. No other company has gone through this transition so fast – it literally happened in 12-15 months under his leadership.”

McDermott added that Dalgaard had been having “open conversations” with him and Hagemann Snabe for some time about his plans to downgrade his role to that of advisor. “This is the nicest balance he could find in his personal life and we were happy to accommodate him because we think the world of the guy,” he said.

Speaking of SAP’s thorough cloudiness, the company also announced on Thursday that it would deliver its products – including, of course, those on the in-memory HANA platform — on VMware’s newly-re-announced vCloud Hybrid Service IaaS platform, as well as vCloud Suite. This will allow for fully managed services on-premise, in the cloud and in hybrid deployments.

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