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VMware has dubbed the major refresh of its server virtualization product line, vSphere, the “mainframe of the 21st century.” While I’m impressed by the product announcement, with which VMware will further expand its already considerable lead over Microsoft and Citrix, I suspect the company will face formidable challenges in transitioning its own sales force (and particularly its channel partners) toward a multidisciplinary, solutions-led sale.
VMware has captured the marketing zeitgeist by labeling its suite “the industry’s first operating system for building the internal cloud.” Private clouds are, in fact, being adopted ahead of public clouds, and VMWare is right that it will only be successful if it enables mainstream commercial workloads to be run in these clouds without requiring modifications. The company claims that “for hosting service providers, VMware vSphere 4 will enable a more economic and efficient path to delivering cloud services that are compatible with customers’ internal cloud infrastructures.” While VMware is by far the best-positioned vendor to enable these, and is building that stack from the bottom up, I would have liked to see more detail on what that top-to-bottom private cloud stack would look like.
A true private cloud provides infrastructure-as-a-service to enable end-to-end application services delivery. VMware is currently focused on virtual infrastructure as a delivery platform, and parts of that stack – such as the ability to charge back internal departments based on usage — are still missing. vSphere 4 also maxes out at 32 physical servers in a single logical resource pool. To me, that seems to be more of a medium-sized puddle, not the large pool required for an enterprise-sized cloud.
If VMware’s intent is to provide a packaged “private cloud in a box” solution for small service providers to resell to their customers, that’s a much more complex story to articulate given the general customer confusion around cloud coupled with the complexity of the stack required to make that work. This is one example of how VMware will require more of a complex, ecosystem-centric sales model.
Unlike other technology vendors who have gone down this path before in their respective silos (e.g., servers, storage, networking, business applications, security), though, executing on its vision will require a joint sale across different silos. Enterprise customers tend to be organized in these silos, and so do channel partners, who either focus only on one or two silos or have disparate practice groups for each silo.
Virtualization deployments generate lots of downstream revenue, notably for storage and networking partners and, to a lesser extent, for security and business applications partners. That revenue should increase as the company penetrates more business critical workloads and as partners build out more of a solutions and services-rich sales capability. Our sources indicate that every $1 of VMware licensing revenue generates about $10 of ecosystem revenue. That should make VMware attractive to partners, but it may also ultimately prove a burden to customers. Mastering this transition will be one of the company’s biggest challenges.
Juergen Urbanski is the Managing Director of industry analyst firm TechAlpha.