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VMworld 2014 – Highlights & Analysis

VMworld, the flagship annual event hosted by VMware, is bigger and better with each passing year. This year’s event was one of the most anticipated conferences in the industry, withcustomers and partners expecting major announcements related to hybrid cloud and end-user computing, VMware didn’t miss the opportunity to underscore its commitment to enterprise through continued investments in core infrastructure, hybrid cloud and end-user computing.

In the last two years, VMware has consolidated its position by focusing on what really matters to enterprise customers. With the acquisition of Nicira, AirWatch, Desktone and, most recently, CloudVolumes; VMware has a strong value proposition for customers. Despite the confusing portfolio and complex technology stack, VMware should be appreciated for simplifying their message based on Software Defined Data Center (SDDC), Hybrid Cloud and End-User Computing (EUC). In every conversation with customers, partners, press and analysts, VMware’s leadership team consistently positioned these three offerings as the core pillars of enterprise IT. Based on its own track record and credibility of the companies acquired, VMware has a unique distinction of having the “best-of-breed” technology stack.

Source: VMware
Source: VMware

The growing interest in Linux container technology and the momentum around OpenStack is a threat to VMware’s business. Docker offers a lightweight alternative to hypervisor-based virtualization that appeals to developers and IT administrators. OpenStack was created to check the growing dominance of Amazon Web Services on the public cloud and VMware on the private cloud. Though VMware found a backdoor to the OpenStack foundation through the Nicira acquisition, other members of the foundation always questioned its intentions. VMware attempted to address these two threats through the announcements made at VMworld 2014. It is also leveraging its investments made in hybrid cloud and end-user computing by bringing them closer.

Here is an analysis of the key announcements made at VMworld 2014.

Emphasis on Software Defined Data Center (SDDC)
SDDC is an important piece of VMware’s strategy for sustaining existing business and acquiring new customers. Having conquered the hypervisor market through vSphere, VMware is aggressively moving into storage and network virtualization. It’s trying to repeat history with vSAN that virtualizes storage and NSX, its Software Defined Networking (SDN) offering. With enhancements made to Layer 2 VPN, firewall and load balancing, NSX 6.1, which was announced at VMworld, is one of the most advanced SDN offerings in the market. This puts VMware in the league of mature networking players like Juniper, HP and Brocade. The micro segmentation use-case of NSX transforms VMware into a strong network security company.

The other important announcement related to SDDC came in the form of the vRealize Suite, a platform that focuses on automation, operations and business. There is also a SaaS-based version of this called as vRealize Air. Though vRealize is more of a consolidation and rebranding of existing vCenter and vCloud family of products, the fundamental difference is in the support for 3rd party public clouds including AWS, Azure and Google Cloud. VMware is positioning this as a cloud management platform that extends the vCloud suite to manage OpenStack, AWS, KVM and, of course, its own hybrid cloud, vCloud Air. The SaaS version of vRealize competes with established cloud management platforms like RightScale, Scalr and Dell Cloud Manager.

The flagship product, vCloud Suite is upgraded to 5.8 with improvements in business continuity, disaster recovery and the ability to run Apache Hadoop 2 distributions with YARN cluster resource management.

With the new enhancements, SDDC becomes the blueprint for its converged infrastructure, private cloud and hybrid cloud offerings.

EVO:RAIL & EVO:RACK – Software defined data center in a box
As a key stakeholder of VCE, VMware contributed to the Vblock systems portfolio to deliver converged infrastructure, which is considered to be expensive by many customers. Branded as “Hyper-converged infrastructure”, EVO:RAIL and EVO:RACK provide choice for customers to choose from a variety of OEMs certified by VMware. EVO:RAIL targets the enterprises that may run several hundreds of VMs while EVO:RACK is meant for service providers delivering scalable workloads. With this initiative, VMware has officially joined the Open Compute Project founded by Facebook.

Though it may appear that VMware is getting into the hardware business with the EVO family of products, it is only providing reference platforms and certifying those reference platforms from OEM hardware vendors like Dell, Supermicro, NetOne, Inspur and Fujitsu to deliver the building blocks of the converged infrastructure. This is similar to the independent hardware vendor (IHV) program that Microsoft runs to certify Microsoft Windows compatible hardware. This will create a new converged infrastructure ecosystem in the industry offering an affordable choice to customers.

Source: VMware
Source: VMware

With EVO, VMware made new friends and foes in the industry. The aggressive push of SDN has already taken VMware into the territory of Cisco causing friction between the two companies. Cisco is positioning Application Centric Infrastructure (ACI) as the preferred SDN for VCE customers instead of VMware’s NSX. For delivering the EVO family of infrastructure, VMware has partnered with F5 and Cumulus, archrivals of Cisco. This further widens the gap between VMware and Cisco. The other company that may get impacted is Nutanix, which offers converged infrastructure that just closed a fresh round of funding of $140 million. Though the list of partners for EVO will grow in the future, HP is conspicuously missing. Given the push of converged infrastructure, VMware will become a direct competitor to HP.

OpenStack – Applying the embrace and extend philosophy
One of the most surprising announcements at VMworld 2014 was VMware Integrated OpenStack (VIO), VMware’s own distribution of OpenStack. For a long time, VMware executives downplayed the impact of OpenStack on their customer base but with the growing momentum followed by increased investments from Red Hat, HP, Mirantis and IBM forced them to rethink that strategy. Though VMware is a gold member of the OpenStack Foundation, its contribution is predominantly for the networking project codenamed Neutron. VMware made it to the top 10 contributors through the acquisition of Nicira. A quick look at the top contributors of OpenStack’s latest Icehouse release confirms this.

Source: Stacalytics.com
Source: Stacalytics.com

VIO is positioned as an enterprise friendly OpenStack distribution that is designed to run on top of the VMware stack. The compute, storage, networking and management components of OpenStack are tightly integrated with the equivalent building blocks of vSphere and vCenter family of products. Customers can use familiar vCenter tools to manage OpenStack-based infrastructure. Apart from its own distribution, VMware has partnered with HP, Mirantis and Canonical to support their distributions.

Source: VMware
Source: VMware

The official entry of VMware into the crowded OpenStack distribution space is to keep Red Hat at bay. It is the only company that comes close to VMware in the enterprise market. With their own hypervisor (KVM), Linux OS distribution (Red Hat Enterprise Linux), orchestration (CloudForms + ManageIQ), Storage (Gluster & Ceph) amd OpenStack distribution (RHEL OpenStack), Red Hat has all the essential pieces to deliver an end-to-end IaaS strategy. It also happens to be one of the top contributors of OpenStack code.

The industry is skeptical of VMware’s commitment to OpenStack. It is perceived as the ‘embrace, extend and extinguish’ tactic being used by the largest commercial private cloud provider. VMware has not articulated how OpenStack fits into their vision of hybrid cloud and SDDC-in-a-box powered by EVO. Their motivation seems to be to attract customers who are evaluating OpenStack as a potential alternative to vSphere. By embracing OpenStack, VMware can play the card of “best-of-breed” technologies to protect their customer base and securing licenses. Only time will tell how customers and the OpenStack ecosystem respond to this move from VMware.

Docker and Kubernetes – Join them if you can’t beat them
Docker has caused a stir in the industry with its simplified approach to container management. Many positioned Docker as an alternative to traditional virtualization that is dominated by VMware and Microsoft. Mature infrastructure providers like Rackspace and IBM SoftLayer have announced their plans to offer bare metal clouds powered by contemporary Linux distributions like CoreOS and Docker. Bare metal clouds avoid dependencies on hypervisors posing a threat to VMware.

At VMworld, VMware unveiled its plan for containers. Instead of competing with Docker, VMware is partnering with them to bring containers to its virtualization platform. VMware developed Cloud Foundry, an open source PaaS before it spun off Pivotal.  By leveraging Pivotal CF (commercial version) and Cloud Foundry (open source), it can bring container-based application deployment and delivery to its customers. That’s not all. VMware is also partnering with Google to support Kubernetes on private cloud and hybrid cloud platforms. Kubernetes is an open source orchestration layer backed by Google to provision, schedule and manage containers running on any infrastructure layer. With support from Microsoft, Red Hat and IBM, Kubernetes is moving towards becoming the de facto orchestration tool for Docker.  VMware may integrate vSphere APIs with Kubernetes to support orchestration of containers running with the VMs provisioned by vSphere. It can even add support to manage containers through the familiar vCenter environment making it easy and transparent for administrators. Eventually, VMware would unify container and VM manageability through vCenter and the vRealize family.

Though VMware and Docker jointly announced their plans to work together, there is an interesting project brewing within the company called Project Fargo, which brings rapid provisioning of VMs. VMware claims that Project Fargo can speed up provisioning by 30X. This technology when combined with CloudVolumes, takes VDI and DaaS to the next level, by enabling administrators to close and provision running images in just a few seconds. This can be extended to other workloads to bring rapid provisioning of server VMs running on private cloud and hybrid cloud. It will be interesting to see if VMware’s stance on Docker will change when Project Fargo becomes mainstream.

Source: VMware
Source: VMware

VMware executives were careful in the way they positioned Docker by consistently stating that “the best way of delivering containers in through VMs”. This is a defensive move by VMware before their competition steps up their assault against traditional virtualization. Red Hat has been at the forefront of integrating containers with its OS and PaaS causing a threat to VMware. Through its support for Docker and Kubernetes, VMware is playing it safe, by protecting its private cloud running on vCloud and its public cloud investments powered by vCloud Air.

vCloud Air – Rebranded and refreshed hybrid cloud strategy
With the rebranding of vCHS to vCloud Air, VMware wants to enter the top league of public cloud providers dominated by Amazon, Microsoft and Google. While still being positioned as the best public cloud for existing VMware customers, it wants to attract a new set of enterprise customers. VMware announced a plethora of new services such as DevOps as a Service, Disaster Recovery as a Service, DB as a Service, and object storage on vCloud Air. Based on EMC’s ViPR software-defined storage, vCloud Air object storage supports the popular S3 API, including lifecycle management and versioning features to simplify and reduce management overhead with data durability of 11 nines per object. Through its vCloud Air OnDemand, VMware is attempting to bring self-service capability to its hybrid cloud.

Source: VMware
Source: VMware

VMware has expanded the VMware Service Provider Program (VSPP) to vCloud Air Network. This program brings vCloud Air capability to more than 3900 partners of VMware in 100+ countries.  Service Providers will be classified into “IaaS Powered,” “Hybrid Cloud Powered,” and the existing “Horizon DaaS Powered” to highlight their key offerings.

By bringing Pivotal CF, Docker and Kubernetes to vCloud Air, VMware is trying its best to attract developers to its hybrid cloud. It has partnered with enterprise backend company, Kinvey to bring mobile backend capability. By combining it with AirWatch, vCloud Air transforms into a mature enterprise mobile management platform that differentiates itself from competing offerings.

Similar to its recent partnership with SoftBank and NetOne in Japan, VMware is expected to partner with mature providers in the EMEA and APJ regions to expand vCloud Air’s footprint. With its eye on enterprise workloads, VMware is clear that it doesn’t want to compete with Amazon to on-board web scale workloads. Its main competitor in this space is Microsoft, which is moving fast to capture the enterprise market.

Editorial Note on vCloud Air Hybrid Cloud Strategy: By offering DRaaS and other SaaS offerings, VMware can alienate its service providers by competing with them directly. Bill Fathers’ response to this concern was, “This means that now there are 3901 service providers instead of 3900.”. Competing with the channel is always a slippery slope and VMware will have to tread very lightly.

Leverage End-User Computing (EUC) and hybrid cloud investments
According to the Sector Roadmap on Virtual Desktops report unveiled at the Gigaom Structure conference in June, VMware emerged as a leading player in the DaaS market. With the announcements made at VMworld, VMware’s EUC story becomes stronger.

Source: Gigaom Research
Source: Gigaom Research

Acquiring Desktone and AirWatch has been a smart move by VMware to strengthen its market position. It is now moving towards leveraging vCloud Air and vCloud Air Network to deliver DaaS offering to enterprise customers.  Codenamed “Project Meteor”, VMware took the curtains off its partnership with Google and NVIDIA to bring best-in-class user experience to thin clients that only run HTML5 browsers. The joint effort uses Nvidia’s GRID virtual CPU, Nvidia Tegra K1 processors that come with Chromebooks, and VMware’s Blast HTML5 technology to deliver superior user experience. This puts both VMware and Google in a win-win situation by accelerating the adoption of vCloud Air and Chromebooks in the enterprise. Enterprises moving workloads to vCloud Air can use cost-effective Chromebooks to access them. This puts VMware ahead of Citrix in the DaaS market.

Apart from session-based and dedicated desktops, Horizon DaaS now supports delivering hosted applications to remote clients. Horizon Workspace Suite completes the DaaS offering by becoming a unified platform accessible via single sign-on to access and determine policy controls for applications regardless of location and operating system.

Source: VMware
Source: VMware

The latest CloudVolumes acquisition brings layering and application containerization techniques to virtual machines. This will help administrators provision desktops in a few minutes.

In another interesting move, Dell has partnered with VMware to offer Horizon DaaS through its Wyse Datacenter offering. With the acquisition of Quest, Dell has entered the DaaS market with vWorkspace. Though it has a lot of work to do in that space, vWorkspace is an affordable VDI/DaaS solution for small and medium businesses.  Dell is positioning Horizon DaaS for Enterprises while still selling vWorkspace for SMBs. This partnership will benefit VMware more than Dell.

End-user computing is one of the key pillars of VMware’s strategy and it seems to be moving in the right direction. As VMware consolidates its investments made in DaaS, MDM, application virtualization and hybrid cloud, it’s positioned to deliver great value to customers. Going forward, EUC will be the key driver to accelerate the adoption of vCloud Air.

Key takeaways
With crucial announcements, partnerships and product launches, VMworld 2014 is a milestone for VMware. The next two quarters will decide the impact of these announcements on VMware.

One key observation from VMworld is that VMware is, again, becoming a developer company. Though it made a conscious decision of moving its platform assets to Pivotal, market dynamics and competitive pressures have forced VMware to embrace OpenStack, Docker, MBaaS and DevOps. Embracing containers was an especially bitter pill for VMware to swallow since it has opposed containers for such a long time. These new offerings will transform it to a developer platform company. VMware has to be cautious by staying focused on delivering value to enterprises through its infrastructure offerings. The developer platform offerings may distract VMware from delivering the vision of SDDC and hybrid cloud. Instead of dealing with developer related products directly, it is best left to Pivotal, which is making great progress with Cloud Foundry and Big Data platforms.

OpenStack, is a tightrope walk for VMware. It’s under pressure to prove its commitment and sincerity to OpenStack by contributing beyond Neutron. VMware may also be forced to open source certain elements of its stack to increase its contribution to the cause.

Another interesting observation is how little Microsoft was mentioned as a competitor by VMware. Having won the hypervisor battle, VMware is moving up the stack to fight it out with traditional networking companies and public cloud providers. Most of the announcements and partnerships targeted Cisco, Citrix, Amazon and Red Hat.

It’s definitely not a “Winner-takes-all” market anymore. Time will tell if the bets placed by VMware will pay off in the long term.