VMware New Cloud Plan: Sell Stuff for Rival Clouds
(Bloomberg) — VMware Inc. is set to unveil new products in a bid to eke out greater relevancy for the company in internet-based cloud-computing.
On Monday, the company will announce Cloud Foundation, which combines software for storage, networking and virtualization into one package, as well as the ability to use that product as a service hosted in IBM’s cloud. The company will also preview new Cross-Cloud subscription services that let customers manage and protect applications hosted in clouds from International Business Machines Corp., as well as market leader Amazon.com Inc. and Microsoft Corp.
VMware is shifting its cloud strategy after little traction and executive departures. It is focusing more on selling products that work with existing leaders, rather than trying to establish itself as an alternative to the Amazons of the world. As more companies run applications on rented servers over the internet, rather than their own data centers, providing services that link the different technologies customers use is a growing opportunity for VMware.
“CIOs and IT professionals now need to manage a multiple-device, multiple-application and multiple-cloud world and they don’t have the tools to do that,” said VMware Chief Executive Officer Pat Gelsinger in an interview. “We can uniquely partner with them to give them the ability to run, manage and secure an application across multiple clouds and deliver it on any device.” Gelsinger will speak Monday at the company’s annual VMworld conference in Las Vegas, where it will unveil Cloud Foundation and preview its Cross-Cloud services.
The shift comes after a year of upheaval for VMware. The company faced investor concern in the wake of Dell Inc.’s announcement in October that it was buying VMware parent EMC Corp. Over in the cloud business, VMware and EMC backed off a plan to jointly own cloud infrastructure provider Virtustream, instead shifting the asset and its losses to EMC. VMware cloud executives Bill Fathers and Simone Brunozzi left, and the company faced poor adoption of its vCloud Air products, which competed with Amazon’s public cloud offerings, said Abhey Lamba, an analyst at Mizuho Securities USA Inc.
“Now they are taking this approach of becoming the management layer in clouds,” said Lamba, who has a “neutral” rating on VMware shares. “That’s a really tough battle, and I’m not sure VMware has any strategic advantage there over the next guy.” The new services aren’t even in market yet, so it’s hard to say how it will do until customers can see how it performs, he said.
VMware created virtualization software that lets companies cram more workloads onto servers. It dominated there by building a product that could work across many different operating systems and types of hardware. That market is maturing, so the company is looking for other opportunities but has seen its cloud efforts lag behind established players. The new approach allows VMware to return to its traditional heritage as a company that can let customers operate with different technology.
It’s key for VMware to carve out a lucrative segment of cloud sales as the internet-based approach becomes more pervasive. Gelsinger, in his speech, will predict that 50 percent of corporate IT workloads will be in the cloud by 2021.
While the Cross-Cloud services will address multiple public clouds, Cloud Foundation will initially work with IBM only, though Gelsinger said in the interview that VMware will add other cloud providers in the future. Companies can also buy the software installed on servers from companies like Dell and Hewlett Packard Enterprise and place those in their own data centers.
Gelsinger will be joined on stage at VMworld by Dell founder Michael Dell and by hotel company Marriott International Inc., which is trying out Cloud Foundation. The product, which targets Nutanix Inc.’s main offerings, will be generally available this quarter.