3 June 13

It’s Not a Zero Sum Game

George Mitsopoulos
Vice President, Cloud Services, Virtacore

Last month one of Virtacore’s key partners, VMware, announced and began giving early access to their new vCloud Hybrid Service (vCHS). VMware has been widely known as a software company, selling their virtualization software to enterprises and enabling their service provider partners like Virtacore to sell managed hosting / cloud services based on their vSphere or vCloud software. As VMware makes over 80% of their revenue via their channel partners selling software licenses, the shift to enter the IaaS market as a service provider and sell services direct to enterprises is a distinct shift on multiple fronts.

Following the formal announcement several people including VMware employees, other service providers and clouderati reached out to me to get my take on what this meant for Virtacore and other VMware services providers. Was vCloud Powered doomed? Though the outlook from some cloud service providers on the announcement was not positive, I see the entry to the IaaS market by VMware as a positive thing for the VMware ecosystem and especially for enterprises using cloud technologies based on VMware for two reasons.

Firstly, to date VMware’s vCloud software was written with enterprise users in mind. Cloud service providers running large and scalable deployments have been an afterthought. Some service providers like Virtacore, who operates one of the largest production cloud deployments based on vCloud, have successfully written their own IP to fill the gaps and create enterprise cloud platforms. With VMware now being forced to eat their own dogfood or as VMware Vice President of Cloud Services Mathew Lodge tweeted, “Drinking our own Champagne”, I am confident we will see improvements in the vCloud software stack in future releases. This will benefit both enterprise customers as well as cloud service providers.

Secondly, competition always drives innovation and this shift from VMware will drive innovation in the enterprise IaaS market. VMware will be forced to create better software and services, cloud service providers will be forced to develop unique services that differentiate themselves, and other cloud stacks like OpenStack will be forced to iterate faster in their effort to win over the VMware embedded base of customers using VMware cloud technologies. That is all great news for enterprise customers adopting cloud services.

VMware has an uphill battle over the next few years making the shift from a software company to a services company as the DNA that it takes to run a service company is vastly different from a software company. Will they succeed? I am confident that they will. Will cloud service providers like Virtacore continue to thrive in the cloud IaaS marketing? Absolutely! As service providers who focus on enterprise cloud deployments know “vanilla IaaS” deployments like what vCHS offers won’t meet the differing needs of many enterprises who require customization and managed services. Channeling Larry Page, who surmised in his Google IO 2013 keynote, this is not a zero sum game for technology companies. Innovative cloud service providers like Virtacore will continue to find ways to differentiate and offer a higher level of service to their clients.

George Mitsopoulos is Vice President, Cloud Services of Virtacore, a leading cloud services provider specializing in virtual infrastructure solutions utilizing VMware. Connect with George, @gmitsopoulos.

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