“Our success,” reads VMware’s last quarterly report, filed in early August, “depends on our current and future customers perceiving technological and operational benefits and cost savings associated with the increasing adoption of our private and hybrid cloud solutions as well as our client virtualization and mobile device management solutions.”
The key word in that previous sentence is “perceiving.” VMware operates a public cloud, called vCloud Air, which it says is responsible for up to 6 percent of its revenue. But that’s today.
According to the company, for it to continue its growth at the rate shareholders have come to expect, depends to a growing degree on whether customers begin adopting its public cloud service.
To the extent that VMware customers fail to adopt vCloud Air, the company stated last month, “our revenue growth rates may slow materially or our revenue may decline substantially.”
Launching the Payload
One way or the other, vCloud Air needs to be monetized. Whereas a growing number of organizations are deploying their applications on PaaS platforms such as Cloud Foundry (to which VMware contributes), Red Hat’s OpenShift or Microsoft’s Azure, VMware needs to shift a sizable chunk of those customers over to vCloud Air, lest it find its revenue plummeting.
The original pitch for vCloud Air went something like this: Organizations are going to deploy hybrid cloud infrastructures anyway, utilizing public capacity only when needed. Since the private side will probably be managed using VMware tools, these organizations would prefer to use the same tools — and thus the same brand of resources — on the public side. Thus, VMware’s Unified Cloud Platform.
That pitch took off about as well as a failing Russian spacecraft.
So the company began testing its next marketing strategy for vCloud Air on its audience at the VMworld 2015 conference in San Francisco Monday. It centers on the subject of deploying mobile applications in the cloud.
“These applications are profoundly changing a number of industries,” remarked Bill Fathers, the company’s executive vice president and general manager for hybrid cloud, “but the problem is that deploying these mobile applications can be complicated, and extremely difficult to architect and build.”
Fathers spoke this line very carefully and distinctly, perhaps knowing that there may be a software developer or two in the audience for whom the deployment of mobile applications on PaaS platforms has actually been, to borrow a phrase from another VMware executive vice president this week, “Sesame Street simple.”
The problem, Fathers explained, arises when a public cloud-based mobile app must make contact with databases or business logic hosted on-premises. Those resources may be managed by existing on-premises enterprise applications.
Communicating between the public app and the private data over a potentially software-defined network can introduce complications with regard to compliance.
“This is another of the really hard problems that the VMware Unified Cloud Platform has solved,” Fathers continued.
(I am shocked, shocked, that no one has come to this conclusion before and built an industry around it.)
The Wrong Side of Seamlessness
Later that same day, during an exclusive financial analysts’ session, some analysts were not so certain that it is VMware, or specifically vCloud Air, that is solving this really hard problem.
One JPMorgan analyst asked VMware’s chief executives to pin down a realistic goal for how much market share vCloud Air should attain, before the company can say it’s fulfilling its mission as a contributor to overall growth. How about 20 percent, he asked? Ten percent?
“We’re really focused on, initially, making sure that our customers — not if, but when they want to move to a hybrid cloud — know that they have safe passage [on] the journey to do so, in their partnership with VMware,” responded VMware President and co-COO Carl Eschenbach.
Today, a majority of new cloud-native apps are being deployed on PaaS platforms such as Amazon AWS and Google Compute Engine, Eschenbach conceded.
“That being said ... one of the first places you’re going to see our solutions, and our container strategy and our stack, will be in our public cloud.” While steering clear of projecting an exact market share number, the company president went on to express his confidence that VMware would have an equal chance to pull even with one of its major cloud competitors, once this Unified platform has attained some share of its own.
Here is where CEO Pat Gelsinger jumped in. Organizations that deploy their apps in the public cloud with the intent to be SaaS vendors, he said, are actually backing out of public somewhat in an effort to increase their reliability, scalability, security and for governance purposes.
“That’s another opportunity for applications as they scale, coming out of some of those early public cloud offerings, for us to capture them as SaaS vendors,” said Gelsinger. Some of those vendors — particularly the ones that target enterprises — are already attracted to VMware, he added, because they’re familiar with VMware.
“This is a period of industry tumult,” Gelsinger said at one point, “of change in the industry. Being bigger and more strategic as we’re going through this period of change is to us very obvious as the better strategy to navigate through these waters.”
Granted, we may have already reached the point in the evolution of cloud dynamics where all enterprise clouds are effectively hybrid clouds. So it makes sense to have not been left in the dust, as hybrid cloud architectures — including VMware’s — progress.
But one reason for the stunning success of OpenStack over the past few years has arguably been its open-endedness, with respect to whose OpenStack-supportive public cloud(s) enterprises choose. Being seamless seems nice enough, except when those invisible seams serve to mask the ties that bind.