As technology industry CEOs go, VMware’s Paul Maritz is as unassuming as they come. But don’t be fooled by his low-key disposition and kindly college professor demeanour. Maritz is a stone-cold assassin – at least when it comes to dealing with IT industry competition. As it turns out, this skill is very well suited to the evolving chess game known as cloud computing, in which VMware and its rivals are essentially starting out at square one.
At Microsoft, Maritz was widely considered the No. 3 executive behind Bill Gates and Steve Ballmer, and by the time he left the software giant in 2000 his canny ability to checkmate one competitor after another – think WordPerfect, Lotus and Netscape – had become the stuff of company legend. During Maritz’s tenure, Microsoft also came to realise office productivity software was best sold as an integrated suite, as opposed to point products, and this led to the creation of Office.
Maritz is making moves – and taking some risks – to help VMware leverage its lofty position as the virtualisation software market leader into a dominant one in cloud computing. And he’s stepping up his game when it comes to pushing VMware’s products as an integrated cloud infrastructure stack.
Maritz and company have just released the largest simultaneous product update in the company’s 13-year history, which includes VMware vSphere 5, the first major update to its cloud operating system. Other parts of VMware’s cloud infrastructure stack, including vShield, vCloud Director and Site Recovery Manager, part of the vcentre product family, have been imbued with features that automate IT processes that used to require human intervention. In other words, VMware has made them more cloudlike.
Maritz would probably cringe at the comparison, but there’s an argument to be made that VMware is becoming the Microsoft of the cloud – with a hand in everything from the cloud operating system to the applications – collecting tolls for all the services it provides along the way. At any rate, VMware’s aggressive charge into the cloud stands to dramatically impact the balance sheet of solution providers that have built huge services business around VMware virtualisation software.
If virtualisation is a cloud stepping stone, then VMware’s updated cloud infrastructure stack represents a smoothly paved roadway, one that gives customers and partners the performance and scalability to build cloud services businesses and the security and disaster recovery to maintain IT operations on the back end.
Maritz has been busy gobbling up some of the industry’s best and brightest IT talent, recruiting two of Google’s top engineers to help build Cloud Foundry, a platform-as- a-service for the next generation of cloud applications.
“We’re trying to shoot ahead and take some risks,” said Maritz in an interview with CRN in late June. “There are big changes coming in both how applications are developed and how they’re provisioned and consumed. This is the time to try and get ahead.”
Just how far ahead does Maritz want to get? To say he has his troops thinking big would be an understatement. In a recruiting video from the Americas Partner Operation Sales team, senior director Bob Crissman, said he saw no reason why the company can’t move from $3 billion to $50 billion in annual revenue. “We're not going to be just the infrastructure for the cloud,” says Crissman. “We are going to be the cloud.”
This kind of ambition comes with a price, however. In the case of vSphere 5, VMware customers are angry over licensing changes that will require some to pay more for the virtualisation infrastructure they already have in place. VMware previously pegged vSphere licensing to the number of server cores, but vSphere 5 licensing is based on the amount of memory customers allocate to virtual machines on the host.
VMware says the new licensing model better reflects the cloud delivery model. But selling the future is no easy proposition, and while VMware channel partners can grasp the significance of VMware’s cloud infrastructure stack updates, not all are ready to commit to the investment that deploying it will require.
“Cloud is still an issue where people still don’t quite know what it’s going to mean for their organisation, in terms of how to manage IT, structure internal IT departments, etc,” says Maritz.
VMware’s cloud conundrum
The strategic significance of VMware’s cloud infrastructure stack can’t be overestimated.
VMware expects value added resellers to use it to build private clouds – both for their customers and within their own organisations. VMware also expects service provider partners to use its cloud stack to build public clouds. In a sense, VMware’s cloud stack will be the linchpin for the hybrid cloud service delivery model that VMware believes will become the primary way most enterprises adopt cloud computing.
Aware of the channel’s power in driving demand, VMware plans to offer incentives to partners that sell and position its cloud stack as a suite of products to their customers, says Carl Eschenbach, VMware’s president of customer operations.
“We’re focused on building out a private cloud suite that includes all of our products, and over time we will package it as such so that it’s easier for the channel to sell,” Eschenbach says. Eventually, VMware intends to give its channel an all-inclusive private cloud data centre SKU, although Eschenbach says VMware needs to integrate its cloud portfolio more tightly to make this possible. “Today there isn’t a single SKU that pulls it all together, but that’s the direction we’re going as a company,” he says.
The VMware Service Provider Program includes service providers like Verizon and SingTel as well as traditional channel partners. Getting these two parties working in concert is one of the biggest near- term challenges VMware faces, as many solution providers are quite comfortable with selling private cloud but are less enthused about working with service providers.
VMware has mapped out several paths partners can take, one of which involves steering customers to public cloud service providers and collecting referral fees. Understandably, many VARs aren’t keen on the idea of referring customers and potentially seeing them defect to these companies.
“By asking solution providers to evolve to collecting fees from service providers, will this erode margins and force us to either expand and be service providers, or shrink and reduce the transactional VMware business we’ve built our organisations around?” asks Dan Weiss, CEO and co-founder of Varrow, a VMware partner. In another scenario, solution providers will resell a service provider’s public cloud offerings to their own customers. But it remains to be seen if this option will take root as VMware envisions. One VMware partner and VAR500 solution provider says service providers aren’t interested in working with partners because they feel they can get the job done on their own.
“Service providers don’t want to have partners reselling their stuff because they feel like they’ll be giving away margin to partners. So it really doesn’t work in execution,” says the solution provider, who requested anonymity. “Bottom line is that service providers don’t want to partner.”
According to VMware, VARs can also move to the cloud by renting co-location space from service provider data centres, and either offer white-label cloud offerings or set up a cloud offering in their own data centre, if they have one.
VMware is aware of the uneasiness that’s percolating in its channel and is endeavouring to explain how working with service providers will actually open up more business.
“We actually see this as a very big opportunity for our traditional partners to leverage and monetise the cloud, either themselves or in partnership with the service providers,” says Eschenbach. “But we’re not going to make it a competitive environment. We have to bridge the gap between the traditional service providers and our solution providers.”
What about partners that either don’t want to make the jump or simply can’t make it work businesswise? Eschenbach says these VARs will not get left behind, estimating that 80 percent to 85 percent of apps will still be running in a private data centre –the traditional bailiwick of the VMware solution provider.
Cloud VARs of the future
VMware’s guidance on cloud has centred on the message that partners can find their niche in the new and unfamiliar landscape.
“They’ve told us that by allying ourselves with cloud service providers, we’ll be able to transform our businesses and become cloud brokers in the future,” says Weiss.
“They’ve also said the solution provider of tomorrow may be a cloud provider with a more boutique, high-touch model. We don’t all have to be Amazons – there’s also a need for channel partners that address a certain segment of the market.”
Unsurprisingly, VMware partners that are already well established in the cloud aren’t as concerned with the implications of the changing channel dynamic.
“What partners fear is the movement away from the private cloud, which is where they have control of the account. But those perceptions are off base,” says Keith Norbie, vice president of sales at Nexus Information Systems. “There are a number of service provider players that are going to make it very attractive for clients to move workloads into a public cloud.”
VMware often talks about the IT spending “drag” that VARs can take advantage of when re-architecting their customers’ data centres for cloud computing.
Doug Smith, VMware’s senior director of global partner strategy and operations, told CRN in March that $1 of VMware licensing generates an additional $15 in IT spending that partners can potentially capture. This obviously doesn’t apply when VARs work with public cloud providers, but there are still ways that partners can form financially fruitful relationships with these companies.
World Wide Technology helps service providers architect their public clouds and works with customers to build private clouds. WWT is formalising partnerships with cloud service providers, and channel conflict hasn’t been an issue, says Scott Miller, director of business development for virtualisation and cloud.
“In today’s market, we’re seeing cloud service providers pretty focused on making money on infrastructure-as-a-service exclusively,” says Miller.
“They haven’t shown interest in evolving into managing IT- as-a- service because that takes a different level of expertise than what they’ve invested in, and hence, comes with more risk.” WWT is developing marketing collateral that spells out how to team with VMware service provider partners during the sales cycle. “Cloud service providers don’t have that go-to-market capability. Most of the ones that went to market initially thought they were going to go direct, but they’re realising a lot of the demand comes from the channel and they need an offering that makes sense,” says Miller.
Mike Strohl, president of Entisys, a virtualisation solution provider, agrees. “A lot of the cloud offerings from service providers lack clear direction about how to overlay the technology that will make them function at a level that meets customer requirements,” Strohl says. “The reseller opportunity is to provide the consulting and integration services between on- premise systems and those that sit in the cloud, wherever it may be.”
Chicago data centre solution provider Ahead is building relationships with multiple cloud service providers. Eric Kaplan, vice president of engineering, is helping clients understand the requirements for hosting applications in the cloud, the cloud pricing models
and how service level agreements are structured. Armed with this knowledge, Ahead is starting to help clients host applications in service providers’ data centres, paving the way to a hybrid cloud deployment model.
The next step: Cloud Foundry
VMware is gaining momentum in leading its traditional channel into the cloud, but there’s another barrier: legacy enterprise applications. Maritz has pointed to older application code as the most formidable obstacle standing in the way of customers’ cloud migration. Cloud Foundry, the open-source platform-as-a-service VMware unveiled in April, is a bid to become the PaaS of choice for developers to rewrite older apps so they’ll run well on private clouds.
VMware is piloting a commercial multi-tenant public cloud PaaS service that’s slated for launch in the first half of 2012 and is leading an open-source Cloud Foundry project under the Apache 2 licence. Cloud Foundry reflects its belief that the popularity of programming frameworks like Spring, Ruby and Node.js will continue to grow.
“Our view is that there’s a new generation of developers who will be building a new generation of applications, and we’re trying to accommodate them on our platform and also have the business opportunity,” Maritz says.
Cloud Foundry is based on technology gained from VMware’s acquisition of SpringSource, and includes the collaboration of Mark Lucovsky, technical director, and Derek Collison, chief architect of the Cloud Services arm, both of whom VMware recruited from Google.
“Our view is inevitably someone would do something like Cloud Foundry, so rather than wait for it to happen and have to react to it, we’re putting our hat in the ring and pre-emptively offering something there,” said Maritz.
The challenge VMware faces with Cloud Foundry is that, for the most part, its traditional channel doesn’t have in-house development expertise. “The only partners doing Cloud Foundry are super-high-end, and it will take awhile before it gets down to the level where everyone can adopt it,” said one VMware partner, who requested anonymity. “We’re looking for VMware to wean the market and show us how to monetise Cloud Foundry.
“They’re able to explain how it works for them, but so far they’re not able to explain how it’s going to work for me.”
Eschenbach expects Cloud Foundry to appeal to VMware partners with cloud infrastructure expertise that are ready to take the next step into app development.
But he acknowledged that Cloud Foundry will be driven, at least in part, by partners with which VMware hasn’t worked in the past.
In the end, Maritz believes VMware’s track record with virtualisation can help convince customers and partners that despite the uncertainty over moving to the cloud, they won’t regret it.
“This is an issue we increasingly have to come to grips with as we talk to our customers and explain to them there are different ways to think about this.
“My sense is cloud is where virtualisation was four or five years ago. We’re going to see the same cycle play through.”
Q&A Paul Maritz
VMware CEO Paul Maritz has had a good run since taking the helm three years ago. But much of his company's success during that time has been tied to virtualisation software, as opposed to cloud computing, where the Palo Alto- based company sees the future taking shape.
Like many IT vendors, VMware and Maritz still have work to do in getting channel partners on board with the cloud and all of its attendant business model changes. VMware's major cloud infrastructure stack update on July 12 offers the clearest picture of how VMware intends to realise its cloud ambitions and get partners to adopt the service provider mentality to their customers and within their own organisations.
CRN: VMware started off as a narrow hypervisor company that allowed you to run multiple copies of an operating system on a single physical machine. Increasingly, our features are about how to take a collection of machines and get them behaving as a sort of single giant machine, for efficiency and reliability and availability reasons. Paul Maritz: One of the features we have is Distributed Resource Scheduler, where we will actually move applications around in the pool of machines automatically in order to optimise performance, or for high availability, reliability or recovery reasons.
Customers are no longer using our software for server consolidation; now it’s about how they do their computing to get additional reliability, availability and efficiency, and all that stuff's baked into the products. That isn’t something you bolt on afterwards.
When we talk about automation, rather than trying to layer management software on top, we're baking it into the platform itself. The vast majority of code
for vSphere goes toward these automations, that was true of vSphere 4 and it’s even more true with vSphere 5.
CRN: With the Springsource, Zimbra, Gemfire and RabbitMQ acquisitions, VMware has been building out its application stack and development platforms. And with Cloud Foundry platform-as- a-service, VMware is now trying to win the hearts and minds of application developers. This is a new area for VMware – how are you going about getting developers into your camp?
PM: We look at the world in three layers: For the infrastructure that apps sit on top of, the great virtue of vSphere is that it can handle, through virtualisation, almost any existing application. What we're also trying to do for new applications is to get those applications to run well in a vSphere environment. We also want to be able to make money by selling new capabilities to developers of those applications.
Specifically, we’ve targeted people who are writing their apps in these new modern programming frameworks, like Spring, Ruby, Node, etc. Our view is that there's a new generation of developers who will be building a new generation of applications, and we're trying to accommodate them on our platform and also have the business opportunity. Enabling that developer is the second tier of what we’ve been doing with Cloud Foundry.
Third, we’re focused on how existing and future applications will be delivered to the end user in a world where you can’t depend on the end user holding a particular device in their hands. There is going to be a lot of heterogeneity among those devices. We need to give our enterprise customers a way to equip their users with capabilities in a device-independent way.
CRN: Linux came about as a way for developers to get around the proprietary barriers that existed in the mainframe world, and you've suggested that the same sort of workaround will eventually emerge as a workaround for proprietary cloud infrastructure. How does
Cloud Foundry aim to address the proprietary issue? PM: Our view is inevitably someone would do something like Cloud Foundry, so rather than wait for it to happen and have to react to it, we’re putting our hat in the ring there and preemptively offering something there. And we’re trying to do it in terms that are genuinely open, which is why we’re releasing it in open source.
CRN: Is open source the main thing that differentiates Cloud Foundry from other PaaS offerings on the market?
PM: Not the open source by itself. We think that whatever solution comes up, it will almost inevitably be open source – open source is almost a pre-requisite. Once you’re over that hurdle, it then becomes about the specific characteristics that [PaaS] layer has to have.
Cloud Foundry is drawing from the folks who we recruited for that team who’ve worked for Google and other places. We have baked this into it the technical characteristics that we think that kind of layer needs.
CRN: You and Steve Jobs both see the world moving to a post- Windows era. These comments
get a lot of attention, particularly in light of the public sparring that VMware and Microsoft often engage in. However, VMware and Microsoft are also working closely on a number of fronts – can you talk about the nature of this work?
PM: Our customers have a lot of Microsoft products, and our products clearly have to work together with theirs in these environments. Both organisations, Microsoft and VMware, are mature enough to know that that has to happen, and neither of us will look good if we're doing things that prevent the interoperability that customers want.
CRN: Microsoft says Hyper-V is making inroads in the SMB market, and that it’s good enough for what most organisations need. The “good enough” argument is common in IT these days as vendors focus on cost savings in their marketing.
As a company regarded as the “Cadillac” of virtualisation, what’s VMware's view on the “good enough” argument?
PM: We have a spectrum of price points, and ... why accept second best? Is there some virtue in accepting second best? We've tiered our products and taken price points up – and down – over the last two years to make sure people who like the leading technology don't have an unnecessary barrier to getting it. By and large, that has worked.
CRN: VMware is well known in the enterprise, but not as much in SMB. What are you doing to change this perception?
PM: SMB is where we’ve created products like vSphere Essentials and taken our price points down specifically to target that area. And we’ve seen pretty dramatic unit growth down there, all of which is going into the SMB market. It’s not like Microsoft is going to get zero percent market share, but I think they're probably been surprised with how resilient we’ve been.
CRN: VMware's Mobile Virtualisation Platform (MVP) is an interesting product that captured a lot of attention at the Mobile World Congress back in February. Can you
talk about how virtualisation can be used to deliver the one mobile device for work and play?PM: MVP is still very much an experiment. We're going through trials to see how people react to it. We need to see how users are going to react to this concept of having two phones in one phone, and how enterprises will like it.
It's an example of having to deal with this dilemma our enterprises customers face. On the one hand, their employees are increasingly not going to be comfortable with being told they can only have one version of a black laptop with a specific version of Windows on it. There's a huge revolt against that.
Businesses can’t stop these new consumer driven devices from getting into people’s hands. On the other hand, they’re still going to be on the hook to make sure they're operating in a secure and compliant environment, and that their information doesn’t get compromised by a hacked version of Angry Birds and transmitted to Turkemistan, or whatever it is.
CRN: Some handset makers are simply cramming all of the business and consumer features onto a single device without using virtualisation. Can this approach work too? PM: The advantage of virtualisation is that it provides an absolute firewall. The problem is, when you’re cramming everything onto one device, and users are installing apps there from unknown sources, it's very hard for the enterprises to be assured their world isn’t being infected by the consumer's personal world. And virtualisation is a very strong firewall to wall those two things off. That’s why people are interested in it.
CRN: Being able to measure all the moving parts in a virtual or cloud environment is a key requirement for many customers. Can you
talk about how VMware’s recent acquisition of Digital Fuel helps get you to that goal? PM:We’re early on in that journey, but we believe that customers need to become more efficient and better informed both a producers and consumers of IT infrastructure. If
you can’t measure it, you can’t manage it. Digital Fuel is a step in that direction.
CRN: End user computing is a developing area for VMware. What's behind building your expertise in this area?
PM: Both in the end user area and in the developer area, we're trying to shoot ahead and take some risks. We think there are big changes coming in both how applications are developed and how they’re provisioned and consumed. And this is the time to try and get ahead.
CRN: VMware has tackled many technical barriers in its history, but like any virtualisation and cloud vendor, many of the obstacles you’re facing today are psychological ones. For example, companies are afraid about storing data in the cloud. Can you talk about how VMware works to overcome these fears?
PM: In virtualisation, the good news is that the psychological barriers are largely behind us.
Cloud is still an issue where people still don’t quite know what it's going to mean for their organisation, in terms of how to manage IT, structure internal IT departments, etc. This is an issue that we increasingly have to come to grips with as we talk to our customers. My sense is that cloud is where virtualisation was four or five years ago. We’re going to see the same cycle play through.
CRN: Google has been attracting growing scrutiny from government regulatory authorities. As a former Microsoft executive who testified on behalf of the company in its landmark antitrust case, what are your thoughts when you see Google getting this kind of attention?
PM: That’s a political process they're getting into, not a technical process or a legal process. I think one of our mistakes at Microsoft was we thought it was a technical/ legal issue. It wasn’t – it was a political issue. If we’d realised that earlier we’d have probably saved ourselves a lot of pain.
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