VMware CEO Paul Maritz: Cloud Checkmate

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.”