Though the dust is yet to settle following Dell and EMC’s huge merger, all parties are adamant that it will be business as usual for VMware, which will remain an publicly-owned entity and allowed to operate independently.
But the impact of the change in ownership, with Dell now owning a controlling share, is not the only challenge facing VMware going forward.
The company is facing a battle on a number of fronts. Customers are increasingly moving workloads out of the data centre where VMware’s virtualisation software has been dominant. At the same time containerisation offers a new way to efficiently run applications on-premise. It remains to be seen how the impact the merger will have on its ability to address these trends.
With VMware holding its annual European user conference in Barcelona the same week the $67 billion deal went ahead, ComputerworldUK takes a look at how the vendor is addressing some of the challenges on the horizon.
Dell/EMC merger - where does this leave VMware?
As expected, the largest ever merger of technology companies was top of the agenda at VMworld 2015, though there was little new detail offered by senior execs.
Not surprisingly for a deal of this magnitude, the merger between the two IT giants has resulted in a complex web of product overlaps and potentially conflicting partner interests, with implications for VMware too.
Under the ownership of EMC it has historically had a neutral stance between the major server vendors. Being closely aligned with Dell could change that however, creating friction with the likes of HP and IBM when hardware based on its virtualistion and cloud management software.
However, COO Carl Eschenbach was keen to point out that it will be business as usual for VMware. which he says will retain the same position in the market following the merger agreement.
He told press at the event: “As part of that [decision] one of the strategies was to make sure that VMware maintained its independence as a company, and we continue to operate as we currently do and we continue to be traded publicly….this allows us to continue to partner and work with our vast ecosystem that we built in the past years.”
Eschenbach added that closer alignment with Dell will create advantages with regards to “a whole bunch of synergies” it opens up with its parent company.
This means “having the largest storage, large PC and compute partners to help accelerate the growth of VMware into the market of software defined data centre, end user computing and even the hybrid cloud”.
In the longer term, unless VMware is to be spun off - a situation many investors would favour - it will be interesting to see how well it can maintain this balance between product collaboration and maintaining VMware's vendor relationships..
Can VMware remain relevant as customers move to the cloud?
One of the key challenges for VMware in recent years has been the growth of public cloud from Amazon Web Services and Microsoft.
In response VMware has attempted to differentiate itself with its vCloud Air service which relies on a network of service providers, with the concept of hybrid cloud at its core.
Details of customer uptake of its vCloud Air service remain thin on the ground at VMworld Europe, though VMware says some customers are running tens of thousands of VMs.
However, VMware was keen to push its idea of a Unified Hybrid Cloud, rather than positioning itself as a direct rival to the public cloud front runners.
With the launch of the cross-cloud vMotion service, Eschenbach offered the prospect of one logical cloud with “seamless integration between a private cloud and one or more public clouds, whether that is AWS or Azure or one of our vCloud Air”, rather than the “giant homogeneous cloud” of its rivals.
Interestingly, Bill Fathers, general manager of VMware’s Cloud Services Business Unit, highlighted the benefits its network of regional service providers has over its larger rivals with regards to last week's Safe Harbour decision. “In the medium term is likely to be the winning strategy, rather than trying to be the single homogenous US entity that tries to provide cloud services across Europe.”
What is less clear is what impact the merger will have on VMware’s cloud plans. It is possible that Dell’s interest in the public cloud could be rekindled with access to VMware’s network of data centres: unlike HP and IBM, Dell does not have a public cloud of its own and has been acting as a broker for other cloud services to its customers.
But although closer cooperation between the two could see Dell push VMware’s cloud more strongly to its mid-tier customers, it seems much more likely that partnerships would be struck around other parts of its business - converged and hyper converged infrastructure as part of private clouds, for example, or end user computing.
It may have established its dominance with virtualisation, but VMware is, to some degree, a late comer to the container trend.
Nevertheless VMware has a number of new container based services on the way, and it highlighted plans around its Photon Platform and vSphere Integrated Containers which debuted at its US user event.
Kit Colbert, VMware’s Cloud Native Apps CTO commented: “Containers are still at a very early stage but there is a tremendous amount of interest in it. We have customers spread across the journey - some folks have just started kicking the tires while others are trying it out in production.”
While the open source Docker project is generating huge amounts of hype, the advantage for VMware would be in its wide customer base. Uptake is still in its infancy for most firms and VMware sees itself as well placed to support more conservative businesses in deployig containers as they adopt devops and create a new generation of cloud-ready applications.
Open source alternative
VMware has attempted to play down the recent reports of Apple dropping VMware in its data centres in favour of the open source KVM hypervisor, apparently saving the Cupertino firm $20 million in doing so.
One exec told ComputerworldUK that the deal is only for a small part of Apple’s operations, and it continues to have substantial contracts in place with the firm.
While it is true that Apple not a typical enterprise, more and more businesses are warming to open source technologies. This is putting pressure VMware’s virtualisation business, with KVM and even open source container tools, as well as its cloud management services as OpenStack moves steadily into enterprise data centres.
Micheal Adams, director of vSphere product marketing, told ComputerworldUK that VMware strategy in the face of open source competition is to join in, launching its own OpenStack distribution for instance and offering ways to run Docker on its VMs.
He added: “If you look at the cloud native stuff, already this year we have open sourced the Photon OS, and we have announced plans to open source the controller. We are trying to embrace that model.”
To a certain degree VMware has had no choice but to adapt to accept that there is growing interest in open source software, and a wider variety of low costs alternatives available to customers could put pressure on VMware’s software costs. But, again, VMware sees its advantage lying in its ability to make many of these tools ‘enterprise ready’.