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VMware cloud services remain a concern following 2016

Our advisory board members reflect on VMware's past year, with praise for VSAN and vSphere and worries about cloud strategy.

There are a lot of reasons that 2016 will be a memorable year for VMware, including the fact that the software company was part of the biggest tech deal of all time. VMware took a big step forward with NSX and debuted new versions of vSphere and VSAN. On the other hand, there's still confusion about where VMware cloud services stand, but VMware's decision to partner with AWS could portend future plans.

SearchVMware asked its advisory board members for their thoughts on VMware's year.

Brian Kirsch

It was a unique year for VMware for two reasons: NSX and Dell. VMware continued its efforts to integrate NSX into multiple product stacks. VMware bet big on NSX and the product could become a core part of the software-defined data center. The portability and security it offers enables a level of flexibility customers simply couldn't imagine before NSX. While NSX is ideal for everyone, pricing and licensing put it out of reach of SMBs. VMware recognized this and introduced new NSX tiers in 2016, which was a nice step forward for the company.

Dell's purchase of EMC is a bit more complex. It's neither a step forward nor a step backward -- it's more like a side step for VMware. While VMware is a public company, it's hard to ignore the fact that Dell now owns a large chunk of VMware. Over the past few years, Dell made several data center-centric purchases with Wyse, Quest Software and Compellent.

If Dell lets VMware be VMware, it could succeed, provided VMware finds a way to stop the current exodus of executives and high-end technologists.

While the needle moves forward with certain products, such as NSX and VSAN, VMware cloud services stalled a bit with vCloud Air. To VMware's credit, the focus change to AWS should give them -- and customers -- a boost in VMware cloud services. While it won't completely offset declining vSphere revenue, the AWS deal and updates to NSX helped VMware finish 2016 strong.

Alastair Cooke

The biggest storyline for 2016 is that VMware is embracing its cloud services position. The deal with AWS shows VMware has realized it can't compete with AWS and must partner. At last, VMware realizes there is no one true cloud, particularly not vSphere. Businesses are going to use multiple cloud services from multiple providers.

I like vSphere 6.5 -- the commitment to the vCenter Server Appliance and its HTML5 Web Client are my two favorite parts. A lot of the other features, such as live VM encryption, are good for niche use cases.

Anthony Poh

The two key products that VMware focused on in 2016 were NSX and VSAN.

While the needle moves forward with certain products, such as NSX and VSAN, VMware cloud services stalled a bit with vCloud Air. To VMware's credit, the focus change to AWS should give them -- and customers -- a boost in VMware cloud services.
Brian KirschIT Architect and Instructor at Milwaukee Area Technical College

For all the features and abilities of NSX, it seems there still isn't a large user base in the United Kingdom, and I feel that pricing is the root cause. It's very hard to justify a spending a large amount on a product as diverse as NSX. Most companies haven't considered budgeting for microsegmentation or virtual networking, so, unless you can build a successful business case, NSX is generally seen as an unnecessary expenditure. I love the product, but I wish customers could see the benefits and that VMware would drop the price to encourage uptake.

I was quite surprised at how well users received VSAN. VMware poured a lot of research and development into the product, and also listened to its customers when it came to new features, such as iSCSI target and 2 Node Direct Connect.

VMware obviously saw a shift in the market toward hyper-converged infrastructure, as evidenced by the release of VMware Hyper-Converged Software. To be honest, it's probably more of a marketing gimmick than a new technology stack given that it just bundles vSphere, VSAN and vCenter. However, it serves as the software foundation for a very strong ecosystem of HCI offerings, from VSAN Ready Nodes all the way through to the new VMware Cloud Foundation platform.

The biggest announcements this year were VMware vCloud on AWS and the tech preview of Cross-Cloud Services. This is exciting for customers as it will give them the ability to run, manage, connect and secure applications across clouds and devices, all from a single pane of glass. We've obviously seen vSphere ESXi being used alongside other hypervisors and NSX being used to overlay heterogeneous network switches, but Cross-Cloud can overlay and manage your cloud provider of choice. Best of all, network and security policies can be applied to workloads deployed in the cloud.

VSphere 6.5 was a major release this year, and one of most popular features was the new HTML5 Web Client. It seems all customers agree that this is a welcome addition after working with the cumbersome Flash-based Web Client.

VMware tries to predict the direction in which the market is headed, and the Cross-Cloud Architecture and Cloud Foundation platforms are great products to help end users control and govern their workloads in a hybrid cloud deployment. VMware also put a lot of effort into VSAN and it's paying dividends as customers look at HCI as a replacement to traditional server and storage infrastructure.

The only gripe I have -- and it's minor -- is that VMware still charges too much for its products in comparison to competitors. VSphere revenue dropped off and they're losing a lot of customers in public sector and education, both places where budgets have been slashed. It's a shame that VMware hasn't given vSphere Standard away for free to counter Microsoft's market increase.

Rob Bastiaansen

It's good to see that VMware's product portfolio and partnerships haven't suffered from Dell's acquisition of EMC. It hasn't had a positive or negative effect -- it seems it is business as usual at VMware.

The new version of vSphere has a ton of new features, many of which revolve around vCenter, and features that were in high demand from customers. VMware is also strengthening its position in the software-defined data center with improvements to VSAN and NSX.

VMware cloud services didn't really work out in 2016. VMware's decision to work with AWS to provide customers a platform to run VMware-related workloads shows which direction the company is headed. I would say that 2016 was a positive year for VMware; the financial results showing year over year revenue growth show that VMware is doing quite well.

Michael Stump

Honestly, I'm not sure what is happening with VMware cloud services. VMware threw a lot of ideas out there, but I don't see anything sticking. Partnering with AWS sounds like defeat to me. If you can't bring a cloud offering to market while riding on AWS' coattails, there's no helping you.

Whatever it is, VMware's cloud strategy will make or break the company, in my opinion. Unless your head is buried in the sand, you know that vSphere is not the only option for x86 virtualization. I think VMware's recent focus on pushing licensing agreements shows its real strategy: lock-in at all costs. If I were building an infrastructure from scratch today, I wouldn't just default to vSphere like I would have five years ago. Microsoft's Azure Stack is compelling because it blurs the line between on premises and cloud. You could deploy Hyper-V, run your Windows and Linux VMs on premises and connect to your Azure subscription for dev/test workloads. That's all simple enough that you don't need anything else from VMware. Granted, Microsoft will also push a licensing agreement, too.

But look at VMware: They're now playing catch up with the two companies: Nutanix and Microsoft. The vSphere 6.5 Web Client looks a lot like the Automated Clearing House user interface by IBM. VSphere 6.5 also has some of the VM encryption features that Hyper-V has had for a while. It's good that VMware finally offers these bits, looking to Acropolis and Hyper-V to fill out the features list on new versions of its flagship product shows a lack of innovation.

Don't get me wrong; I still have immeasurable admiration for VMware employees and their undeniable contributions to modern computing. I want them around for another 18 years. But, with serious competition and the continued internal aftershocks of the Dell-EMC deal, VMware's future is a little less clear.

Next Steps

Tracking the journey of VMware in 2016

New release of vSphere 6.5 brings welcome changes

Get to know VMware NSX with this crash course

This was last published in January 2017

Conference Coverage

Dell EMC World 2017: Viewing storage from all angles

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What was your biggest VMware takeaway in 2016?
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"The only gripe I have -- and it's minor -- is that VMware still charges too much for its products in comparison to competitors. VSphere revenue dropped off and they're losing a lot of customers in public sector and education, both places where budgets have been slashed. It's a shame that VMware hasn't given vSphere Standard away for free to counter Microsoft's market increase."

This is a great point.  Microsoft, Nutanix, even Citrix are being much more aggressive.  A small example.  The company I work with (Unitrends) has a free backup & continuity purpose-built virtual backup appliance.  With free Hyper-V you can do host-based backups.  With free ESXi, you are forced to use guest based backups because VMware chose not to allow access to host-based backup APIs (VMware VADP - VMware API for Data Protection) in free ESXi.  So getting to parity would be making VMware vSphere standard free - or including VADP in the free edition.

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