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Many businesses have struggled to integrate their private and public clouds. The challenge has been that one set of tools ran on premises and a second off-site. Recently, VMware and Amazon Web Services moved to link their two offerings, which is helpful for businesses using them, but disconcerting for organizations that rely on other cloud options.
"Our research indicates that mixed environments are the norm," said Jay Lyman, principal analyst for cloud management and containers at 451 Research.
The two industry behemoths forged a tight bond: Amazon Web Services (AWS) became VMware's top public cloud offering and VMware became AWS's primary private cloud offering. As part of their cloud partnership, the suppliers are developing VMware Cloud on AWS, which is based on VMware Cloud Foundation, a platform consisting of VMware vSphere, VMware Virtual SAN and NSX. The software runs on bare-metal AWS infrastructure, meaning private, hybrid and public VMware cloud services now have a consistent interface.
AWS and VMware: An ideal cloud partnership
VMware stands to gain from this because its private cloud products are now aligned with the industry's leading public cloud service. Synergy Research Group (SRG) found that AWS accounted for 31% of public cloud deployments, close to three times higher than the next closest competitor, Microsoft.
AWS also benefits from this arrangement. The vendor's services have been very popular among consumers and small businesses. Cracking the enterprise market is typically a longer, more difficult sell, and now, the vendor has a more appealing pitch to CIOs. According to Al Hilwa, program director at IDC, the alliance strengthens the AWS leading value proposition and will force competitors to work harder still to gain shares.
Cloud providers pay the price
If this cloud partnership gains traction, other cloud suppliers may be hurt. Microsoft has been strong in the commercial sector and has previously been the only provider able to offer customers products with a clear, nondisruptive path from private to public services. The vendor can no longer use VMware's lack of a robust, multi-geography public cloud alternative as a wedge to try to push customers from VMware to Azure and, in some cases, to Microsoft Hyper-V.
VMware has worked with a few other public cloud providers. In January 2015, the vendor announced a cloud partnership with Google in which Google Cloud Platform services became available to VMware customers via vCloud Air, VMware's hybrid cloud platform. But despite a lot of talk, Google has only 4% market share, according to SRG.
Perhaps the most challenging relationship to maintain is VMware's cloud partnership with IBM. In February 2016, the vendors announced that they had jointly designed an offering so customers could automatically provision preconfigured VMware software-defined data center environments -- consisting of VMware vSphere, NSX and Virtual SAN -- on the IBM Cloud. IBM has been aggressively marketing this product and, in August, the two vendors claimed that more than 500 customers linked their VMware networks to IBM's public cloud services.
Other ripple effects may be felt by cloud management vendors. Products like BMC Cloud Operations Management, Cisco's CliQr and RightScale promise to make it easier for companies to manage a hodgepodge of cloud services. By having a partnership with AWS, VMware becomes another player in this space, one delivering tools to link the most popular private and public cloud management tools.
Cross-vendor agreements aren't a cure-all
A few caveats remain for the VMware-AWS cloud partnership. The new services will not be available until the middle of 2017, so competitors have time to pull together alternatives. AWS also faces technical challenges.
"There are some technological issues to work through," Hilwa said. "For example, [using] bare-metal capabilities to run VMware software is something new for AWS and will require joint investment."
Agreements between industry giants are sometimes tenuous in the long term. As enterprises move their workloads to AWS, they may wonder why they should bother keeping their VMware private cloud infrastructure, especially due to its high licensing cost. If they move off VMware, the agreement hurts rather than helps the supplier.
In addition, many companies have more than one cloud provider and need more than what AWS and VMware offer. Here, enterprises may decide to link their cloud systems via standard interfaces, like OpenStack.
Finally, the cloud partnership may push other vendors to join forces.
"I would expect to see more of these types of cross-vendor agreements involving would-be rivals," Lyman concluded. These agreements can help firms with different vendors' products, but will never be a panacea.
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