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VMware learns from its mistakes with VMware on AWS partnership

Although the details surrounding the VMware-AWS partnership remain hazy, the deal does shed some light on VMware's hybrid cloud aspirations and long-term strategy.

It's no secret that VMware and Amazon Web Services have a strategic new alliance, but it's unclear what this partnership...

means for VMware's bottom line and product landscape. I recently spoke with Mark Lohmeyer, vice president of products, cloud business platform at VMware, about what's been happening in the VMware sphere since the sale of vCloud Air to OVH and what direction the company is headed.

VMware on AWS is still in closed beta and will likely become generally available at VMworld. Until then, all we can do is speculate about how all the pieces fit together. So far, we know that the infrastructure that hosts VMware on AWS consists of ESXi hypervisors running on bare-metal hardware. This dovetails with the rest of the VMware stack and provides a simplified on-ramp for a potential VMware hybrid cloud configuration, which would bring in more revenue for the company. In Lohmeyer's words, the goal of VMware on AWS is to deliver "the best of both worlds" to the customer.

This means that administrators can continue to use the familiar vCenter interface and that an administrator can get by with minimal AWS knowledge in day-to-day administration. Thanks to Elastic Block Store and the underlying elastic nature of the bare-metal hardware, a VMware administrator can add and scale nodes easily for operational consistency. In a nutshell, VMware on AWS is a VMware cloud and a VMware product. Think of Amazon simply as the bare-metal provider. VMware will provide support, and customers will pay bills to VMware, who will then pay AWS. VMware hasn't disclosed the breakdown of revenue and cost.

VMware puts partnerships first

There is, of course, a lot happening beyond VMware on AWS. VMware's also working with a number of cloud providers with whom you might not be familiar. VMware currently works with a network of over 4,000 cloud providers, including service providers, solution providers and, in some cases, large telco companies in countries around the world. Many of these cloud providers offer the same basic services as AWS but are able to compete with AWS and its ilk because they offer unique services that appeal to businesses, such as data locality and specific government regulation.

Alternatively, VMware has also partnered with larger names, such as IBM and Microsoft. IBM and VMware have struck a deal in which IBM will provide a full VMware stack in its cloud environment. VMware has also made a deal to manage Horizon VDI instances on Azure. VMware's goal is to make inroads with the right application offerings -- namely, those that compliment VMware's way of doing things, while providing a first-class user experience.

It seems as though VMware on AWS is the only cloud service through which some of VMware's most interesting tools, such as  vRealize Operations (vROps), are available. It's understandable that, this early into the partnership, VMware would pour its resources into AWS cloud integration, but I was curious whether these tools would be available through different cloud providers in the future. To this, Lohmeyer said that VMware stands fully behind its commitment to be the glue that holds all clouds together and to provide transparent intracloud migration but that it may be a while before live migration between different cloud providers becomes a reality.

VMware has taken AWS and made it its own, from top to bottom.

VMware isn't the only one that stands to gain from this partnership. Amazon can now cross-sell application services, like Database and Lambda, to VMware on-premises customers. This inbound cash flow combined with a cut of the profits from VMware on AWS could lead to significant uptick in Amazon revenue.

VMware on AWS selling points

Even though cores and sockets aren't the best way to generate revenue, VMware recognizes that on-premises customers are accustomed to them. This became apparent when VMware attempted to introduce a virtual RAM tax -- a plan the company quickly reconsidered. However, the era of cloud and self-service inspired VMware to implement a pay-per-VM model in some of its new technologies, including vROps and vRealize Automation. This new model both resolves the issue of cores and sockets and modernizes VMware's licensing scheme to reflect the reality of today's clouds.

Perhaps the top selling point of VMware on AWS is that it offers NSX and vSAN within the AWS cloud environment on a consumption-based model. NSX brings microsegmentation and security, while vSAN provides the vital shared storage component.

In my opinion, many of the VMware faithful might have misunderstood the nature of the partnership between VMware and AWS, partially because it's only available in closed beta. Basically, VMware has taken AWS and made it its own, from top to bottom. This is a calculated decision from VMware, one made in response to the objective failure of the company's original cloud offering and based on the fact that running your own cloud is expensive. Overall, this partnership -- in addition to those made with IBM, Azure and assorted ISVs and the move to a pay-per-VM model -- is a good strategic step forward for VMware.

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