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VMware looks to regain public cloud footing with vSphere on AWS

The Amazon-VMware partnership secures vSphere revenue, makes it easier to adapt legacy apps to AWS and allows customers to run the same software on AWS on premises.

In 2016, the unthinkable happened: VMware announced that it would offer a service inside Amazon Web Services data centers.

This new deal allows users to rent a vSphere cluster inside an Amazon Web Services (AWS) data center, where they can place legacy applications alongside cloud-native applications. This announcement came as a bit of surprise because VMware and AWS seem to be polar opposites philosophically. Why would the industry's leading on-premises and legacy platform partner with the company that invented public cloud?

From a business angle, this partnership makes complete sense: VMware and AWS have a lot of customer overlap, but little overlap in the services they provide. VSphere on AWS aims to bridge that gap. The question remains, who stands to benefit the most from this partnership: VMware, AWS or their users?

VMware protects its revenue source

It's no secret that VMware has struggled to be a public cloud business. VCloud Director hasn't quite set the world on fire and VMware recently sold off its vCloud Air public cloud. Rather than continue to struggle, it seems as though VMware is taking the "if you can't beat them, join them" approach. VMware recognizes that hybrid cloud will be the dominant enterprise computing model for the next few years and that AWS leads the public cloud market. This partnership with AWS allows VMware to remain a primary platform for enterprises as they move toward hybrid cloud.

VMware needs enterprise customers to continue to use vSphere and to renew their Enterprise License Agreements. Because VMware doesn't sell hardware, it relies on licensing, support and services for revenue. That's where AWS comes in. According to this deal, AWS will provide the hardware and VMware will provide the software, support and services. Presumably, AWS will bill VMware on the back end for the hardware. VMware is still responsible for all vSphere billing, which means the company gets to protect its existing vSphere revenue.

Easily adapt legacy apps to AWS

VMware and AWS have a lot of customer overlap, but little overlap in the services they provide. VSphere on AWS aims to bridge that gap.

One of the drawbacks of the AWS cloud is that it requires you to change how your IT works in order to use it effectively. More often than not, users must develop applications from the ground up to use AWS services, and this deployment model seems unlikely to change. Additionally, many standard enterprise applications deploy onto AWS. Legacy applications, on the other hand, deploy with different architectures on premises, and it takes a great deal of effort to adapt an application designed for on premises to work on top of AWS. For many organizations, that effort, time and cost exceed the benefit of using a public cloud for new applications.

The move to run vSphere on AWS allows the company to focus on delivering services for cloud-native applications. Organizations can continue to run legacy applications unmodified, but they can also deploy those applications onto AWS without the additional time, effort or cost. VSphere on AWS incentivizes customers to use AWS because it provides a new springboard to develop new AWS applications with cloud-native services.

A classic colocation situation

The appeal of vSphere is that it runs unmodified software in VMs. VSphere on AWS allows customers to run exactly the same software in the AWS cloud as they do on premises. This is the only way to do a lift-and-shift migration to the AWS cloud. Many businesses don't want to run data centers or server hardware because it would require them to rewrite or refactor their software.

VSphere on AWS is a classic colocation scenario that enables organizations to run existing applications and architectures -- including unmodified legacy applications -- in a public cloud data center. This means customers can get some of the agility and ease of use of the public cloud without the cost of redevelopment. They can also develop new features using cloud-native tools and retain core data in legacy applications. If this price is right, customers stand to win big from this deal.

VCAN providers stand to lose

Not everyone benefits from the VMware-AWS partnership. VCloud Air Network (vCAN) service providers and their customers stand to lose the most. These are smaller cloud service providers who compete with AWS, but use vSphere in their public cloud services. Now that VMware is cozying up to the competition, vCAN's future looks questionable. If I were a vCAN provider, I'd look for an alternative cloud platform where I have more control. If I were a vCAN customer, I'd talk to my provider and consider making the switch to vSphere on AWS.

Next Steps

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