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Since VMworld there’s been a huge amount of news about EMC(Dell)+Virtustream_vCloud Air. Basically EMC(Dell) will be consolidating most of its cloud assets under Virtustream which will be spun out as a separate company with EMC(Dell) owning 50% and VMware the other half. I’ll go into more details of the spin out but first here’s what I learnt speaking to them at the show.

Adding some more colour to the highlights from my VMworld Europe 2015 coverage:

• VMworld Europe 2015: The Day –1 Buzz
• VMworld Europe 2015: The Day 0 Buzz
• VMworld Europe 2015: The Day 1 Buzz
• VMworld Europe 2015: The Day 2 Buzz
• VMworld Europe 2015: The Day 3 Buzz

I had a chat to Andy Sugden from Virtustream who EMC acquired recently. I had some misconceptions about Virtustream and how they competed with vCloud Air. Virtustream basically has software called xStream which big enterprises (on or off-prem) or service providers use to create managed instances of SAP and some other big applications. This takes a lot of the complexity away from managing these apps and provides a secure wrapper around the whole app up and down the entire stack so it can work in a multi-tenant environment and ticks all the security and compliance boxes. You can also create and manage performance and availability SLAs using the software. IBM use it (mmm, not for much longer I guess!). I can certainly see integration with vCloud Air by bringing some more of that secure multi-tenancy to vCloud Air but the big apps Virtustream manage aren’t the first applications people are moving to the public cloud so its normally a managed cloud offering, it was certainly interesting to get a better understanding.

What’s new and what does it mean?

EMC/VMware has had a grey rather than silver lining cloud story in my opinion. They started with vCloud Director as their secure multi-tenancy + provisioning + portal + network segmentation product. This was for everyone building a cloud, private or public. It was a difficult product to set up. I was involved in a PoC a few years ago which required VMware be on-site for two weeks. The networking was powerful but complicated. Then VMware bought Dynamic Ops which became vCloud Automation Center and then became vRealize Automation. This became a new pan-cloud provisioning product. VMware then decided to break up vCloud Director, the provisioning piece would be partly ditched/merged into now vRealize Automation and vSphere itself. vCloud Director then would become a product only for Service Providers. Then VMware decided to get into the cloud game itself and compete with the Service Providers  and built vCloud Air on top of vCloud Director.  VMware then bought Nicira and released NSX which did the secure network segmentation. In the meantime EMC built itself a hybrid cloud division. Hardware wise each division competes selling different bit of tin at various stages of convergence to build clouds. EMC then bought Virtustream which does secure multi-tenancy with business critical apps. Still following? So basically after all this time vCloud Director wasn’t good enough and EMC and VMware have made a number of acquisitions to fix this.

The news of the spin out is partly to address this complexity which is a good thing as well as buying Virtustream data center space as data centers are costly, expensive things to set up. Rodney Rogers will stay on as CEO of Virtustream and pull the rest of EMC/Dell/VMware’s cloudy stuff under him.

Bill Fathers who was the vCloud Air boss is not moving over to Virtustream and is staying at VMware to take on a more “strategic” role. I’m not sure whether this is a side-step or demotion or a needed effective interface between the two now arms-length companies.

So what is the future for vCloud Air?

Virtustream is the new brand name so will vCloud Air itself be rebranded(vast marketing money down the drain) or will is become one of the cloud brands of Virtustream?

vCloud Air hardly features in the big cloud games, AWS is vast and growing and building new services like mad. Microsoft is doing amazing things with Azure and providing a very interesting way for enterprises to leverage cloud and bring it into their own datacenters. I’ve said it before, Azure was built as cloud native with no legacy, Microsoft is selecting ways it can pull parts of the cloud back into your datacenter. vCloud Air was built to bring your data center into the cloud with a familiar look and feel but that also means it has a lot of baggage. As people ask for more features further up the stack, an IaaS history cloud becomes less interesting (+revenue generating). How quickly can Virtustream combine all the various cloud software assets and also build a converged hardware + software stack cheap enough (hello Dell) to run themselves as well as provide cloudy bits to Service Providers to complete against AWS/Azure and even vCloud Air. This is again all at the IaaS layer where margins are forever dwindling. Will it be enough to survive when expanding data centers beyond current vCloud Air + Virtustream is an extremely costly capital outlay.

Pivotal

The ace in the DELLeration is Pivotal which has the very successful Cloud Foundry. This moves up the stack to PaaS and most interestingly is pan-cloud. Cloud Foundry on your private cloud, AWS, Azure, IBM Softlayer, vCloud Air, you name it, it is pretty much there. So a federation company is building a very well regarded platform across clouds but its not part of Virsustream? There’s talk of Pivotal heading towards its own IPO, could it rather be folded into Virtustream as well to build a full stack cloud or is that silly talk? Does VMware+Virtustream stay more IaaS  (+ a little SaaS) and Pivotal pure PaaS?

Converged Stack

VMware in effect will become the provider of the underlying software for whatever cloud story Virtustream has and Dell/EMC will become the hardware provider. Interestingly Dell supplies the servers that Microsoft uses in Azure. I wonder whether the spin out of Virtustream into another company is so Dell can maintain this relationship so Dell isn’t competing directly with Azure and can provide servers for both. I see the converged infrastructure offerings of EMC/Dell further, well, converging. Dell Vblocks + VSAN/ScaleIO nodes on cheaper Dell servers everywhere with no need to pay Cisco for UCS / Nexus if they can also use Dell networking + NSX (no idea if that’s possible). Funnily enough this makes Dell a supplier of a pretty full stack: server, hypervisor, networking, storage + Cloud Foundry + other cloud. Isn’t this just what Oracle is doing and they even have a database and some apps to put on top!

Next?

The cloud market is moving so quickly that Dell/Virtustream doesn’t have a lot of time to tell the market its plans (soon not the stock market) and then be able to execute and that is expensive, especially if you have some debt to pay back. It has to move up the stack to offer cloud users more than secure VMs and SRM destinations. AWS and Azure are not standing still and are building IoT gateways, data analysis engines and so many other API driven utilities where customers never see a VM, just a service. Integration between vSphere and vCloud Air isn’t as seamless as it could be, vCenter is no longer up to the task in many ways. VMware’s vision of a hybrid cloud with seamless workload mobility if required and consistent API deployment isn’t easily done yet, plenty of work to do.

Dell also has a great partnership with Microsoft (Azure server provider, remember), how will this be impacted by Dell owning VMware? Could Dell entice Microsoft to partner with it for providing other applications like SQL/Exchange/Dynamics on top of Virtustream or are Microsoft’s cloud dreams Azure only? What does Virtustream/vCloud Air do for companies that want to consume cloud via OpenStack APIs?

I wish Rodney Rogers the best of luck, headwinds are blowing ever stronger and it will take savvy leadership to navigate and find those silver linings.