Last week we heard about VMware on AWS offering coming next year [1]. VMware is providing their software stack on baremetal servers in AWS.

What does VMware and its customers get out of the deal?

Short answer: Proximity to AWS and its cloud services!

vCloud Air already provides a VMware based cloud in datacenters set up by VMware, where VMware handles all the hardware and software operations. This reduces the operational complexity for customers and provides a pay-as-you-go model for their workloads. However, vCloud Air still does not provide many of the other services that customers expect in a public cloud, such as object store, databases, key-value stores, load-balancers, private DNS.

Similarly, their partnership with IBM [2] didn’t really solve the problem for customers. It simply replaces VMware’s own datacenter with IBM Softlayer datacenters that come with IBM’s support and services.

AWS is not just an IaaS but it also provides many software services like highly available object store, replicated databases with DR capability, DNS as a service, load balancer as a service, replicated key-value store across multiple datacenters, among others. All these reduce the effort by the customer, where they had to hire DBAs and set up all these services themselves. It is not a trivial task to do these even with a virtualized infrastructure. Being able to put the hardware and VMware deployment in AWS datacenter provides proximity to AWS in terms of latency and a high bandwidth connection to services that are deployed. So customers can start using the services even while running some workloads on VMware. However, all of these services will be running on AWS infrastructure itself.

Once the service is publicly available next year, the key thing will be to see if these services are available as part of vSphere and can be managed using vSphere or will customers have to deal with both AWS and vSphere. The main goal for AWS is to sell their software services to VMware customers. If customers use more and more services from AWS, these will be running on AWS application infrastructure and not VMware’s deployment. So even though a customer may move to VMware cloud in AWS, it is a perfect scenario for AWS to get them in, offer them software services and making them consume more of AWS than VMware. Over time, I think customers will have more workloads on AWS than VMware. This is the biggest long-term risk for VMware in this deal.

What else could VMware have done?

Another alternative would have been to add more services in vCloud Air to make it easy for customers to deploy services instead of just consuming IaaS. It may be too late for this now. Oracle[3] is doing that by offering their databases and middleware software layers as part of their cloud. Oracle is offering all three consumption models: IaaS, PaaS and SaaS.

What does AWS gain from the deal?

Short answer: VMware customers!

This is a great deal for AWS, since VMware itself will help customers move to their datacenter and be close to AWS services. That makes it is easier than ever for AWS to start providing them with more services and eventually migrate even the initial workload to AWS due to high bandwidth connectivity. So far the biggest obstacle was to migrate data from on-premises applications to cloud over WAN or leased network connections. That problem is solved with this move.

What is VMware’s hope from the deal?

Notice the word “hope” here. If customers choose to use VMware management software to manage their workloads across both VMware and AWS, then there is at least some value add that VMware can continue to provide. However, this is a difficult challenge because VMware’s management software is designed for IT and is not as well suited for consuming and managing services on a public cloud. Also, tools that manage workloads and services on AWS, are not aware of vSphere APIs. These tools work natively with AWS APIs. Only time will tell if that can be changed fast enough, while keeping pace with the rapidly evolving cloud market.

Summary

The deal is a win for AWS and customers clearly. In the short term, VMware may be able to keep the customers a bit longer, but this is just a landing pad for customers and not a permanent base. It is hard to see a long term benefit for VMware from this deal.