VMware is finally going to become independent of Dell. The deal is complex and still needs an IRS ruling on the tax impact to be delivered before it’s final, but it would resolve some long-standing questions about whether being largely owned by a computer vendor would compromise VMware’s credibility where Dell isn’t the primary supplier of hardware, or perhaps isn’t a supplier at all.
VMware’s relationship with Dell may be important, but I don’t think it’s the biggest issue VMware faces. That’s critical because if the shift to independence doesn’t resolve that most critical issue, the turmoil that’s often created with changes in the business framework of companies may hamper VMware’s strategic progress overall..
All you have to do to understand VMware’s roots, and it’s risks, is to consider the name of the company. “VMware” is “Virtual-Machine-ware”, reflecting the company’s early dominance of hypervisor-based server partitioning into multiple virtual machines. Enterprises used VMware to multiply the capacity of their servers and data centers, and as the enterprise evolved, VMware has been able to sustain its relationship with CIOs and the IT organization, up to now.
Three specific things have emerged to generate a risk to that relationship. First, container technology is rapidly becoming the preferred approach to allow enterprises to multiply the capacity of their servers. Second, the emergence of public cloud computing has shifted enterprise software focus to the public cloud, but not by “moving” applications there. Finally, the emergence of the use of hosted software in creating telecommunications services and features has changed the hardware dynamic to a broader notion than “servers” or “data center”. How VMware responds to these three factors will determine its future, whatever its ownership structure might be.
Virtual machines partition servers below the operating system, which means that every tenant VM on a server looks like an independent server, with its own operating system, middleware, and so forth. That’s great for isolation of tenant applications, but the additional overhead limits the number of VMs that a server can host. Containers split off applications by separating “namespaces” rather than the hardware. A single OS is used, and some middleware may also be shared, so the overhead of a container is less. In addition, container technology was really promoted primarily to facilitate portability of applications and simplicity of deployment, so there are positive container benefits beyond resource efficiency.
VMware didn’t jump out as a big container player, perhaps to protect its VM incumbency. That decision collided with the emergence of public cloud services, which were initially focused on “infrastructure-as-a-service” or IaaS, which could have been called “VMs-as-a-service” because that’s what they were. VMware’s cloud strategy seemed to be linked to the presumption that running the same VMs both in the cloud and on the premises created the ideal “hybrid cloud” model. That in turn tied VMware to a single, simple, hybrid cloud architecture proposition, always a risk in a rapidly evolving technology space.
Then, as the saying goes, came the telcos and “telco cloud”. For a decade, the network operators have known that they had to take advantage of the agility and richness of software in defining future network infrastructure and services. NFV was an attempt to frame how software could be used in virtualizing network functions, and while it didn’t succeed, it did validate the notion of “universal CPE” (uCPE), which really means white-box hardware that’s separated from software. White boxes are disaggregated network devices, and it’s difficult for buyers to accept that you need to run hypervisors on these devices to partition them into VMs (even though there’s a hardware abstraction benefit to that).
5G specifications include using hosted virtual functions for the functional elements rather than fixed appliances, and the open-model 5G initiatives like O-RAN further define a software-centric approach to implementing 5G, which means a hosting-centric shift in infrastructure planning. So far, indications are that operators favor white-box elements toward the edge, which might well mean that the majority of O-RAN hosting could be in white boxes. However, operators are thinking more and more in terms of containers even for data center hosting; recent changes in NFV to support containerized hosting are an example.
The interesting thing is that if you look at the specific assets of VMware versus its major virtualization-and-cloud-software competitors, VMware stands tall. I’ve noted multiple times that I think their technology is at least tied for, if not the singular best, in the space. Their strategic positioning of those assets seems to be the problem, and of course this is an issue with a lot of (well, yes, maybe most of) vendors. While vendors seem happy to over-hype things like IoT and 5G, they under-position their own assets. This is likely due to the fact that senior management believes that product positioning is really all about supporting the next quarter’s sales, while “future technologies” are fair game for wild predictive extravagance.
This sets up the big question regarding Dell and VMware, which is whether VMware’s issues in our three critical areas were created and sustained by Dell’s goals and not VMware’s own interests. To drive the former, VMware has to address two major points, IMHO. First, VMware has to frame a better position on “hybrid cloud”, by first recognizing what’s really going on in the public cloud, then what’s happening in the data center, and finally how the two should optimally support each other. Second, VMware has to make its VMware Telco Cloud business the absolute leader in what’s becoming a very competitive space.
Right now, VMware is at least accepting a broad view that their hybrid cloud strategy is to run VMware virtual machines on premises and in the cloud. They’ve created partnerships with public cloud providers to promote that goal. Obviously, harmony of hosting doesn’t create application integration, and in any event the big challenge is that enterprises want containers on premises and (increasingly) managed container services in the cloud. VMware actually supports what people need, but they’ve been shy/reluctant about expressing it. This is an easy problem to fix because Tanzu, VMware’s virtualization portfolio, is (as I’ve already said) at least the equal to anything else out there. All they need to do is sing better.
VMware also has some very innovative thinking in their Telco Cloud space, in no small part because it can build on their Tanzu framework. Their challenge again may be that VM-centricity. The network of the future is going to consist of three separate things—remnants of legacy technology (large at first, and likely for at least four or five years), white boxes, and the fusion of hosted functions and “carrier cloud”. How to build the second and third pieces of this, and how to keep all the pieces managed and integrated as they evolve under their own pressures and constraints, is a problem VMware needs to solve. I think they’ve actually got it solved at a technical level, but it’s harder to say that with confidence than it is with the container issue, because there’s less specific detail on their site to confirm my judgment.
As a final point, VMware is one of the companies that have united to form the Open Grid Alliance, a group promising to “rearchitect the Internet”. I’ll blog on that later this week, but there are a couple of important points to note about the intersection of that group and the telco positioning issue. Point one is that much of the stuff their alliance is targeting is really telco infrastructure as much as Internet infrastructure. Point two is that another member of the Alliance, DriveNets, is a white-box-based cluster/cloud router vendor. The VMware press release doesn’t mention VMware Telco Cloud or make any commitment to support white boxes.
That’s worrying, frankly, because I think their Telco Cloud is one of VMware’s most strategic concepts, and something they just cannot afford to get wrong. It would be very unfortunate if OGA ended up knocking VMware out of kilter in the space, and yet the industry is replete with examples of alliances-gone wrong. VMware needs to work hard to be sure that OGA doesn’t, but it also has to make sure that it dances to its own telco tune, because expectations for VMware will build now that they stand on their own.