Winners and losers from the big AWS-VMware pact

Amazon Web Services and VMware on Thursday announced what executives at both companies call a long-term strategic partnership to make it easier to run VMware workloads on AWS’s cloud.

At a press conference in San Francisco each company’s CEO boasted about the VMware on AWS offering which will be available as part of an invite-only beta early next year and rolled out to the masses in mid-2017.

In a nutshell, AWS has dedicated a portion of its bare metal cloud infrastructure for running VMware’s core management software: vSphere (the ESXi hypervisor and virtualization management platform), vSAN (the virtual storage area network platform) and NSX (the virtual networking software). Customers can spin up three sizes of AWS on VMware and pay for it through a credit card or their existing VMware account. AWS is VMware’s “preferred” public cloud and VMware is AWS’s preferred private cloud, CEOs Andy Jassy of AWS and Pat Gelsinger of VMware said during the press conference.

What does this mean for users? Simple: existing VMware customers will be able to more easily lift and shift workloads into AWS.

What does it mean for the rest of the market? To explore that further, here’s the Cloud Chronicles list of the winners and losers of this announcement.

Winners

VMware

This partnership is a big deal for VMware. VMware’s most recent strategy pivot centers around the idea of enabling cross-cloud architectures. VMware wants to be the company that enterprises use to connect to the cloud. While previous integrations between VMware and AWS allowed for IT admins to launch AWS virtual machine instances from VMware software, this partnership marks a much deeper integration of these platforms. After today’s news, VMware has a much stronger argument that it can be a cloud management vendor for managing AWS workloads. The news also comes on the heels of a recently expanded partnership between VMware and IBM. VMware announced a partnership with Google almost two years ago. So, VMware is only increasing its partnerships in the public cloud.

What’s ironic about the deal is that it marks an about-face for the company from just a few years prior when Gelsinger was denouncing public cloud as a platform that would be a major headwind for the company if customers adopted it. Those days are long gone, and VMware has pulled off a coup in the cloud management market.

Could this deal come back to bite VMware? Well, if all VMware workloads end up moving to the public cloud then that would be bad. The good thing for VMware is that that’s unlikely to happen.

AWS

AWS

This deal is good for AWS. At the end of the day this partnership represents a way for customers to more easily on board workloads to the AWS cloud. That’s the company’s goal and the reason they agreed to do this. AWS has been steadfast against the idea of offering a private cloud and has made minimal efforts to extend their infrastructure on to customers’ data centers. This partnership marks a big step forward in AWS recognizing on premises workloads and welcoming them into the AWS cloud.

Enterprises

At the press conference the CIO of international food distribution company Sysco Frank Merli spoke about how recently the company has begun using AWS’s cloud and has also invested heavily in virtualizing their infrastructure using VMware. Merli said this partnership between AWS and VMware is “fantastic” for his company because its two leading strategic infrastructure partners are teaming up. That will be a common story for a lot of businesses.

This new partnership will make it easier for customers to on ramp workloads into the public cloud, and they can leverage their existing expertise in using VMware management tools to do it.

Losers

Microsoft

Amazon’s biggest competitor in the cloud is Microsoft. Officials in Redmond talk chapter and verse about their hybrid cloud strategy and how they are the only company that can span public and private clouds. Now, AWS will have an answer when Microsoft boasts about its hybrid cloud. In some ways the VMware-AWS partnership legitimizes Microsoft’s hybrid cloud storyline and raises the question of why AWS didn’t do this sooner. A Microsoft spokesperson issued the following statement from the company: ““Microsoft Azure has always been hybrid by design, based on our decades of enterprise experience. True hybrid cloud isn’t just connectivity, it’s consistency — across development, management, and security.”

This partnership arguably makes AWS an even more attractive platform for the hundreds of thousands of VMware customers who are looking to move to the public cloud.

IBM

Earlier this year VMware made a big partnership announcement with IBM to run VMware’s Cloud Foundation stack of software in the IBM Cloud. At the press conference this week VMware CEO said AWS is the company’s “preferred” public cloud. This deal between VMware and AWS diminishes the significance of the VMware-IBM partnership. In response to the news, an IBM spokesperson defended the company’s agreement with VMware: “IBM Cloud was first to market with VMware, and with 1,000 clients already using this partnership, it is clear whom they prefer.”

Cloud Management vendors

VMware is essentially a cloud management vendor. By having a partnership with AWS at this scale, it puts VMware front and center as one of the leading AWS cloud management vendors. That’s bad news for companies like RightScale, Cisco’s Cliqr, IBM’s Gravitant and many others. The argument all these other vendors will have is that they work across many clouds and do not just have a high affinity with AWS.

PR people handling the announcement

About an hour before the press conference a blog post on VMware’s website mistakenly went live announcing the deal. This came a week after the news was leaked to multiple media outlets. Michael Dell even referenced the announcement before it was public. The AWS-VMware partnership basically turned into the worst kept secret in the cloud.