Assessing VMware’s ongoing reinvention

Assessing VMware’s ongoing reinvention

Virtualisation mainstay VMware wants to build and manage multi-cloud infrastructures… and so much more as 2019 kicks into gear

Pat Gelsinger (CEO - VMware)

Pat Gelsinger (CEO - VMware)

Credit: VMware

The company stuck with its core competency but continued to innovate into new areas at the same time, he says.

In 2009, Fay was hired at ACI, a provider of corporate-benefits packages, to lead a digital-transformation initiative. ACI had recently acquired four companies, its data footprint was growing at 300 per cent a year, it had security, compliance and data governance issues, and the data centre needed modernisation.

The first step was a basic server hardware consolidation effort that led to the creation of 40,000 virtual machines, a move that saved the company an estimated 30 to 40 per cent in CAPEX costs per year and helped with HIPAA and PCI compliance efforts.

When Fay wanted to automate data centre functionality, VMware was there with its software-defined data centre.

When encryption for sensitive customer data became a priority, VMware had just released a new version of VSphere with built-in encryption. When his software developers wanted to move to containers, VMware had its Pivotal Container Services product.

And when VMware bought SD-WAN vendor VeloCloud, it just so happened that Fay was already a customer. At one point, Fay says he went with another vendor for hyper-converged infrastructure but switched back to VMware because its platform was the most mature and had the most functionality.

Fay says he appreciates other aspects of his relationship with VMware. There is no vendor lock-in in terms of the underlying hardware. For example, NSX plugged directly into his Cisco networking gear.

The result: “You can have network functions virtualisation pushed over any content-distribution node you want, anywhere in the world. That was a paradigm shift, because you’re no longer just managing the network, you’re using it to drive innovation.”

Fay says he is keeping his eye on VMware’s cloud offering on AWS. The only thing holding him back right now from a full production deployment is the lack of availability zones. And he’s looking forward to other VMware initiatives in areas of blockchain, edge computing and 5G.

Similarly, Adam Alicea, director of enterprise engineering at VITAS Heathcare Corp., began his relationship with VMware through a server virtualisation project.

Eight years ago, when he joined the largest hospice care company in the U.S., VITAS was moving its data centre from Miami to Smyrna, Ga., and his task was to migrate the company’s 70 applications onto virtualised servers.

After a 17-hour day, about 80 per cent of the company’s applications – many of them mission-critical apps related to patient records – were running on the virtualised infrastructure, he says. And the company’s footprint had been reduced from nearly a full cage in a colocation facility to 11 server racks. Today, that’s down to six racks.

Four years ago, when the in-house electronic medical records system was pushing the company’s SAN to the limit, Alicea switched to a VMware vSAN. Latency dropped from seconds to microseconds and the company realised a nearly 50 per cent reduction in storage-hardware-acquisition costs.

“Everybody was wowed,” Alicea says, and he was given the green light to develop and implement a five-year plan that included deployment of a full software-defined data centre.

On the networking front, Alicea began re-designing the core network, moving from Cisco gear to white-box switches running the Cumulus Linux OS, boosting the network backbone from 10Gps to 40Gps and adopting a spine-leaf architecture for increased resiliency.

The next step was adding VMware’s NSX, which integrated with the storage- and server-virtualisation systems to provide a single view of the entire data-centre stack. In addition, NSX provided network micro-segmentation for security, as well as load balancing. “It all made sense,” Alicea says.

He is working with VMware in other areas as well, implementing virtual desktop infrastructure with VMware’s Horizon View technology on NSX clusters. But he’s also sticking to the best-of-breed approach. For example, after evaluating VMware’s SD-WAN technology, he decided to stick with his current implementation.

VMware's Dell EMC connection, future plans

No discussion of VMware can be complete without mention of its somewhat convoluted ownership situation. Storage vendor EMC bought VMware in 2004 for $625 million and sold 15 per cent of the company to the public via an IPO.

In 2016, Dell, which was then privately held, borrowed $67 billion to buy EMC in a deal that stands as the largest ever in the industry.

As part of that transaction, Dell issued something called “tracking stock,” a separate stock based on VMware’s performance. Then, in December of 2018, Dell announced it was going public again and bought back the VMware tracking stock.

None of these machinations seem to have had much impact on the ground, according to both analysts and customers.

Any efforts by Dell to increase synergies between the companies can only be good for customers, and these corporate changes haven’t slowed down VMware’s continued push into new markets. For example, Dell just announced an aggressive product roadmap for its HCI product line that features VMware’s VxRail technology.

And at the latest VMworld conference, the company announced several new initiatives. Project Dimension is a managed service that will bring software-defined data-centre infrastructure- and hardware-as-a-service to on-premises and edge locations.

Project Magna is aimed at leveraging artificial intelligence and machine learning to build self-optimising virtual infrastructures. And Project Concord is VMware’s blockchain initiative.

But there is always a concern that if debt-laden Dell hits a few rough quarters, it might scale back new technology investments at VMware.

So far, however, the overall strategy seems to be working. Revenue for the latest quarter was US$2.2 billion, up 14 per cent from the same quarter of the previous year, and the company increased its full-year revenue projections to nearly US$8.9 billion.

Quarterly earnings of US$1.56 a share beat analyst estimates. And VMware stock, which dipped to a low of around US$50 a share in 2016, is now above US$150 a share.

Industry analysts are impressed. Forrester listed VMware’s HCI offering as one of the leaders in the fast-growing “data centre in a box” market. IDC says VMware is the market leader in cloud management software at more than US$900 million in annual revenue, and is the market leader a new category called IT automation and configuration management.

And Gartner puts VMware in a leadership position in WAN edge technology.

Wolf, not surprisingly, is bullish on VMware’s future: “We will be global leaders in infrastructure, networking, data management, end-user computing, and we will revolutionise how applications and data are secured.

"We will empower customers to take open source projects into production, providing the reliability, scalability and operational consistency they require. Finally, we expect to continue to be a major force in cloud operations and management."

Tags VMwarevirtualisation

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