When Bloomberg published an article earlier this month sounding the warning bell about the VMware-Amazon partnership, its writers shared some compelling arguments. In “How VMware’s Partnership With Amazon Could End Up Backfiring,” writers Dina Bass and Brian Womack remind readers of Amazon’s pattern of crushing the competition – including competitors that start out as partners.
They write, “Here’s the problem: there's nothing keeping Amazon from developing its own competing set of products down the road. Should that happen, VMware would be poised to lose customers – including some that it helped introduce to Amazon Web Services through this partnership."
Amazon has played that card in the past, but anyone who went to VMworld knows there are at least three things wrong with this argument.
1. VMware’s customers aren’t going all in on the cloud.
I talked to numerous VMware customers in Las Vegas whose enterprises spent a ton of money on the cloud, and then came back to their on-premise environments. Despite the hype, not all workloads thrive in the cloud. Enterprises are learning (sometimes the hard way) that some of their applications need the high availability and predictability of on-premise environments and that the process of rewriting applications for the cloud is not as simple as they’ve been promised. The reality is turning out to be much more hybrid, including on-premise, private and multi-cloud.
2. Amazon has built a business cultivating the developer community.
Developers are generally not the enterprise IT professionals who buy and run VMware. VMware users tend to be enterprise IT and operations specialists who are accountable for keeping systems running and their businesses operational - always. Amazon expects their enterprise customers to re-write applications and put them in the cloud, but enterprise IT is loathe to rip and replace.
3. This partnership could backfire…on Amazon.
The stock market seems to see a huge win for VMware in this partnership and other recent company news. The real question in this deal should be, “Why the hell did Amazon do this?”
Ninety percent of the workloads out there are running on VMware, and there isn’t enough money in the universe to rewrite them all to be cloud-native even if it could be justified. Moreover, the petabytes of data those apps sit on are locked up inside VMware data stores and aren’t going anywhere. It’s always been clear that the real money is in getting these Microsoft Windows and Linux servers in VMware moved to someone’s cloud, so doing this deal was brilliant.
The risk, though, is that Amazon is really only providing “co-lo as a service” to VMware and will not be able to sell all these new customers anything that is AWS-native. To succeed here, they have to compete with all manner of entrenched, well-integrated vendors across the VMware ecosystem. It’s unclear whether they have the disposition to be a well-behaved part of someone’s ecosystem.
Amazon has earned its reputation as a fierce competitor, but the risk that this partnership will go bad for VMware is overblown. As Bloomberg notes in its article about the deal, “VMware is also controlling the access to its customers and is selling the entire package, including the related AWS services.” Between that fact and VMware’s foothold in the enterprise, the company should come out just fine.
Do you agree? Tweet me with your predictions for this partnership.