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AWS and VMware venture caters to the well-heeled enterprise

Amazon's enterprise courtship gets a boost from its VMware partnership. But the service is tailored to VMware's stalwart big company base.

When the fruits of the AWS and VMware partnership are released later this summer, customers will gain a gateway to hybrid cloud, with the compute, pricing and ease of use that these large enterprises demand.

But a split has emerged between VMware's enterprise and small- to medium-size business (SMB) customers as the VMware Cloud on AWS service -- still in beta -- will appeal largely to those with enterprise workloads and demands -- the core of VMware's lucrative customer base. SMBs get short shrift.

"They're going for the low-hanging fruit," said Gary Chen, analyst at IDC in Framingham, Mass. "It makes sense with the initial version [of the service]."

VMware is eager to tap into a new revenue strain with its hybrid cloud partnership, as it senses a demand among its customers.

"Within our customer base, 80% to 90% -- if not more -- are interested in high-level hybrid cloud," said Mark Lohmeyer, vice president of products for VMware's cloud platform business unit, during an interview last month. "Fifty million workloads already run on top of vSphere in these customers' data centers, and hundreds of thousands of people know how to run and operate those environments -- they made a significant investment to optimize their applications to run on top of those platforms."

But that investment -- and associated applications -- vary greatly depending on the size of the business. And while VMware Cloud on AWS is a fit for some customers, it's not for everyone. "From my perspective, it's not aimed at small to midsize customers," said Rory McNeelance, director of infrastructure operations at Rail Europe, at last month's AWS Summit in New York City. Rail Europe is a distributor of European railroad products based in White Plains, N.Y.; the company runs some production workloads and data analytics in AWS and wants to cut colocation costs.

IDC's Chen agreed that the initial VMware Cloud on AWS does not scale well for SMBs because many SMBs use only four nodes for their deployments -- the base level required for the AWS offering. VMware Cloud on AWS could force them to double down on their computing investment.

"Imagine asking that of an enterprise, 'You have to buy the same amount that you have on prem.' That's a very big chunk," Chen said. "So it's not scaled that small. They can't just buy an individual VM or node, which would probably fit in better with SMBs."

And many of those customers don't use the full VMware stack, Chen said. "[What] you get with the offering is pretty much the complete VMware stack. It's going to be the storage, networking and all of their management technologies. For a lot of SMBs, some of those things will probably be unfamiliar to them."

AWS and VMware plan to adjust host sizes and other details in time, but it might not be fast enough for some customers, especially those trying to escape colocation costs. McNeelance said he doesn't expect the service to fit his needs for another year and might look to another hybrid cloud offering.

SMBs might be better off with the vCloud Air Network, which VMware will continue to support, according to VMware's Lohmeyer. The partner network offers more SMB-focused software and services that could address some concerns until the VMware Cloud on AWS service evolves. Partnerships with IBM and Rackspace could also help bridge the gap on a temporary basis. This might allow companies to remain on VMware and re-evaluate their needs later versus switching over to another hybrid offering, such as Azure Stack.

Enterprises see a fit, if the price is right

VMware's enterprise customers have questions of their own, and the virtualization provider has been cagey on the particulars. But enterprises are encouraged by the details they've seen thus far.

"I think [VMware Cloud on AWS] is going to fit our needs," said Dwayne Salmon, a systems administrator at Equinox, a luxury fitness company based in New York. Equinox uses VMware in a hyper-converged data center hosted by Sungard Availability Services. The company has a 10-host VMware cluster that runs 300-plus Windows- and Linux-based virtual machines, as well as workloads in AWS and Azure.

As Equinox downsizes its data centers, the VMware Cloud on AWS service offers a potential fit, which lets the company keep critical apps on premises and move other workloads to the cloud. It currently uses Vblock hyper-converged infrastructure on premises but would like to move entire workloads into the cloud.

"I think I'm sold on [the service]," Salmon said. "It means I won't have to worry about doing the patching, updates or ESXi hosts. Salmon welcomed other emerging features, including encryption for files that move through vMotion to the cloud.

But ultimately, the decision to buy will come down to cost.

"If [we cannot] justify the cost to move to VMware Cloud, it's not going to make sense," Salmon said.

AWS and VMware have yet to offer pricing details, though Lohmeyer said it would offer a consumption-based model similar to how AWS charges for Elastic Compute Cloud (EC2) instances. Also, VMware customers can apply loyalty discounts.

It's unlikely that VMware will charge less per host than AWS does for access to its infrastructure. AWS puts a premium price on its EC2 Dedicated Hosts over instances, and VMware's bare metal AWS offering is most closely related to those Dedicated Hosts. VMware enterprise customers will likely appreciate that extra workload isolation more than SMBs, easing some concerns with regard to cloud security and bandwidth. But it won't be inexpensive.

Amazon's in the driver's seat

VMware will sell, support and deliver the service. Amazon provides the infrastructure and coordinates on the back end with VMware on support but otherwise lets VMware take the lead in managing the service and its customers.

Experts said they believe that this AWS and VMware partnership will provide cloud-shy enterprises with an easy onramp to cloud services. Once they get a taste, AWS can entice them with other AWS services such as serverless computing with AWS Lambda, its AWS IoT platform, its content delivery network Amazon CloudFront and artificial intelligence tools.

"There's definitely going to be an upsell opportunity for Amazon," Chen said.

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