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VMware's own cloud is now profitable and innovative

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September 1, 2016

Earlier today, VMware said that its cloud is now profitable and spins out innovations the rest of VMware users can benefit, according to Ajay Patel, VMware's executive responsible for all product development for vCloud Air.

In the early 2010s, VMware's cloud ambitions saw it pursue a global strategy of building data centers, albeit colocated in third party infrastuctures, and a promise of easy hybrid cloud integration because its own cloud would just run vSphere.

But in early 2016, it changed course altogether, scaling back its ambitions and instead doubling down on partnerships with other clouds that also thought they could make a profit with a vSphere solution.

VMware is now a $7 billion company but that number is dwarfed by the big three cloud-builders AWS, Google and Microsoft.

So the reversal was a bit of a shock but also eminently understandable. Not long afterwards IBM decided it would offer hosted vSphere, so at a stroke VMware achieved global scale and just about the best reseller imaginable, making its own scaled-back ambitions looking less like a loss.

This week at VMworld 2016, we've learned that IBM is all-in with this partnership, having signed up as the first cloud to operate with the new Cloud Foundation that offers vSphere and vCenter as-a-service to help build hybrid clouds.

Patel also said that a great many other vCloud Air Network (VCAN) members are thriving as VMware users look for different types of cloudy engagements.

Some users want managed cloud whereby they run a private cloud inside a host's data center. Others want platform-as-a-service. Some want infrastructure-as-a-service. With over 4,000 VCAN partners operating clouds, Patel and VMware CEO Pat Gelsinger are confident they can run an efficient cloud.

Gelsinger already said a few times during the conference that VCAN partners collectively win several billions of dollars a year in Vmware-cloud-related revenue.

AWS and Azure each do about $10 billion a year and rising fast. If total industry-wide vSphere-derived cloud revenue is half that, VMware's a big cloud player and is doing it on high-margin software licences.

VMware therefore looks to have found a route to cloud relevance without having to do the expensive part of clouds by itself.

It also looks to have a thriving hybrid cloud business to build with its new Cloud Foundation product. Which is not to say VMware thinks it has this nailed-- it knows it has to keep coming up with new ideas to make vSphere relevant as more workloads head skywards.

Source: VMware.

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