An #Innovation Amateur’s Opinion: “VMware and the Public Cloud”

Technological inventions with revolutionary potential incite participant enthusiasm to participate in a virtual gold rush. Since the inception of a billionaire corporation within a Silicon Valley garage, creating an infamous music-sharing site scripted by a teenager, or a global social media network designed in a dorm room, the barriers of entry into fields of innovation have seemingly evaporated. Conceived within the Stanford lab, VMware encompassed the entrepreneurial spirit as it charged towards the 2015 public cloud market space.

VMware is an EMC Corporation subsidiary offering virtualization and IaaS, infrastructure as a service, platform service offerings with a prominent reputation in the private cloud sector. Before the cloud, data storage and application hosting were through on-premise applications or PaaS, a platform for products. Expensive hardware, costly upkeep, and limited scalability led to the migration to the cloud. In the early adopter phase of this movement, the market growth potential was limitless, especially as big data became an inevitable business challenge. Cloud security was still in the infancy stages as the public perception consisted of ambiguous uncertainty. With the public perception expressing hesitancy and caution due to security needs, VMware considered itself a noteworthy contender.

Before announcing a partnership with Google, VMware launched its own vCloud Hybrid Service, later renamed vCloud Air. After a few months of nominal traction, EMC acquired Virtustream for 1.2 billion to leverage the data centers into their current solution. Leadership envisioned the ideal synergy between the new data centers, EMC storage hardware, and VMware cloud suite. vCloud Air catered to legacy VMware customers through a public Cloud extension hosted on a private data center. By design, this solution catered to high-security content companies that needed alleviation from on-site data storage expenses and maintained the need for maximum data privacy. As the cloud market matured, this model addressed a niche need instead of a mainstream pillar offering.

Innovation and accelerated adoption lead to the formalization of three distinct cloud subcategories, such as the following: private, hybrid, and public cloud. Private cloud, where vCloud Air categorically resonated, required internal resources for management but offered firewall protection to provide the highest tier of security. Hybrid cloud utilizes both Private and Public solutions, using an internal grading system to differentiate between highly secure and non-sensitive data. Public Cloud operates entirely through third-party service providers. As the adoption curve approached the early majority, the agile payment structuring options and opportunity cost of outsourcing magnified public appeal. As industry experts projected the new normal, the competitive landscape ignited with big tech entrants.

Tech giants felt the pain on-premise data storage inflicted upon budget expenses through the hardware purchases and management overhead. These industry leaders also had a first-hand experience and understanding of the rudimentary pain scalability caused. Amazon and Microsoft leveraged their unique business needs and devised a solution to solve similar needs for their customers in a simple, monetized package. Amazon Web Services, AWS, sold their cloud solution in customizable allocations, catering to the overall population. Individual developers with a project, start-ups in stages of growth, government agencies, and enterprise corporations alike could purchase the capacity as needed. Microsoft Azure nipped at the heels of the first-mover, AWS, with incentivized pricing and functional capabilities. Through steep first-year discounts and integration with Microsoft applications, Azure doubled cloud revenue within a year.

Amazon and Microsoft established dominance as public cloud vendors by orchestrating the most significant data centers equating buyer power and market pricing financial control. VMware and EMC acknowledged their limitations to compete within the public cloud sector as an equitable alternative; instead of accepting defeat, VMware and EMC leverage their niche competitive advantages to expand their footprints. VMware started with an indirect approach to revenue generation, relying on its partner channel to drive sales through three distinct product offerings: the software-defined data center (SDDC), hybrid cloud computing, and end-user computing (EUC). Collectively these niche subsectors comprised a market valuation of over 57 billion. EMC introduced EMC Enterprise Hybrid Cloud Solutions that integrated AWS, Azure, and vCloud Air.

The EMC Federation encompassed independently existing subsidiaries with varying degrees of crossover. Under this umbrella, EMC II, VMware, Pivotal, RSA Security, and Virtustream simultaneously in affiliated marketplaces, which appeared cannibalistic to third-party analysis. EMC leadership self-awareness and strategic foresight became apparent as the various pieces of the federation intrinsically collaborated, leveraging the peripheral talents that amplified their individuality. The true genius of the EMC cloud market entry is discoverable through the retrospective analysis of the following: the careful pairing of entities, the unique strength promoted through affinity partnerships, and the complementary nature between each offering as an individual or a whole.?