VMware has long been the established leader in enterprise virtualization. VMware's vSphere virtualization platform is used in 100 percent of the Fortune 100 companies and VMware has about 70 percent of the enterprise virtualization market. However, that success in virtualization has not necessarily translated into success into the cloud.
In the past, VMware has relied on partners to provide cloud services for its vSphere and vCloud offerings, but that strategy has let competitors like Microsoft, with their Azure services, and Amazon, with its AWS cloud services, to gain a clear advantage in the cloud services market. Both Amazon and Microsoft were able to take advantage of their existing global infrastructure to directly provide cloud services to customers. VMware worked with partners and didn't possess this type of infrastructure themselves. VMware's recent announcements have shown that it intends to expand its cloud presence with a new hybrid cloud offerings and enhanced network virtualization.
In their March 13 announcement, at the Strategic Forum for Institutional Investors, Pat Gelsinger, VMware CEO, introduced their new Hybrid Cloud Business Unit and vCloud Hybrid Service. Gelsinger also announced that Bill Fathers will be the senior vice president and general manager of VMware's newly-formed Hybrid Cloud Services business unit. While details are still light, VMware is expected to roll out the new Hybrid Cloud Service as an Infrastructure-as-a-Service (IaaS) offering to compete with the likes of Amazon (AWS), Rackspace, and Microsoft Azure.
Unlike past offerings, the new VMware vCloud Hybrid Service is expected to be operated by VMware. This is a significant shift for VMware that could make some existing partners unhappy with the new direction. VMware has purposely labeled this new service as a hybrid offering to shape customer's expectations that this service will be an extension of the local private cloud infrastructure. VMware has stated that they expect to launch their VMware vCloud Hybrid Service later in 2013.
In addition, VMware revealed their intentions to merge their existing VMware vCloud Networking and Security products with the recently acquired Nicira Network Virtualization Platform (NVP) into a single product family named VMware NSX. VMware NSX will provide network virtualization by working with both VMware and non-VMware hypervisors and cloud management solutions. Like server virtualization abstracts, the server from the underlying hardware, network virtualization abstracts the physical network topology from the virtual network exposed to the applications and virtual servers. VMware NSX uses a central controller to manage multiple vSwitches across your infrastructure. VMware VP of Network and Security Hatem Naguib describes the new VMware NSX offering more fully in his blog post on the VMware site.
This follows up on the VMware and EMC announcement made last December about the Pivotal Initiative. Led by Paul Martiz, Chief Strategy Officer of EMC, Pivotal Initiative is focused on Big Data and Cloud Application Platforms. These recent moves show that VMware is definitely making a big play in the cloud market.