VMWare as the Amazon of PaaS

VMWare as the Amazon of PaaS

Note:  This is an extremely geeky post… if you have no interest in Enterprise Infrastructure it will not only bore you, it probably won’t make much sense.

I noticed this week that VMWare expanded their Cloud Foundary offering to include support for .NET.  I had three seperate thoughts about this (and about VMWare in general) that I couldn’t seem to pull together in to one coherent post, instead here are three mini-ones:

  1. The way VMWare is attacking PaaS is similar to the way Amazon attacked cloud in the first place (IaaS).  I can see three similarities.  First, Amazon also had an enormous, complimentary legacy business (there retail concern which left them with loads of compute power that they could sell).  VMWare has the advantage of already having in-roads at all the major players in enterprise IT through their existing products.  Second, both Amazon and VMWare took pure technology concepts (IaaS and PaaS respectively) and made concessions to the “way the world works” (namely the slow speed at which companies can adopt new technologies).  Amazon has a bunch of offerings that aren’t cloudy but give companies the extra security they desire.  VMWare allows you to use the Cloud Foundary software to setup a private cloud in your own datacenter.  The third similarity is that both were big, well-funded companies that launched a new model in to a space that was far from mature.  Amazon was really the first big company to seperate out compute power from web hosting and let you just buy a server with your credit card at prices so cheep a nerd could test the waters without getting his company to approve a large contract.  VMWare is trying out the concept of open-sourcing their cloud management software so that anyone can run a Cloud Foundary cloud.  I’m not saying these three similarities guarantee that VMWare will become the market leader in PaaS in the same way that Amazon has in IaaS, but it is certainly worth noting.
  2. In addition to the move being like Amazon’s, I would also call it Googlish or Netflixish.  VMWare is astutely aware that while infrastructure virtualization is kicking ass now, it will not always be a cash cow.  Google knows this about search and plays with things like Android and Google+, Netflix knows this about mailed DVDs and invests in streaming.  VMWare has made a sizable investment in a less profitable market in hopes of becoming the market leader in a growing segment.  It’s the kind of thing good companies do, but it’s more than a little bit dangerous.
  3. VMWare’s PE (56) is a little over half that of Amazon and Rackspace (both in the 93-95 range).  I will grant that it’s far from a pure cloud play and that there is some danger that new owners EMC will meddle too much in their products as their own core business is disrupted.  However, it’s half price on a company with probably the best offering in a market that I think is going to grow significantly in the next 20 years.  Plus you get the market leader in what’s already popular (visualization and internal cloud).