It has been almost five years since VMware laid out its vision based on the ideology behind the software-defined data center (SDDC). This announcement came during one of the keynote addresses during the VMworld 2013 conference in San Francisco, California. Since that time, VMware has been working diligently to make its vision a reality while helping to shape the definition of what a twenty-first-century data center is and will be moving forward.
The concept behind the SDDC is based off of three core aspects of the data center: network, compute, and storage. For VMware, the core aspects of its portfolio that answer those needs are VMware NSX for networking, VMware Virtual SAN for storage, and VMware vCloud Suite for compute. Sprinkle the VMware Realize Suite on top of that for management, and we start to see the overarching vision coming into focus.
Now, almost five years later, VMware is really starting to see the fruits of its labor. Companies like Cleveland Research are expecting a favorable year-end demand for VMware products across all the SDDC solutions in VMware’s portfolio. The partner community has been indicating a strong upside and demand for VMware NSX and VMware vSAN in particular. The partners are seeing larger deal sizes, more bundling of products, and more strategic customer meetings, discussions, and proofs of concept.
According to some of the partner discussions, it is believed that demand for the fourth quarter of 2018 will be ahead of established targets. A breakdown of the SDDC for VMware works out to be something like this:
Compute: This is 33% of the business for VMware, and VMware is expecting demand and ongoing growth in compute based on vSphere 6.5 upgrades to continue to support this area. Researchers are suggesting the continued demand is driven by customer upgrades from the legacy vSphere, as customers have been looking to extend support of the preexisting application, as well as by the opportunities presented with data center refresh initiatives and the new lift and ship opportunities.
Network: This is 13% of the business for VMware currently, and I believe this area will continue to grow with customer demand for the microsegmentation, orchestration, and automation that VMware NSX brings to the table. The VMware cloud on AWS is another reason, offering the opportunity to accelerate VMware NSX growth. The VMware acquisition of VeloCloud is expected to present longer-term opportunities for this area of business by enabling customers to leverage an SD-WAN product into the environments.
Storage: This is currently 5% of the overall business, and I believe this number will increase slowly and steadily as more customers move into the hyperconverged models. For most customers and companies, this will not be something new; rather, it will move at the pace of the already-in-place refresh cycles. Dell appears to be encouraged by the interest in vxRail and is expecting growth with this application. As a side note, the researchers are indicating that Nutanix is currently leading the hyperconverged market, and all indications are that Cisco is currently underperforming. We will have to see if Cisco is able to turn that around sometime soon.
Management: This is currently 24% of the overall business for VMware, and it is an area that has been considered flat to down in the past several quarters. VMware’s vRealize Suite is the basis of VMware’s cloud management platform. VMware has direct competition in this area from companies including RightScale, Turbonomic, CloudCheckr, and Hewlett Packard Enterprise. I think VMware is moving in the right direction in this area as it adds more features and services to its suite of products. I am expecting this area to start experiencing accelerated growth once there is more availability and maturity with the VMware Cloud on AWS platform. In my opinion, once that happens, this will cement its role as the hybrid management solution.
In closing, VMware might want to consider focusing its attention on preparing a hybrid cloud migration roadmap that will center on longer-term enterprise licensing based around a refresh schedule for both private and hybrid solutions. It should have an immediate focus on the larger companies that are showing interest in adopting and implementing the VMware Cloud on AWS over the next twelve to eighteen months. This is an opportunity I think VMware really needs to push in both the technology and the sales model by expanding it to more of its partners. I think the current sales model is something that will slow the growth of this platform; once this area is expanded, the growth should expand in kind. Another thing that I believe will help accelerate the growth of VMware’s portfolio is if it expands and presents more implementation services to its customers, especially with VMware NSX in the immediate future, as it has been reported that around 50% of the NSX licenses remain idle. This is a make-it or break-it time for VMware to deliver on its roadmap and show that its hybrid is the future.