Will VMware survive a post-virtualization world?

VMware is the virtualization king, but what are the chances of parlaying that into future success?

VMware VMworld 2015
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Having recently attended VMworld, VMware's annual user conference this year, I came away ruminating on VMware's existential future. (disclosure: VMware covered my travel and expenses to attend the event). I spent much of the keynote on day one of VMworld trading tweets with other members of the commentating classes. My tweets were, admittedly, somewhat snarky in nature and reflected on my perception that VMware is a slow and lumbering monolith that has been successful in one field (virtualization) and is at risk of having that success overrun by new approaches (containerization, microservices, cloud, etc.).

As is often the case with unintentionally snarky tweets, I spent the rest of the day in conversation with a number of VMware executives, customers, and partners, and came to see that perhaps my snarkiness was unjustified. Before explaining that, let me lay out some context.

VMware is the undisputed king of virtualization - the reality is that the vast majority of the world's enterprises (big and not-so-big) use VMware's virtualization and associated technologies in order to gain efficiencies and move from a purely physical approach towards infrastructure to a virtual one.

Recent changes, both technological and macro, have led to an erosion of this opportunity, however. The rise of the cloud has led many organizations to move away from owning and running their own infrastructure. More recent developments like the rise of microservices and containerization have further raised some questions about the need for virtualization.

In the face of this perfect storm, VMware has followed a few different strategies over the years. It tried to become a software company, for example, acquiring (and then offloading) SaaS products such as SlideRocket and Zimbra. It's dabbled (and is still dabbling) in its own public cloud platform, vCloud Air, and has created an end-user computing business.

But all of these attempts have very much been subservient to VMware's primary focus on being an infrastructure company. This in a world where infrastructure is increasingly being seen as a commodity.

This tension was obvious in the keynote and audience reactions at VMworld. VMware used the event to talk about its Photon platform, an interesting solution for creating and managing container-based infrastructures. But, although Photon was a part of the first day's keynote, it felt strangely removed from the main VMware story, which very much focused on the company's virtualization and related technologies. It was like there was the status quo being talked about, the existing use case of all those global companies running vSphere, but in a parallel, but somewhat disconnected, universe, was this shiny new thing, Photon.

It all seemed a little conflicted and inconsistent. But then I got thinking about the very real situation that VMware finds itself in, and that made me pause for a minute. VMware is, frankly, in a bit of a bind. It's full of smart people who totally understand that the broader world of IT is changing. But at the same time it has a customer base that is, for the most part, fairly conservative.

I wanted to dig into this with VMware, and who better to put the question to than CEO, Pat Gelsinger. I asked Gelsinger whether he felt this tension between wanting to move fast and being constrained by the conservatism of his customer base. Gelsinger was surprisingly honest in his response, conceding that this was, in fact, an issue for the company. He explained that he always wants VMware to move faster but needs to think about moving "fast enough." This theme was repeated in conversations with other VMware execs, specifically regarding the company's approach to containers. I was told that the company feels it needs to be "just in time" to bring a container management offering to market - too early is counter-productive, and too late is, obviously, damaging to the brand.

This desire to be just in time explains, perhaps, the somewhat incongruous nature of the container announcements at VMworld. While they happened on the day one keynote, they felt, at least to me, very peripheral to the company's core message about converged infrastructure and cloud management.

And this is what I keep coming back to. I understand the tension that VMware feels. But I can't help but think that there is a middle ground that would see them reconcile the messages between the old way of working and the new one. It feels to me that, despite nodding their heads in the direction of a progression and a continuum between the old and the new, VMware still sees the move away from heavyweight infrastructure as a chasm that they will only attempt to cross at the right time.

In Gelsinger's pre-VMworld interview with Network World, we can see this dual approach in action. When answering a post about containers, Gelsinger was at pains to point out his view that containers aren't yet enterprise-ready, but will be ready to roll once they have some VMware assets underneath them. While there is some validity to this argument given that containers are young and that regular enterprises don't yet clearly understand what they need to make them work within their particular context, it still comes across as defensive.

But is it defensive? Or is it merely a pragmatic answer to the sort of questions that Gelsinger and his team get on a daily basis from their typical enterprise customers? I talked to a few container-related vendors who were exhibiting at VMworld. Every one of them said the same thing - that the thousands of people who passed by their booths during the show had little interest or awareness of containers, and that the interest they did have was steeped in concerns about the risks they bring.

Given this perspective, it is hardly surprising and, indeed, it is probably wise, for VMware to be following a conservative approach. The question that remains, as it has for the past couple of years, is what the future holds for these traditional companies. Will they be swamped by the ever-increasing number of disruptive companies looking to knock them off the perch? And if they are, will VMware be left unable to respond to the needs and wants of a new type of organization?

Or will change be slower and more iterative, and can VMware move at a constant pace in order to keep its impressive customer base intact? Everyone has a different opinion on the matter, but one thing is for sure - there are big stakes up for grabs here.

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