It’s easy to think, in these days of ever greater cloud infrastructure adoption, that VMware doesn’t have the clout they once did in the IT world. In fact, I recently had a client demote the vendor from their top 20 list, where they’d sat for many a year. More businesses are moving to Azure and AWS than ever before, IaaS usage is growing at an exponential rate, and cloud is, as we all know, very much the buzz word of the decade. And it will be for some time to come. But don’t write off the world’s largest provider of ‘traditional’ (some might say legacy) on-premise datacentre virtualisation just yet.
In the money
A cursory look at their financial results for 2018-19 shows annual revenues of nearly $9 billion, a 14% increase on 2017-18 and, by the way, a record for VMware. Q4 (November – January) accounted for nearly a 3rd of that with $2.6 bn, an increase of 16% on the same quarter the previous fiscal year. License revenue was responsible for just under half of Q4’s revenue but, again, there was a significant increase, year on year, of 21%. The fact that the licensing was only half the quarter’s revenue tells you everything you need to know about where VMware is making a lot of its money – support, professional services and, increasingly – wait for it – cloud subscriptions.
VMware in other people’s clouds
You probably already know that VMware have tied up deals with Amazon AWS and Microsoft Azure, alongside all of their other VMware Cloud Foundation providers; and it was recently announced that Google are joining that particular cloud party too. So, what’s the point of these partnerships? Two words – hybrid cloud. Hybrid cloud is a term used to describe a technology platform comprised of 1 or more cloud services (IaaS usually) and on-premises datacentres. In the context of VMware, it very much involves the data centre. To be clear, though, these partnerships do not follow the usual rules of public cloud services.
How it works
When you are buying an IaaS service on Azure, AWS, or Google Cloud, you are normally subscribing to the use of one or more VMs on their shared server platform in one of their global datacentres. With the VMware hybrid scenario, however, the “public” cloud element is actually hosted on dedicated servers. The beauty of this approach to technology hosting is that you can effectively run your own VMs, which may have been deployed on-premise in your own vSphere-based datacentre, natively on the cloud providers’ platforms. You can, therefore, use the this approach to protect your investment in on-premise VMware licensing, by continuing to use your licensed products in your datacentre, whilst taking advantage of the benefits of public cloud offerings – application scalability, offsite DR scenarios and rapid scalability when required for spikes in demand.
Licensing & Pricing
As far as paying for it goes, you would still need to licence the on-premise part of the solution with VMware through the usual channels – whether that be an ELA, EPP or other licensing program. The cloud side of the platform is paid for, unsurprisingly, via subscription. Though instead of subscribing to VMs, as may be the usual case if your organisation already has a cloud presence, you subscribe to the number of physical host server CPUs your technology is consuming. Another benefit to note, is the licensing angle. Because the Azure, AWS or Google cloud servers involved in this unified technology platform would NOT be shared servers, the Bring Your Own Licence policies offered by many software vendors are obviated. That said, Microsoft have recently extended the need to have SA to dedicated cloud platforms, as well as shared, so you would still need to watch out.
Barry delivers a comprehensive VMware licensing training course as part of our LISA training platform. You can check it out with a free trial here https://lisa.training/free-trial/
About Barry Pilling
He is an expert SAM consultant who has worked with multiple clients across a huge range of industry sectors. He specialises in data centre and infrastructure licensing and processes across all platforms, and is a firm believer in simplifying software asset management.
He is a member of Working Group 21, which defines ITAM standards for ISO, a contributor to the Campaign for Clear Licensing, and can often be found trying to help people on the ITAM Review forum.
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