A Conference Note From Nancy Piccin

VMware Inc. has been touting its “software-defined data center” concept for several years, and this year’s announcements pushed further into that territory. OTR Global met with several existing sources at the conference and also talked with new acquaintances about how the new technologies could drive changes in how customers think about and buy IT resources.

Photo mosiac of past attendees

Processing moves back into the server: VMware unveiled Virtual SAN (vSAN) and NSX, a virtual networking product. Channel partner sources were enthusiastic about the potential for these new products to reduce cost and complexity by performing data processing functions at the hypervisor level, using flash in the server, rather than out on the network or in a storage array. Years ago, those functions were moved out of the server to avoid taxing other processing needs, but with advances in chip technology, the pendulum is moving back the other way. “If Intel [Corp.] can keep putting more transistors into chips, think of what you can do with tightly coupled flash memory [inside servers],” one source said.

This source, a large channel partner who does business with multiple storage and networking vendors, said the ability to virtualize storage within servers -- thereby eliminating the need to buy a separate SAN -- is especially attractive to what he called “emerging technology” customers (those who are just beginning to need sophisticated infrastructure). Although traditional IT shops may move more slowly to new architectures, he said emerging IT customers are looking for ways to delay or even avoid buying storage arrays. The NSX and vSAN announcements help them do exactly that while using VMware, and will expand VMware’s customer base.

He said emerging customers also find vendors like Nutanix Inc. and SimpliVity Corp. (both of which had prominent booths at the show) attractive because they pack everything into a single enclosure. Their mindset, he said, is “Why do I need to buy all this stuff when I can do everything in one box?”

Another channel partner who was not at the show agreed the converged infrastructure approach would be attractive to startup customers. “The whole ‘data center in a box’ concept is maybe the most interesting thing to me; that’s not a bad story,” he said. But he was more skeptical about the approach for existing enterprise users. “If I’m a VMware customer, the question is whether I am willing to spend the money to get there. All new gear to do what I’m already doing? It will translate to more licenses, and more expensive licenses.”

Another partner who was at the conference also said he believes the vSAN approach will be more attractive to lower-end customers. “The vSAN doesn’t have the features and functions for enterprise, which is where we play – it’s more of a mid-tier package,” he said.

Commoditization is easier: Shifting workloads into the server also make it much easier to use commodity hardware rather than premium brands. Nearly every source we talked to commented on one conspicuous absence: “The other big thing from our point of view is that there was no Cisco [Systems Inc.] on the NSX slides,” one said. Another said, “The fact that Cisco was not on the slides speaks volumes.”

Several sources said the approach also risks pushing storage partners (including NetApp Inc.) away. “Whose storage you use starts to matter a lot less. The idea that ‘We’re going to be an EMC [Corp.] shop or a Cisco shop or an NetApp shop’ -- who cares?” one said. “It will be years before this really happens, but it raises the potential.”

VMware’s competitive position improves: A couple of sources said the NSX and vSAN products could restore VMware’s lead in hypervisor technology. “We all knew it was coming,” one said, noting that with the new products, VMware has “one-upped” Microsoft Corp.’s virtualization play. “Hyper-V can’t do either of those things. Microsoft is working on it, but they’re not there yet.”

However, another source was skeptical. “Microsoft is still going to beat up VMware over the next 12 months,” he said, noting the VMware approach remains significantly more expensive and is not generally available yet.

Hybrid cloud extends VMware’s reach: VMware also unveiled vCloud Hybrid Service (vCHS), which will provide cloud-based storage and easily integrate with customers’ private clouds. Datalink Corp. (a VMware partner with a large practice dedicated to building private clouds with NetApp’s FlexPod and EMC’s Vblocks) was running a demonstration of how the service worked at its exhibit on the show floor. A Datalink representative said customer interest was very high. “It’s been nonstop for three days,” he said.

Footnote: Struggling for federal sales: One source at a start-up storage vendor who sells into the federal government said sales are slower than expected heading into his fiscal year-end (Sept. 30) -- not because agencies are short of funds, but because there have been personnel cutbacks and furloughs that make order processing difficult, consistent with commentary in OTR Global’s August Palo Alto Networks Inc. report. “A lot of contracting shops have shut down. Or there is money to spend, but it has to go through a system command, which has said ‘no more orders.’ You can’t get any meetings on Thursdays and Fridays because everyone is on furlough,” he said. “And the money goes away on Sept. 30.”

Photos by Nancy Piccin