Is VMware Planning a Public Cloud?

Could yet another major public cloud be in the works? CRN is reporting VMware plans to build out a public cloud that would aim to compete with Amazon Web Services, Rackspace, Microsoft and Google.

While VMware said its policy is not to comment on speculation, the report cites multiple unnamed sources who say VMware has acquired significant datacenter facilities in Nevada for what is known as Project Zephyr. VMware has gone this route to light a fire under its hosting partners to build out public cloud services based on vCloud, according to the report.

The move is surprising to hosting providers that have committed to offering their own public cloud services based on VMware's hypervisor and vCloud platforms. Hosting providers say VMware had given assurances it does not intend to compete with them, setting it apart from the company's arch-rival Microsoft, which is investing heavily in expanding its Windows Azure service.

"They have iterated and re-iterated that they had no plans to go into the cloud and infrastructure as a service themselves," said Aaron Hollobaugh, VP of marketing at Hostway. "It's a big surprise to me, but it's also an inevitable change in their desire to grow within the cloud marketplace because they are not having the traction they want from their service providers."

Hostway is not a VMware partner – it has aligned itself with Microsoft's cloud platform -- but the hosting provider faces similar competition from Redmond. Nevertheless, Hollobaugh believes Hostway is poised to address customers who require more higher levels of support. If the CRN report is true, his onetime employer, Denver-based Hosting.com, may face similar competition from VMware.

"This rumor has been around for a long time and I don't even know if it's real," said Hosting.com CTO Craig McLellan. "There's been no official communications with me. I think that in general, every technology manufacturer has embraced the channel while at the same time competing with the channel. The real emphasis has to be on working well together if this is in fact the case."

Despite VMware's insistence that it wasn't planning to offer a public cloud service, the company has made some moves in the past that could be construed as steps toward doing so. For example VMware acquired a facility in Washington that the company ultimately used to build a green data center, a move that sparked some scuttlebutt that it may be a front to operate a public cloud.

Another move that raised some speculation that VMware may be looking for its own public cloud came that same year in 2009 when the company took a 5 percent stake worth $20 million in Terremark, which was later snapped up by Verizon. Though VMware's stake in Terremark, which not surprisingly uses VMware's vCloud platform, was rather small, some wondered if the company wasn't positioning itself to buy the company outright before Verizon came in.

If in fact VMware decides to launch a public cloud, it makes one wonder if the change in heart comes from parent company EMC, the management changes at VMware and the company's efforts to bolster its cloud infrastructure with the acquisitions of DynamicOps and Nicera.

VMware customers and partners will be anxious to hear the company's public cloud intentions or lack thereof at this month's VM World conference, if not sooner.

Posted by Jeffrey Schwartz on 08/02/2012 at 1:14 PM