Imagine a business where you essentially enjoy a near-monopoly position and sit on a public market capitalization of nearly $50 billion on $8 billion in annual revenues. Sounds awesome, right? What's less awesome is when an open source, disruptive technology comes along, without a viable business model and relatively no revenue, and suddenly your entire franchise faces a lingering demise.
Welcome to VMware's world.
The Docker Death Star
For years, VMware has insisted that the Docker-spawned container revolution was a tailwind, not a headwind. Read between the lines of a recent survey of more than 135 channel/systems integrator partners by Diamanti, a Goldman Sachs container infrastructure startup, and the truth seems less flattering. VMware, which sees 80% of its revenue coming through the channel, is about to see the channel implode. Those same partners that made VMware fat with revenue now see better opportunities with containers.
SEE: Why containers are critical to successful DevOps projects (Tech Pro Research)
This is doubly significant because channel partners, like analyst research, tend to be a lagging indicator of technology trends. If that's the case with containers, VMware has even more to worry about than supposed. What surprised me in this report was that nearly half of the respondents are already working with Docker containers and nearly a third are using Kubernetes for orchestration:
More than half believe containers will be competitive with existing virtualization technologies or a "complete replacement," according to the report. As for when, roughly 63% identify the container opportunity as "now" or within the next 12 months. This is a boon for container vendors. For VMware? Two-thirds said VMware has the most to lose from the accelerating adoption of containers.
Killing me softly
Sure, it's also true that most workloads today still run behind corporate firewalls, most likely on VMware technology. VMware revolutionized the data center at a time when enterprises were desperate to contain the size of the footprint of their massive computing centers. The old joke was how much would it cost to drop another rack into the data center? The answer was something like: "$10 million because we need to expand into a new building - we're out of space."
In light of that, VMware became hugely successful by driving much greater efficiency over hardware servers in the data center. So, VMware does have friction going for it. It also hasn't been sitting still on containers.
SEE Special report: Riding the DevOps revolution (free PDF) (TechRepublic)
VMware understands its customers well and has made a series of announcements to embrace different cloud approaches and to even make nice with Kubernetes. The company has partnered with AWS and Google, and has even joined the Cloud Native Computing Foundation. It is willing to work with almost any partner that can help it keep a grip on its massive installed base of vSphere customers.
This doesn't change a core weakness in VMware's story: VMs rely on hypervisors. Not only do containers offer a direct replacement for VMs, they can also come with significant performance and other benefits, like not paying the VMware tax.
"VMs were designed to replicate physical servers and that comes with a lot of overhead," Jeff Chou, CEO of Diamanti, told TechRepublic. "Containers let customers run multiple applications on the same operating system with much less overhead than the software overlay of a hypervisor."
Chou also argued that containers on bare metal is where the market is going. "Bare metal promises the opportunity to run an order of magnitude more containers than on VMs," Chou said.
All of this means that VMware, desperate to play nicely with containers, may struggle to make containers anything less than a nearly "fully operational" Death Star for its existing business. IT still buys servers, and hence will continue to pay VMware to help manage them.
Developers, however, are in love with containers. Those developers may be running the Death Star, and VMware has yet to show that it can effectively cater to them.
- Special report: The art of the hybrid cloud (free PDF) (TechRepublic)
- DevOps: The smart person's guide (TechRepublic)
- Simple ways to instill more quality into DevOps (Tech Pro Research)
- VMware snaps up cloud startup CloudCoreo (ZDNet)
- What is Docker and why is it so darn popular? (ZDNet)
Matt Asay is a veteran technology columnist who has written for CNET, ReadWrite, and other tech media. Asay has also held a variety of executive roles with leading mobile and big data software companies.