We don’t normally comment on commentary at the 360is blog. Most of our postings are more substantial, whitepapers, guides, seminars, or software we’ve produced or packaged. However there is a good posting (Cloud Hosting & Service Provider Forum) by Richard Talaber (ex-CTO’s office at VMware) on LinkedIn and thought I’d reflect on it here.
For those of you who aren’t on LinkedIn, or don’t want to join the group in question, Richard was responding to Beth Pariseau’s article at TechTarget on VMware’s recent abolition of the vRAM tax.
Richard makes the case that VMware is probably not going to be the right virtualisation stack for a commodity “$75” per-month per-VM hosting/cloud service, vRAM tax or not. He also believes that VMware still makes sense for the smaller market for high-value fully-managed VM hosting, with load balancing, monitoring, fault tolerance, and high performance throughput bells and whistles.
Mostly I agree with Richard, he makes sensible arguments supported by good assumptions but in-spite of this I still see more than a few problems for VMware in the short and medium term. Let me explain...
All service providers, including Cloud & Hosting providers, need to own their own infrastructure if they are to have a sustainable business. Whether it be a fibre optic network (in the case of a carriers) or their provisioning, monitoring, and management stack in the case of Cloud providers. Unless a service provider owns his own infrastructure, he cannot exercise full control over his costs. Cost control is vital in a service provider business, as profits depends upon volume, and any tax on profits is unwelcome, especially one that grows in-line with that volume.
Hardware must be paid for (hopefully using inexpensive long-term debt secured against assets you also own), but if there is even a chance of finding a cheap or inexpensive hypervisor-and-management-stack then Cloud providers have to take it. This is why you see so many of them with Xen, XenServer or KVM. This is why the list of users of OpenStack reads like a who’s who of Telecoms and Hosting. For those that argue I'm not considering TCO, think about this. I've hired good technical guys, pay them well, they work hard for me, I'm supposed to be a player in Cloud. If my guys can’t engineer something solid, maintainable, and cost effective then what am I doing in this business? These guys and the platform they build from KVM, Xen, or whatever, are my long-term competitive advantage. At least until I'm big enough to be building my own data centers from scratch.
If I'm a Cloud provider and my maintenance renewal (or any other per-unit-customer cost) jumps even 1%, its a big deal, I've got a bazillion systems after all.
For parts of the infrastructure that can’t be wholly owned, or cannot be had for free (with effort from my hardworking DevOps guys), the Cloud provider's only weapon is over-subscription. Pay for the product then figure out how to dilute that cost by maximising over-subscription, balance providing a great service with running the hypervisor and server hot. It is a very difficult balance. This is one of the reasons the vRAM tax was so wildly unpopular with Cloud providers, it took away one of their profit levers, or at the very least shortened it.
Hosting/Cloud providers are currently at a very immature stage in life, they are talking about RAM, and IOPS, and vCPUs or is it CPUs or is it Cores or Threads? What do any of those things mean? What about transfer rates, or latency, what kind of cores? What is a thread? These things don't mean much to business people so good luck trying to explain them. When business sees 3 prices for what they perceive as essentially the same service, they are going to go for the cheapest and find out later if it was appropriate. By Richard’s own admission, 80% of workloads are relatively modest in demands. VMware will not manage to get across an argument based upon performance; a performance lead of the size VMware achieves (or even aspires to achieve) is not a sustainable advantage for the Cloud provider market.
Richard's last sentence is key: "Perhaps VMware should consider a public cloud price that is significantly less expensive than a private cloud price.". Logical. If the public cloud VMware price were somehow so small as to barely matter, then service providers would not spend time fiddling around with the competition or knocking up free alternative platforms....but how to segment the product? I think it is too late now, there are alternatives in-use, there are engineers out there with experience of building these infrastructures for service providers, and even if you can't afford to buy such people you can probably rent them. Talk to us.
- Better performance is not a sustainable advantage for VMware.
- A richer feature set probably isn’t either.
- Cloud providers dislike anything that handicaps their ability to over-subscribe.
- Cost that grows in-line with customer volume is a no-no, unless it is absolutely impossible to avoid.
VMware could make their product more appealing to commodity Cloud providers, but in order to do so they’ll have to start thinking more like them. Or talk to someone who does. 360is has helped companies like CheckPoint, HP, and Microsoft understand the Cloud service provider market. You know where to find us.