Microsoft Exec Touts Hybrid Cloud Approach, Tells VMware 'You Can't Dabble In Public Cloud'

Microsoft apparently feels it has amassed enough experience running its Azure public cloud to start doling out advice to rival VMware, which is a newcomer to this space and is reportedly struggling to gain customers.

"You can't dabble in public cloud; you're either all-in, or not," Mike Schutz, general manager of cloud and platform product marketing at Microsoft, said in a recent interview. "This is not a side project for us. We're in it in a very big way, and our partners get that."

VMware intentionally avoided the public cloud market for years because it didn't want to compete with its service provider partners. But last May, the Palo Alto, Calif.-based vendor rolled out its vCloud Hybrid Service (vCHS) public cloud, touting it as a "safe landing place" for customers to move their VMware private cloud workloads.

Several VMware partners told CRN that vCHS isn't yet generating much interest from customers. In addition to being priced too high, partners said vCHS' primary use case is Infrastructure-as-a-Service, which is already a crowded market.

Related: VMware Gives Channel Partners OK To Sell AirWatch Cloud-Based Mobility Software

VMware's cloud lacks the kind of services that would differentiate it from Microsoft and other cloud competitors, sources told CRN, speaking on condition of anonymity. VMware has been pitching disaster-recovery-as-a-service, but it hasn't gained much traction, sources said.

"When we work with customers, they are going to Amazon Web Services and Azure," said one VMware partner. "The only vCHS deals we’ve done were part of enterprise licensing agreements. When we propose vCHS outside of an ELA, the price is always too much."

A VMware spokesperson declined to comment on the partners' assertions.

But in VMware's second-quarter earnings last week, COO Carl Eschenbach said vCHS is seeing "very good uptake" from enterprise customers, though he noted that the service is still in its "early days" on the market.

Eschenbach said VMware's hybrid cloud business grew nearly 80 percent year over year. Yet it's unclear how much vCHS contributed to this, as this figure also included revenue from VMware's vCloud Service Provider Program.

Meanwhile, on the private cloud front, Microsoft is continuing to hammer its well-worn message about Hyper-V being cheaper than VMware. At Microsoft's annual partner conference earlier this month, COO Kevin Turner said Hyper-V is four times cheaper than VMware's server virtualization.

Schutz told CRN this stems from the "licensing premium" VMware charges and from improvements Microsoft has made to its server virtualization software, which enable it to support a greater number of users.

"Our on-premise virtualization and private cloud products have matured to the point where the cost differential with the public cloud is minimal. Why would I pay two or three times the amount for equal or lesser capacity?" Schutz said.

It's too early to say VMware's public cloud play isn't working out. VMware has a huge channel and a solid reputation with partners. In recent months, VMware has made vCHS available in China, Japan and the U.K., while also launching a program that offers training to partners that are new to public cloud.

That said, Microsoft's head start in the public cloud has vaulted it into a leadership position in the hybrid cloud space, according to some partners that have long worked with both vendors.

"In my opinion, Microsoft has clearly leap-frogged VMware in terms of the completeness of solution, simplicity of implementation and integration," said the source, who asked not to be named to protect his vendor relationships.

PUBLISHED AUG. 1, 2014