Where Does VMware Play In Cisco-EMC Alliance?

EMC and Cisco are raising the profile of their VCE Coalition to combine storage, server, networking, and virtualization resources into an integrated offering, a move causing many solution providers to question the value of VMware as an independent entity.

Moves to introduce VCE as a formal entity with a high-level top executive in charge call into question how that coalition will impact virtualization technology kingpin VMware’s relationships with companies such as HP and IBM, which are top rivals to EMC and Cisco,

The VCE (Virtual Computing Environment) Coalition, which is being led by EMC and Cisco, will mark its first public appearance by being a premier sponsor of EMC World, which will be held in Boston next week.

EMC and Cisco late Wednesday night also appointed Michael Capellas, the former Compaq chairman and CEO and former Hewlett-Packard president, to lead all aspects of the VCE Coalition. Capellas was also appointed to the complementary role of CEO of Acadia, a Cisco-EMC joint venture with investment from Intel and VMware.

EMC, Cisco, and VMware in November unveiled VCE and Vblock Infrastructure Packages, a series of pre-configured, pre-tested storage solutions based on EMC’s Symmetrix or Clariion storage arrays, Cisco’s Unified Computing System (UCS) and networking switches, and VMware’s vSphere server and cloud virtualization platform.

The two in November also introduced Acadia, a joint cloud infrastructure offering geared to service providers and large enterprises. Acadia is expected to be used to deliver Vblock architecture through the cloud and has seen investments from not only VMware but also Intel, on whose Intel Xeon processors the Vblock architecture runs.

EMC in February also appointed a high-profile channel executive, long-time channel chief Pete Koliopoulos, to head channel programs related to the Vblock coalition.

VCE, when it was first unveiled at EMC World in 2009, actually was an acronym for what at the time were touted as the three primary partners in the group: VMware, Cisco, and EMC.

However, by Fall of last year, VCE became known by its current formal name, Virtual Computing Environment, a change that helped de-emphasize the role of VMware.

That de-emphasis was needed because, while VMware is majority owned by EMC, it still operates as an independent company. As such, VMware partners with nearly all the major server vendors, including such companies as HP, IBM, and Dell.

At the same time, however, HP and IBM are arch-rivals to EMC on the storage side and Cisco on the server side.

NEXT: Is EMC Taking Risks With HP’s VMware Relationship?

HP, along with its solution providers, is considered by many in the channel as VMware’s biggest go-to-market channel for its technology, followed by companies such as IBM.

Therefore, any moves which make the relationship between EMC and VMware appear tighter than before spark concerns about VMware's partnership with HP and with other vendors, according to solution providers.

HP solution providers who are building private and public cloud solutions on HP's converged infrastructure are skeptical about whether the HP-VMware relationship can continue in its present form.

"I can't see how the HP-VMware alliance is going to continue to work," said one solution provider CEO, who is partnering closely with HP and VMware. "First VMware is EMC owned and EMC and Cisco are coming together. For HP it is like sleeping with the enemy."

Executives related to the VCE Coalition did not return requests for comment on this story.

Any joint development between VMware with EMC and Cisco that gives Cisco servers and EMC storage better VMware performance than HP servers and storage could potentially kill VMware’s relationship with HP, the solution provider CEO said.

"That is not the case right now, but if they start fine tuning VMware to run better on Cisco and EMC than on other hardware platforms, that would be big problem for HP," he said.

HP's Virtualization Elite program supports not only VMware, but Citrix and Microsoft, said the solution provider. "All the major hardware vendors are going to have to hedge their bets and work closely with Microsoft and Citrix as well because VMware is owned by EMC," he said.

This may already be starting.

HP and Microsoft in January unveiled a three-year agreement to invest $250 million to significantly simplify technology environments for businesses of all sizes, with a special emphasis on cloud computing and virtualization.

While the expanded HP-Microsoft partnership was touted as making it easier for the two companies to offer a complete hardware-software stack at a time when vendors are looking at ways to provide complete solutions, it was also seen as signaling the start of a rift between HP and VMware.

NEXT: Partners Not Sure EMC-VMware Wants To Risk Outside Relationships

Bob Venero, the president and CEO of Future Tech Enterprise, a Holbrook, N.Y. VAR 500 power, said he doubts that EMC and VMware will do anything to endanger the astronomical sales being powered by HP -VMware virtualization solution.

"The amount of HP server infrastructure out there dwarfs anything Cisco has out there right now and probably will in the future," said Venero." VMware and EMC are going to be somewhat like Switzerland in this deal. They have to be because there is too much for them to lose by cutting off or hurting HP as a partner here. Is VMware EMC going to walk away from that business for the potential that the Cisco solution is going to take off?"

The percentage of revenue VMware gets from its Cisco relationship is miniscule, while the HP partnership is a huge revenue generator for VMware, said Mark Gonzalez, president of Nth Generation, a San Diego-based solution provider and HP partner.

For that reason, Gonzalez said, partners should ask VMware a couple of questions.

’(Why are there) so many joint announcements between Cisco and VMware if their market share was so low? Aren’t you concerned what that might do to your relationship with HP, IBM, and Dell? It just feels like the risk/reward ratio is just not there, he said.

VMware has no choice but to work with HP or risk loosing a big part of its market share, said Dhruv Gulati, executive vice president of Lilien Systems, a Larkspur, Calif.-based solution provider and HP partner.

This is especially true as VMware moves from its role as the company that spurred the growth of the virtualization market to just another top vendor, Gulati said.

’Around three to four years ago, VMware was it,’ he said. ’But now the market is maturing. It’s not the game changer it once was.’

That role will continue to change as companies like HP are able to increasingly work with alternative partners such as Microsoft, and increasingly develop their own technology that virtualizes more of customers’ IT infrastructure, Gulati said. He cited as an example HP’s Virtual Connect, which virtualizes part of the networking infrastructure, as well as other technologies that virtualize applications.