UPDATED 09:16 EDT / MAY 27 2015

NEWS

How Virtustream fits into EMC’s Federated Hybrid Cloud

EMC’s cloud strategy is rapidly coming into focus as it continues a string of acquisitions aimed at building out its newly formed cloud managed services business.

The latest of these – its $1.2 billion takeover of Virtustream Inc. – is a further indication that legacy vendors aren’t going to be shy about using their cash hordes to buy major positions in the evolving cloud. Enterprises that are reluctant to move to the cloud if it means working with smaller, albeit disruptive vendors and would prefer to stay with a ‘big name’ will naturally gravitate to their longtime enterprise partners. By gobbling up companies like Virtustream, EMC gives this kind of customer a name it can trust, packaged with the energy and innovation of a disruptive startup.

With its Federation structure, EMC has demonstrated that it doesn’t strangle innovative startups with big-company bureaucracy. EMC has left VMware Inc. well alone, and its spinoff of Pivotal Software, Inc., shows it has the foresight not to meddle too much. Folding Virtustream’s xStream Cloud Management Platform into its portfolio provides EMC with the unique ability to offer a managed services capability at scale.

As Chad Sakac, President of Global Systems Engineering at EMC noted in this post, Virtustream gives EMC a managed services business in the cloud, allowing it to help enterprises move software like SAP SE’s HANA to the cloud and keep everything running smoothly. Virtustream enjoys a cozy relationship with SAP, which led one of its investment rounds, and even maintains a sales office in SAP’s home town of Walldorf, Germany.

Sakac said Virtustream opens new markets for EMC. “EMC does managed services today for a lot of customers, but only really around storage services” he wrote. “But there’s a huge demand for more, things like the Federation Enterprise Hybrid cloud on VxBlock and VxRack as a managed service. When you see that demand – you need to jumpstart things. Virtustream jumpstarts a broad managed services business in the Federation.”

Virtustream won’t buy EMC an automatic leadership position, but it will help to fuse together some of the other services in its portfolio, said Wikibon analyst Stu Miniman.

“When it comes to IaaS, EMC’s primary offering is the Federation Enterprise Hybrid Cloud (EHC) where the public cloud is based on VMware vCloud Air and the vRealize Suite,” Miniman said. “OpenStack can be part of EHC, so now there are three overlapping software families for cloud management: VMware vRealize, OpenStack-based options and now, Virtustream xStream.”

The acquisition fits naturally with EMC’s “Platform 2.5” strategy, in which Pivotal Web Services provides a “simple and easy developer on-ramp” for developers to build and run 12-factor cloud apps, as Sakac notes. When choosing to run these new apps at scale, developers can choose from Amazon Web Services cloud or the Federation ecosystem, which includes the public cloud (vCloud Air), on-premises (Federation Enterprise Hybrid Cloud), and now as a managed virtual private IaaS cloud too.

“Pivotal is the focus for new cloud-native applications and this is not an area that Virtustream targets today,” Miniman noted. “Look for Virtustream in what EMC calls “platform 2.5”.”

With the addition of Virtustream, EMC is now theoretically able to support all kinds of applications and workloads on every type of cloud. Of course, combining companies and cultures is never easy, and the challenge for EMC will be to integrate Virtustream smoothly into its wider Federation. If it can do so, this should prove to be a very good purchase indeed.

Photo Credit: Pierre Marcel via Compfight cc


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