“Pat, funny to see you here today.”

Those were the first words out of the mouth of Andy Jassy (above left), Amazon Web Services’ chief executive, after he appeared onstage at a press conference Thursday with VMware Inc. CEO Pat Gelsinger (right). The wry comment was a reflection of the traditional rivalry between the largest public cloud company and the maker of private cloud software.

The two companies announced a landmark partnership in which customers of VMware, starting in mid-2017, will be able to move their computing jobs run on VMware software to AWS’s cloud in order to to take advantage of more flexible and lower-cost storage and computing services in the cloud. VMware Cloud on AWS could reset the competitive landscape in computing, allying a surging cloud giant with a data center mainstay.

After the announcement, the two executives talked with John Furrier, co-CEO of SiliconANGLE Media, and SiliconANGLE Editor in Chief Robert Hof about why the onetime rivals joined together and how the new service could speed the pace of customers’ move to cloud computing. This is an edited version of the conversation.

Q: Pat, why go with AWS when you had a lot of other potential cloud providers?

Gelsinger: Our customers are using Amazon, and Amazon is there engaging the enterprise customers, who use VMware. Our customers are saying this is pretty straightforward: Put those two things together. So it’s a response to what customers were already asking us for. We believe that bringing together a very seamless, unique hybrid service offering will accelerate customers’ adoption of the cloud. This is a win-win-win–a win for VMware, a win for Amazon, a win for customers.

Q: What do you say to the critics saying VMware capitulated on the cloud and Amazon wins?

Gelsinger: We are giving them an opportunity to consume the VMware technology in a powerful way. We’re integrating and creating new, differentiated services together. … Now there’s no “or,” there’s an “and.” I suspect customers will make this their fastest way to get the SDDC [Software Defined Data Center, the name for VMware’s private cloud architecture]. In some cases, I think it will actually help us bring that back on-premise.

Jassy: People who make comments that this is good for one company and not really good for another, they’re just missing the point. At the end of the day, all of us are in business to serve customers. Customers are very clearly demanding to use the same software that they use on-premises alongside AWS and the public cloud. The real beneficiary is our customers.

Q: Andy, is this just another service to Amazon?

Jassy: We’re still at the early stages of the meat of enterprise adoption and now you’re getting to these enterprises that are really exploring adoption [of the cloud] for the first time. They say, I don’t have giant IT staffs, I want to be able to leverage the investments I’ve made with software the last bunch of years.

Q: With this deal, what are the network effects for your businesses?

Gelsinger: If we make it easy for customers not to make hard choices, they will go faster. For us, this [product] makes it easier for them to have a cloud strategy. They don’t have to re-platform applications. So it accelerates both our businesses. Some have argued that the cloud is all about cost. I think the primary reason cloud has become so powerful is that it’s easy. It allowed people to go faster.

Jassy: The more customers we have on the platform, the more feedback we get, the more it turns into features. The same is going to be true here in this hybrid evolution. … As we learn more together, we’re going to keep iterating on the offering. So there’s a real network effect there too: The more customers who are using the offering, the more feedback we’re going to get and the more we’re going to keep iterating on it, and the better the offering is going to be.

Q: Pat, doesn’t making it easier for customers to move to the public cloud create even more of a divergence down the road from your base strategy of continuing to sell software for private data centers?

Gelsinger: Remember, my business model is helping people take advantage of the VMware intellectual property — a license or a service. You’ll hear in our earnings call how we’re doing, but our business model has an increasing service portion. We’re going to be doing perpetual licenses for well, well past my tenure as a CEO, which I suspect will still be long.

Q: Why did it take so long to conceive this product and roll it out, which won’t happen until mid-2017?

Jassy: If you looked three or four years ago, the number of enterprises running significantly on the cloud was very different. Enterprises have gotten excited about operating in the public cloud to a much more dramatic extent. Customers asked about it before but weren’t demanding it to the same extent that they have been over the last year. That’s what really changed.

Gelsinger: Three years ago, the market was very different and the technical challenges seemed way too large for the market opportunity. Now we’ve overcome the technical challenges, the market is here, this is a compelling offering.

Photo by Seth MacMillan