VMware has been in the news recently – a valuable asset for Dell, caught between the Dell-EMC deal (see analysis of the deal here). Just a couple of months ago VMware had its VMworld, a forum for VMware to articulate its strategy to customers, partners, media and analysts. VMware’s 2015 theme “Ready for Any” was centered on the challenges that IT professionals are facing today - security, mobility, application delivery and hybrid cloud – and the company’s strategy of supporting “One Cloud, Any Application, Any Device” as a means of empowering IT management to respond to these challenges. VMware’s vision is to “enable an architecture that lets IT deploy or consume capacity from a cloud without having to worry about the physical location or who the vendor is. To do this VMware wants make sure that different form factors of the cloud (private, public, managed, etc.) connect or are transferable”.
Hybrid IT, including hybrid cloud, is no longer an appealing future proposition; it is a current reality as workloads increasingly run internally on a highly-optimized virtual environment connected to a public cloud, and public cloud resources are being widely used for developing and testing applications to be deployed on private or hybrid clouds. Many workloads process data in the public domain and simultaneously store sensitive data in the traditional data center to meet regulatory and compliance guidelines. Techaisle’s SMB & midmarket cloud adoption survey shows that within SMBs, use of hybrid cloud will continue to increase as both a conscious strategy and as a reaction to use of both public and private resources within a single infrastructure; hybrid use is expected to top 40% within the small business market, and will be used by two-thirds of companies with 100-999 employees.
Over the last two years, as virtualization penetration within enterprises has been slowing, VMware has been broadening its solution portfolio to deliver solutions for management and delivery of on/off-premise IT infrastructure. As a result, VMware’s product line has grown beyond compute: it rolled out vSAN for storage, NSX for network, and vRealize for management. Last year, VMware announced its vision of software-defined data center (SDDC) and introduced EVO:RAIL, which ties VMware software to partner hardware for a hyper-converged appliance. In the most recent VMworld this vision was extended to EVO:RACK: while EVO:RAIL was positioned as "SDDC in a box" suitable for midmarket businesses, EVO:RACK (now marketed as VMware EVO SDDC) is aimed at large enterprise customers. In Techaisle’s view, vSAN and EVO:RAIL are also relevant solutions for SMB customers looking to adopt hyper-converged infrastructure.
In 2014, VMware had announced integration between on-premise vSphere and VMware's own public cloud (vCloud Air) enabling businesses to migrate workloads to a VMware-based public cloud. In 2015, VMware extended the narrative to announce Unified Hybrid Cloud - built on SDDC and vSphere - to enable IT professionals run, build, deliver and secure any application, anytime and anywhere. Despite new offerings it is common knowledge that VMware still lags Amazon Web Services and Microsoft Azure in the public cloud market.
VMware is continuing its investment in network virtualization and in the future of NSX. It announced NSX 6.2 with added features such as inter vCenter NSX support, universal firewall rules and security groups, and Trace flow. Techaisle assumes a bigger game changer to be the integration between virtual and physical networks when VMware and partners such as HP complete the support of OVSDB in NSX to manage hardware virtual tunnel end-points (VTEPs).
Key market context
While enterprise market may be saturated, virtualization adoption within SMBs is far from over. Techaisle’s SMB & midmarket Server Virtualization adoption market trends study shows that US SMB server virtualization penetration has reached 54 percent (un-weighted), up from 41 percent two years ago. Within midmarket businesses the penetration has reached 88 percent and another 7 percent are planning adoption in the next year. Across the entire SMB community, there has been a 45% increase in off-premise virtualized servers in the past two years, an enormous shift that highlights the broader shift towards remote management of infrastructure resource. VMware has positioned itself to capitalize on the immense SMB opportunity, however, it needs to have a sales motion that is specifically targeting net new customers within SMBs rather than “mining” the installed base as in enterprises.
The real VMware SMB story is in EUC – enabling untethered mobility
The real story and opportunity for VMware, though, is in end-user computing.
Although much of the public debate around mobility involves hardware brands and feature sets and overall penetration rates and even BYOD (which is now passé), the real business benefit of mobility is delivered via applications that address specific task requirements within the business, and mobility management solutions that overlay the management and security structures needed to integrate these apps with corporate IT systems. In 2014, VMware introduced VMware Workspace Suite, an integrated platform for managing applications, data and devices. In 2015, VMware announced new End-User Computing (EUC) solutions including a technology preview of VMware’s new “Project A2” to accelerate Windows 10 adoption, a new VMware Identity Manager Advanced Edition, VMware Horizon 6.2 with a focus on helping businesses bridge the gap for traditional workforce to a more mobile and user- and application-centric experience and VMware Horizon Air, a cloud based services for delivering desktops and applications.
Project A2 is a new mobile centric approach to deliver and manage applications and devices for Windows 10 using AirWatch enterprise mobile management (EMM) and VMware’s App Volume application delivery technology. It is expected to help businesses easily upgrade to Windows 10 allowing IT organizations to move existing applications into the cloud with a uniform management experience.
And then there is VMware Horizon™ Air® - a family of cloud-services from VMware that enables the delivery of virtual desktops, applications, and desktop disaster recovery capabilities to end-users on any device, anywhere. VMware Horizon Air provides three distinct services: Horizon Air Desktops, Horizon Air Apps, and Horizon Air Desktop DR. A great set of solutions for SMBs who have the need to effectively manage mobile resources without the barriers associated with complexity, management and investment.
VMware also announced its new hybrid cloud-scale architecture, Project Enzo, to transform IT experience by combining the benefits of virtual desktops with hyper-converged infrastructure and the cloud. Project Enzo is expected to enable delivery of desktop and application services through its cloud service, VMware vCloud. It is aiming to provide a cloud-based management pane to build and deliver virtual workspaces, offering favorable economics and cloud simplicity for virtual desktops and apps via a modern hybrid architecture and hyper-converged infrastructure. With Project Enzo, SMB IT staff could potentially push out custom desktops in seconds. However, there is still a lot more to know about Project Enzo before making any definitive recommendations.
A related demand for identity management is increasing as SMBs shift towards cloud and mobile strategies. Mobility does not deliver business benefits painlessly. The introduction of mobility solutions has created new issues for SMB IT management, and suppliers who can help to address these issues will gain favor in this community. One such challenge is the need to address the “dual mode” user. In Techaisle’s SMB & Midmarket mobility adoption study, both small and midmarket firms report that users access a combination of business and personal resources via their business-connected (both corporate-owned and BYOD) mobile devices. This helps to reinforce the importance of systems that help manage mobile devices that deliver access to corporate information without downloading data and applications themselves and methods of securing data when it is exchanged between mobile devices and external users.
VMware’s Identity Manager Advanced Edition helps in managing user identity across platforms and devices. It is an “identity as a service” (IDaaS) solution for simplified access and identity management that supports delivery of a single sign on experience for Windows, SaaS and mobile applications. It offers one-touch access to nearly any application, from any device optimized with AirWatch (AirWatch is a VMware enterprise mobility management (EMM) platform with flexibility to support multiple use cases with unified management of endpoints, end-to-end security from devices to data center, and integration across enterprise systems) adaptive access. Identity manager is unique due to its ability to register a device with AirWatch and create a secure chain between the user, user’s device, operating system and the enterprise. VMware Identity Manager with adaptive access from AirWatch creates an industry-first single touch experience, authenticating a user against the enterprise directory without prompting for another password across device platforms.
Final Techaisle Take
It is clear that SMB IT needs to move beyond hardening the perimeter as a means of defining security. In today’s world, the most important security objective is to safeguard precious data and application assets through a combination of monitoring, network segmentation, encryption and related tactics. This clarity, though, does not itself help SMB IT staff to adjust to the new threat sources that accompany mobility solutions serving the expanding mobile workforce, its activities and its requirements. With continuous integration across platforms, including AirWatch, Horizon, NSX and Identity Manager, VMware is focused on delivering access to corporate resources as consumer-simple and enterprise secure.
SMB employees continue to store data across multiple repositories with an average employee using at least 6-12 different tools. IT needs to balance the user need to access all resources from one central location with the corporate requirement to securely manage and store corporate content, and to seamlessly combine content management with knowledge management. VMware is responding to demands from SMBs for effective, manageable security technologies integrated within content and collaboration platforms.
Mobile devices are an essential component of mobility – but mobility itself extends beyond hardware to applications, solutions and work habits. Similarly, while the “dual mode” user represents a specific problem for SMB IT staff, the challenges of supporting a mobile workforce go well beyond the device. AirWatch EMM helps enterprises address these concerns by providing flexible deployment options and user-based policies.
The trend towards increased diversity and sophistication of mobile app portfolios is driving a concurrent requirement for mobility solutions capable of automating the management, security and infrastructure associated with complex mobile portfolios. However, mobility solutions are not a “set it and forget it” type of technology. These solutions require continuous tuning and ongoing investment as their scope expands to match the burgeoning requirements of an increasingly-complex mobile environment.
VMware Identity Manager Advanced Edition handles federation and management of user identities. The new standalone edition includes elements of AirWatch console, making good use of adaptive access. However, the market for federated identity management tools is crowded, and the VMware’s offering is a new entrant in the ongoing race to build critical mass of adoption.
VMware is certainly creating the right sound-bites. However, in stark contrast to the very high proportion of SMBs who recognize VMware as a leader in virtualization, Techaisle research has found that less than 25 percent of SMBs consider the company to be a leader in mobility management solutions. Clearly, VMware has a lot of work to do to enhance its position in this market. Techaisle believes that the solution may lie with how VMware manages the channel partners that deliver to its SMB customers. Specifically within the SMB market, VMware should make midmarket businesses a high-priority target segment, especially the “innovation-driven” and “agility-focused” segments identified in Techaisle’s SMB and midmarket segmentation study. These groups, which constitute 27% and 19% of the midmarket respectively, see mobility and cloud as high priorities for driving innovation, agility and reducing costs within their businesses – and as a result, may be receptive to VMware’s platform-driven solution.
VMware has always been present in selling into the SMB segment, but now it has really begun to thread the SMB needle in the hopes of helping SMBs with spanning the gap between cloud and the mobile future. This is a major opportunity – and also a tremendous challenge, one which will require not just VMware’s best efforts but also the conscious and coordinated support of VMware’s channel. The opportunity to stitch together advanced, any location/any app/any device infrastructure is unfolding, but it will require collaboration spanning IT innovation and account-level integration to create the seamless infrastructure fabric that VMware and its SMB market envision.
Research You Can Rely On | Analysis You Can Act Upon