Microsoft And VMware Tussle Over Private Clouds

Microsoft is upping its efforts to compete against virtualisation giant VMware in private clouds, claiming to offer an application-centric solution that is “very different” from that offered by VMware.

Yesterday, Microsoft announced that customers across Europe are choosing it to help them migrate to the cloud – naming the Welsh Rugby Union and Team 7 among its latest wins. According to Edwin Yuen, director of virtualisation and cloud strategy in the Windows server and management marketing group, people are choosing Microsoft’s private cloud solution because of the company’s expertise in software and applications.

“With the cloud you’re not so much focused on bits and bytes and servers and connections; you’re much more focused on applications, and that’s where we’re really very strong,” Yuen told eWEEK Europe. “We have a deep application insight. We understand what’s going on with the programs. And if you know what’s going on you can do much more.

“VMware’s very focused on what they’re good at, which is how much they can see of virtualisation and how to manipulate those resources,” he added. “It’s not so much about the applications.”

Licensing model changes anger customers

Yuen also criticised the recent changes made by VMware to its licensing model with the release of vSphere 5 earlier this year. He explained that, under its new vRAM-based pricing, VMware now charges per virtual machine, so the more that customers virtualise their machines, the more they end up paying.

“Where previously you would get an economic advantage for growth, you actually now get an economic disadvantage for growth,” Yuen explained. “That’s a fundamental change. Now every time they press a button, they have to think about the economic result of that.”

Microsoft recently produced a white paper (pdf) claiming that a VMware private cloud solution can cost from four to nearly ten times more than a comparable private cloud solution using Microsoft’s Hyper-V technology over a period of one to three years.

However, at the VMworld 2011 conference in Copenhagen, VMware defended the changes to its licensing model.

“We as an industry are looking at a lot of changes that are going to need to happen around software licensing, because we come from an era where we’ve based things on physical architectures, and that’s not going to work, particularly as we move to multi cloud provider type environments,” said VMware’s chief marketing officer, Rick Jackson.

Cost vs quality

“Microsoft is playing on the point that it’s about cost,” added Jackson. “All in all we’re talking about less than two percent of our customers that would experience a negative impact, and a significantly larger percentage that will actually benefit from the pricing changes.”

Jackson said that customers often try Microsoft Hyper-V first because it is available for free in their operating system environment, but then end up switching to VMware because “their experience is more robust, it’s easier to set up and it’s easier to maintain.” He highlighted the company’s recently announced Q3 earnings, which revealed year-over-year revenue growth of 32 percent to $942  million (£596m).

“I’ve heard over and over again, ‘how can you compete against free?’ Yet we continue to see strong customer growth in that market,” said Jackson. “I have to come back and say it’s because of quality products. That’s what this company produces.”