VMware’s hybrid vCloud takes on Amazon. Kinda.

VMware’s(s vmw) new vCloud Hybrid service, now in beta and due to ship mid year, is the company’s public Infrastructure-as-a-Service play, according to VMware CEO Pat Gelsinger.
vmwarelogoThis may be one of the industry’s worst kept secrets, with stories surfacing about the plan last July on GigaOM and then in August in CRN. But it is nonetheless important. VMware will make all the relevant code available to its existing  VSPP partners, Gelsinger told analysts at a New York investor event held by VMware, parent company EMC(s emc) and the Pivotal Initiative spinoff. That may reassure some of those service providers and VARs who were already implementing vCloud Director in data centers of their own.
VMware also said former Savvis exec Bill Fathers will head up this Hybrid Cloud Services push. Savvis, now part of CenturyLink, is a big VMware service provider partner.
The selling point is that vCloud Director running customers’ private clouds  will interoperate will with vCloud running in public clouds and will facilitate work loads moving back and forth easily. That’s pretty much been VMware’s story for years. The rather large difference now is that VMware itself will be hosting and running a rather large public cloud instead of relying on big service providers to do so on its behalf.  Clearly VMware has Amazon and its public cloud might on the brain, as evidenced by VMware’s recent  “Amazon will kill us all” comments .
Gelsinger said all the vCloud Hybrid intellectual property will be made available to the company’ s partners — which may reassure them that VMware will not build out its own Amazon-like public cloud infrastructure. Time will tell. VMware CFO Jonathan Chadwick tried  to lay that fear to rest. “We will leverage other people’s infrastructure” rather than building out VMware’s own data centers, he said.
Forrester(s forr) cloud analyst James Staten in a research note wrote:

“VMware said its public cloud will be aimed at its existing customer base and sold through its existing VAR and SI [system integrator] channel. This explains CEO Gelsinger’s strong comments from last month’s Partner Exchange – it wasn’t public clouds he was worried about but non-VMware public clouds. But for this channel fulfillment strategy to come true, its partners will have to get with the cloud program too and like the [infrastructure and operations] clients they serve, many don’t see more revenue at the end of the public cloud rainbow.”

Staten makes a point. It’s also by no means clear that VMware’s vCloud push is gaining traction. Most service providers that offer it also offer other, non-VMware options. One big hurdle for vCloud adoption issue is price. One IT consultant summed it up last week:

“I did a cost analysis for a big [integrator] last week – VMware is $6 per GB ram per month – adds about 30% in some cases to price – and do you think customers care what the hypervisor is? I can’t see how VMware’s core revenue maintains in any shape or form.”

This story was updated at 1:20 p.m. PST with more information about VMware’s new Hybrid vCloud services division