VMware is banking that disgruntled service providers will come back

Bill Fathers knows VMware’s(s vmw) new cloud effort has a partner problem but he thinks it’s fixable. Fathers joined VMware in March as SVP and GM of its new Hybrid Cloud Services unit. Previously — and this is key — he was president of Savvis, (s ctl) a hosting company and cloud provider that is also a VMware partner. That means he’s seen both sides of the VMware/service provider divide.

Bill Fathers, SVP and GM of VMware's Hybrid Cloud Services Business Unit

Bill Fathers, SVP and GM of VMware’s Hybrid Cloud Services Business Unit

Recently, Fathers told me he knows that several VMware service provider partners offer multiple cloud stacks — one VMware flavored plus something else. They’ve done that at least partly because of disaffection with VMware and its pricing policies and out of growing concern that VMware, with its own vCloud Hybrid Service (VCHS) cloud plans would increasingly compete with them.

But, Fathers insisted that will change as VMware proves both its new technology and that it wants to be a good partner.

VMware wants VSPP partners fully aboard

“We’ve gotten better in communicating with service providers. We’re clear that we’ll make all of our intellectual property [from VCHS] available to them and it will be a logical upgrade from what they’ve already bought from us,” he said.

VCHS is VMware’s enterprise-focused public cloud that primarily targets VMware’s current 500,000 customers — most of whom are also being wooed by Amazon(s amzn) Web Services in its enterprise push as well as by Microsoft(s msft) Windows Azure, HP(s hpq) Cloud and others. Before VCHS, VMware strongly encouraged service providers to run vCloud Director, with what even its own top execs concede were so-so results.

Rescue from the “horrible world” of multiple stacks

But Fathers thinks straying partners will come back home to new VCHS technology because it’s too hard and too expensive to run different flavors of cloud infrastructure. “If we do our job right, we can save them from the horrible world of supporting multiple stacks. These companies don’t have the SG&A to do that,” Father said.

Here’s the problem: Some of VMware’s current vCloud Director partners, even several in its VMware Service Provider Program (VSPP) aren’t buying it. Privately several told me that VMware has a lot of to prove for them to go all-in with vCloud Hybrid Services.

Looking to OpenStack, CloudStack alternatives

Said a senior exec at one of the bigger VSPP partners: “We will adopt VCHS but not exclusively at all. VCHS is just [vCloud Director] for service providers — it will open up competition but absolutely won’t lead to consolidation, especially since vCD is on shaky grounds with customers not sure they even want it,” he said via email.

The CEO of another service provider agreed. “We see very few providers even in the VSPP program looking at VCHS as their new focus — most are already moving to a couple of alternatives,” he said.

He said many of these partners are thinking of sticking with or going back to vSphere server virtualization as one option but also running Xen- or KVM-based developer and test clouds.

“They are offering two tiers of service to be able to meet customer needs,” he said. He also sees OpenStack gaining traction because it’s now seen as a good framework upon which to build services. And, he noted, CloudStack is also gaining adherents.

“CloudStack is still kicking! It’s constantly adding new service providers because it offers support and polish compared to OpenStack — and CloudStack can manage legacy VMware workloads which gives those providers a path to a single control portal,” he said via email.

His main takeaway is that some big service providers will sign on for VCHS but are not likely to sell it hard. And that reason goes back to the old specter of VMware competing with its own partners.

It bears mentioning that Verizon(s vz), another VMware service provider partner, just announced a new set of cloud services that it built from the ground up — not with VCHS. While the company will continue to sell and support its existing VMware-based cloud infrastructure, it’s clear that it sees its own enterprise cloud as its strategic offering going forward.

And if other big service providers follow suit, that’s a problem for VMware.