Virtual Compute Environment – Solutions Venture and Investment

This is one of a 5 post series on the VCE coalition announcement, what’s in it, and what it means.  You can see all the posts together here.

The ultimate expression that a customer agrees with the philosophy of Infrastructure as a Service (IaaS) as a model of the future (both internally and externally) is that they don’t even view the hardware as capital – and start to push their hardware vendors to accept that same model. 

In the end, the core idea is that the infrastructure becomes a service itself to the end customers of IT – whether you are using it internally or externally.   The result is that while many customers will chose to acquire the infrastructure in a more traditional way – many others have been pushing Cisco and EMC for a new model.

These conversations are always interesting – people describe what they’re looking for, but don’t know exactly how to formulate their thoughts. As we discuss it though – there’s clearly a desire for something new.  These usually fall into one of the 3 following types in my experience:

• Some of the more “avant garde traditionalists” still wanted to own the infrastructure, but use a capital-defered acquisition model (utility, but still capex). 
• Others wanted opex oriented models (think of this as “pay for your UCS/V-Max in a usage model”) –
• But at the full extreme of the model there is a pure service, “VM utility” consumption model.  

The first two, Cisco and EMC can do in our existing business structures.  Speaking on the EMC side, we have sold more than $1B of storage this was over the last few years – mostly to service providers, but to some enterprise customers also.    But… The third option required something very new, and didn’t fit into the models Cisco or EMC could bend our existing organizations.

So, we ve formed Acadia.  

Acadia is a Cisco-EMC (and since this all using Intel’s latest stuff – Intel is also in) joint venture to build, operate, and transfer Vblock infrastructure to organizations.  Let me spell this out a bit:

• Build = we will help you get it up and running – taking out all the risk of consuming Vblocks.   It is paid for completely in an opex consumptive model.
• Operate = if you want, we can operate it for you as a managed service
• Transfer = if you decide, you can take it on yourself, and we transfer the intellectual property over to you.  

If you’re considering a outsourced model – you owe it to yourself to look at this from Acadia or from our Vblock partners.   This enables you to get all the upside of outsourced model, but  without the downside of older technology, lower degrees of technical integration (outsourcers generally integrate through brute force, and this results in a higher operational expense model – which is good for them, but bad for customers).  

It’s very important to note a couple things (because I’m sure this will be the source of much FUD):

1. Acadia will offer services directly as well as through our partners (learn more about that here).   The goal of this exercise is not to compete, but rather provide a guiding model.   I think that while some degree of partner/channel apprehension with anything new is understandable, it’s mostly rooted in FUD as competitors try to find leverage – Marc Farley is a strong player at a competitor (3PAR) and was even doing that yesterday before the announcement as leaks started to become fast and furious.   Expect to see more from other competitors of EMC, Cisco, and to a lesser degree – VMware.    Let me explain why I think it’s good for our partners.  It may seems to be a bit complex for those with a simplistic world-view, but the reality is that we’re very focused on enabling as many routes to customer value as we can.  It’s analogous to why we’ve launched www.emccis.com – it’s not to compete with all the vCloud partners, but rather to provide a real proof point example.   To be a real proof point – it has to be real.   Also, it’s important to be pragmatic.  

   Here’s a question – is HP a partner-friendly company?  Surely they are.  But, yet – they sell direct, and they acquired EDS.   How is that possible?   The answer is basic - this isn’t a zero-sum game.   Through this process, and what we learn – we share it all with our partners.

1. It’s important to note that we did this as a new joint venture so that it would be able to operate independently from Cisco and EMC, but still leverage the other elements of this announcement (the technology innovations, and the joint presales/service/support model)
2. Acadia will be operating in the market starting the first quarter of 2010.

This part of the announcement highlights that what we’re talking about here is not only new technology, and new ways of managing and operating IT infrastructure, but entirely new ways to consume it. 

What do you think – is it possible for EMC/Cisco thought this joint venture help our customers?   Can we do it in a way that helps our Vblock partners and Cisco/EMC resellers?

Comments

[marc farley]

Chad, it's true the rumors I picked up on yesterday turned out to look more like rumors than the intention of Acadia. The whole undertaking is bold - (of course I'm not going to endorse it!) but its an intriguing idea - creating a stack solution for customers. It never would have worked 5 years ago, but with the consolidation we've seen in the industry over the last couple years it might have a chance. BTW, you must have exceeded some personal best for output today and maintained your usual quality, although the use of Hollis-esque italics was a bit heavy.

[Chad Sakac]

Thanks Marc - while we're destined to be on different sides of a fence - I always respect what you do. 3PAR is a great company, great products, and they are lucky to have you :-)

I have good respect for the companies and people we compete with.

Chuck and I - well, we're different people, that's for sure. Each with our strengths and our foibles :-)

I'll make sure that I don't over use the italics :-)

[marc farley]

I can't help but tease - just a little. Great job today.