APAC firms looking beyond server virtualization

Having seen the benefits from server virtualization, enterprises are now asking for virtualization to move into networking and storage, says VMware's Asia-Pacific head.
Written by Eileen Yu, Senior Contributing Editor

SAN FRANCISCO--Having gained some confidence about the benefits of virtualizing their server environment, businesses in Asia now are starting to ask for the same technology to be extended into storage and networking.

VMware won't be building data centers in Asia-Pacific to support its new hybrid cloud service, preferring instead to do so via local partners.

According to Andrew M. Dutton, VMware's senior vice president and general manager of Asia-Pacific and Japan, there has been "dramatic" growth in server virtualization particularly in Asean, specifically Thailand, Malaysia, and Indonesia. Organizations see the benefits of server virtualization and now want to know when and how this can be applied to networking and storage. 

In an interview here Tuesday at the vendor's VMworld annual conference, Dutton noted the change in demand. This, he said, will grow in tandem with server virtualization which continues to see increasing adoption since the region was late in deploying the technology compared to the United States. 

He added that Asia companies are also asking for hybrid cloud services, an area VMware stepped into this week when it launched its vCloud Hybrid Service. The announcement includes the addition of three new data centers to support the new hybrid cloud offering, bringing its datacenter count to four--all residing in the United States. 

It also expanded its alliance with VSPP (VMware Service Provider Program) partner, Savvis, to include support for the cloud service. 

Asked if VMware had plans to widen its datacenter footprint to the Asia-Pacific region, Dutton told ZDNet the company would rather augment existing local partnerships than build physical sites. 

"At the moment, I want to lead with franchise first because our local partners are very strong," he said, adding that VSPP partners in the region include SingTel, Softbank, Hitachi, CSC, and Optus. "They already have been deploying much of this technology, so you can get most of the services from them immediately. I would like to first consider if they would like to expand these relationships [with VMware]."

Such efforts will start with more mature markets with robust infrastructure and strong legal foundation, such as Australia, Japan, Singapore, and possibly China, which Dutton said needed a strong local partner that understood local market requirements.

Carl Eschenbach, VMware's president and COO, said later in an Asia-Pacific media briefing this approach would allow the vendor to avoid getting into a "capital-intensive model" that could impact its cashflow.

This also made sense where local brands in markets such as China Mobile, Telstra, and NTT in China, Australia, and Japan, respectively, had much stronger footprint in these markets than VMware, noted Eschenbach. 

Dutton added: "Whether we rent that space or do it via partnership will be something we'll have to discuss, but it's a better way invest in a local infrastructure than try and do anything ourselves. 

"This model has worked very well for us. It may not be smart to change that model especially in Asia-Pacific, where so many of our local partners understand the local environments so much better than us," he said. 

The region accounts for about 20 percent of VMware's total revenue and over 97 percent of its revenue are generated by its partners, he noted. 

Eschenbach added that Asia-Pacific is the vendor's fastest-growing region, clocking a 40 percent year-on-year growth in its second-quarter revenue, which hit US$1.24 billion.

According to Chin Jun Fwu, Asia-Pacific research manager for virtualization and datacenter research at IDC, VMware will need to look at how it manages its partner ecosystem in addressing customers' needs. 

While the vendor's decision not to build its own data centers in Asia-Pacific is unlikely a major issue, Chin said VMware partners are home-grown local players which may not be able to scale globally with its customers. "If the customers want a partner with global presence, then the local partners may not work," he said, adding the vendor's partner network must be properly trained to deliver and support the new realms of virtualization--networking and storage--as well as its hybrid cloud service. 

The IDC analyst added that cloud adoption has yet to reach maturity in the region so VMware also will need to focus on educating its customer base here, especially when returns of investment from the new virtualization deployments may not always be immediate.

Dutton also underscored the need to focus on education and training. Elaborating on the company's Asia-Pacific strategy over the next year, he said there will be "a big training effort" around partners and to educate them on VMware's new offerings including the NSX network virtualization and Virtual SAN platforms. "We're not going to do this until the customers understand it enough to be able to support the technology," he said, adding that the vendor will also be rolling out its Hybrid Cloud Service in one country in the fourth quarter, and another two in first-half 2014.

He said several customers in the region already were testing NSX, but only Japan's NTT Communications has been publicly revealed as a customer, having gone live with its deployment last month. He added that there were also clients running the beta release of VSAN, but declined to reveal their names. 

Eileen Yu of ZDNet Asia reported from VMworld in San Francisco on the invitation of VMware. 

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