VMware Enlists Dell to Help Wage ‘Operating Systems War’ in Cloud Business

VMware Inc. (VMW) is working with Dell Inc. (DELL) and the Ubuntu Linux operating system to spur adoption of its cloud-computing software, ratcheting up competition with Microsoft Corp. (MSFT) for corporate customers.

Dell’s services arm will help install VMware’s Cloud Foundry program, while Ubuntu will begin including parts of the software, said Jerry Chen, a vice president at VMware. EnStratus Networks LLC, which lets companies manage cloud-computing software, also will support Cloud Foundry.

VMware is forging alliances to capitalize on the shift to cloud computing, which lets businesses keep information in data centers. Cloud Foundry can store programs in different data centers, as well as a customer’s own facility, so there’s a backup in case of an outage. While that portion of market is still small, it may become as pivotal as operating systems are to computers, attracting Microsoft, VMware, Google Inc. (GOOG) and Salesforce.com Inc., said Ben Pring, an analyst at Gartner Inc. (IT)

“It’s still a very early-stage marketplace and very unproven,” he said. “They see it as the next strategic chokehold that a cloud vendor can get, the next go-round of the operating systems war.”

Gartner, based in Stamford, Connecticut, expects the market for this kind of product -- called application infrastructure services, or platform as a service -- to grow from $1.4 billion this year to $2.4 billion by 2015. That doesn’t include the management software and developer tools the companies can sell with it. It also doesn’t account for the cloud storage and computing power that companies such as Amazon.com Inc. offer separately, Pring said.

Virtualization Leader

VMware, based in Palo Alto, California, is the biggest seller of virtualization software, which lets companies use fewer server computers in data centers by running different operating systems on a single machine. VMware’s stock has risen 20 percent in the past year, boosted by companies putting more of their information in data centers. The company is majority- owned by EMC Corp., the largest maker of storage computers.

Cloud Foundry is still available only in a test version and includes an open-source project that lets outside developers contribute to the product.

VMware also aims to appeal to corporate customers with software that writes cloud applications using several different programming languages. That contrasts with the approach of Microsoft, which relies on .Net, and Google, which uses Java, Chen said.

Bigger Market

Most large customers currently use one technology or the other, so it’s hard to say how much demand there is for an all- in-one feature, Pring said. Still, the flexibility will help VMware target a wider swath of businesses, rather than just one camp, he said.

Microsoft may be the toughest adversary in wooing large corporate customers, Chen said. Because of Microsoft’s long history with business customers and its work on the .Net language, “they’re the one we worry about most in competing for enterprise customers,” he said.

Salesforce.com, which also has a partnership with VMware, is increasingly vying for those buyers as well, Pring said.

Having multiple copies of programs stored in different cloud data centers may be a draw for customers, particularly after Amazon’s Web Services suffered a brief outage this month and one lasting several days in April.

“If Amazon goes down, you are kind of out of luck,” Chen said. “If you put your app on Cloud Foundry and it’s running on VMware and Amazon, you can just move to another instance. You don’t have the problem of being locked into one vendor.”

To contact the reporter on this story: Dina Bass in Seattle at dbass2@bloomberg.net

To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net

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