VMware Sells vCloud Air
While many companies are looking to have a market share in the public cloud space, VMware wants to move away from it. This is why it sold its public cloud business called vCloud Air to OVH, a French cloud provider. Terms of the deal was not disclosed.
vCloud Air is a line of business through which VMware provided data center services to companies that run VMware’s server virtualization technology. Over time, it also extended this service to third party data centers, as a way of creating a new revenue stream.
Unfortunately, vCloud Air could not compete with AWs and Microsoft Azure, and this meant that vCloud Air was a big failure. With this product, VMware realized that running massive cloud infrastructure is best left to the experts, and it’s better off focusing on what it knows best, which is to focus on technology.
It changed its strategy last year to keep pace of the changing dynamics of the cloud business. It now wants to focus on software-defined infrastructure stack that is expected to deliver more value for its investment and at the same time, help the company to go deeper into the business of hybrid cloud. The line of products that’ll come for this idea is still not known and there is much skepticism around it. For now though, that’s the plan.
Keeping in tune with this strategy, VMware has sold vCloud Air for an undisclosed sum. This is, in fact, a good move as it can save the company a substantial chunk of money. Though this product gave the company a few million dollars a year, it’s nothing compared to the almost $7 billion the company earns every year. Also, the first set of servers for vCloud Air was setup in 2013, which means, this infrastructure is coming to its end-of-life. By selling it to OVH, VMware has passed on the responsibility and capital expenditure of upgrading these servers to the buyer. To top it, VMware has even got some in the financial deal.
An added advantage with this sale is VMware has eliminated the conflict that arises between its own cloud and that of the 4,000 and odd servers that are owned by vCloud Air network partners that run vSphere-powered clouds.
This sale was expected on many fronts. The growing clout of AWS, Azure and the fast-catching Google Cloud means that the public cloud space is heating up like nothing before. This also explains why companies like Dell and HPE couldn’t make a mark in public cloud and had to withdraw. The same is for VMware too. At least in this case, the timing is perfect as the company does not have to incur more capital costs.
So, what’s in this deal for OVH?
For starters, OVH is one of the leaders in European cloud market and this acquisition can helped it to consolidate its position. Another reason is OVH is looking to expand rapidly in the US and vCloud Air may give it a good entry point.
VMware will also continue to be a technology partner for OVH.