Removing lucrative rebates, killing off popular products and upping prices may all be considered among the ultimate sins a channel vendor can commit, but nothing gets resellers’ blood boiling more than when a company tries to muscle in on its business and compete for channel sales.
And that is exactly what VMware was accused of planning to do at its customer and partner event VMworld last month as it unveiled a new cloud offering.
The firm was keen to hail the arrival of its new vCloud Hybrid Service (VCHS) offering to the EMEA market – boasting locally hosted datacentres to ensure optimum privacy and control – but its big announcement was overshadowed somewhat as it was left batting off claims that the move will hit its service provider partners in the pocket.
The VCHS was launched in the US earlier this year, and will be brought to EMEA later on this quarter in the form of a UK-based pilot scheme. The datacentre will be based in Slough and will provide services to the UK and beyond ahead of the launch of a tranche of local datacentres across a range of EMEA countries at the start of next year. VMware cited data sovereignty and control as a central issue for the channel and end users, and said its local approach will be a key differentiator.
But while it was keen to shout about its new service offering, VMware was forced into defensive mode as it attempted to silence claims it was going after service providers’ business by launching its own rival offering.
“Initially, being realistic, announcing a potentially competitive service caused a few conversations with some of our partners,” admitted Bill Fathers, VMware’s general manager for hybrid cloud during a press conference.
“It may be seen as a competitive offering but it is a vast market in which service providers have a massive ability to differentiate themselves.”
Despite its best efforts to promote the service as a strong channel play, the news met a cautious response from some.
Wayne Emerson, commercial director at VMware service provider partner and reseller System Professional, said he thought the service did compete on some levels.
“We do see [VCHS] as competitive to a degree, but we’re not yet sure of its value to us. Our current thinking is that we would much rather guide clients to our own service if appropriate,” he said.
“I am not convinced yet how much it will affect our market space. The people we are talking to are already considering AWS [Amazon Web Services], Azure and those kind of platforms, alongside the likes of Rackspace too.
“I listened to the announcements with interest, but I am not yet sure how disruptive it will be – it will be very interesting to see how it takes off in the UK.”
Throughout its event, VMware went to great pains to assuage partners’ worries, taking every opportunity with the press to reiterate that every single VCHS sale must go through a channel partner.
And it seems its efforts did the trick for some, who gave the virtualisation giant the benefit of the doubt and said they did not feel threatened by its services offering.
Des Lekerman, chief executive of newly VMware-accredited firm The Internet Group (TIG) said having a VMware stamp of approval on a service can only be a good thing for cautious customers. “From my point of view, I think [the new VCHS offering] is an opportunity because there are a lot of sceptical customers out there watching companies such as 2e2 and Trinity go under – they get left in the lurch. Having a managed service provider that is providing on-premise and cloud services and working with someone such as VMware gives the customer a lot more reassurance,” he said.
“VMware definitely has a partner strategy and those who embrace this and move with it and leverage it will make the most money.”
Softcat’s solutions director Sam Routledge agreed that VMware is a trusted and well-liked brand, so having its name on a service is an added bonus. He added that he was pleased the service was a channel-only offering, and that the service providers he spoke to were not overly concerned that the vendor’s offering would be a competitive one.
“We would not see this as competitive to what we’re doing – it’s a channel-only offering,” he said.
“After talking to a few service providers, I think their view was that being an infrastructure-as-a-service provider is not a differentiator – you need other services on top – so they did not see VCHS as a threat.”
Keeping it local
When it wasn’t defending the go-to-market strategy of VCHS and promising the channel a slice of the action, VMware was stressing that its new service can alleviate data sovereignty concerns. Over the summer, information leaked to the Guardian and Washington Post led to claims that a handful of top tech firms allowed the US National Security Agency (NSA) to access European users’ data – a claim the companies, which include Google, Microsoft, Apple and Facebook – deny. And it is not just the political elite that have been growing increasingly nervous since the scandal broke, with resellers reporting increased concern from customers around where their data is stored.
VMware told CRN at VMworld that it always planned to launch dozens of local datacentres across Europe for its VCHS offering, but that the recent media attention around the NSA came at a good time for it as customers were increasingly aware of data sovereignty issues. VMware service provider partner Colt’s director of distribution channel, Gary Moore, said local hosting is a must for customers.
“We have looked outside our own geographical boundaries, and found little appetite for IT services which are not locally hosted,” he said. “Central Europe, for example, is just as keen to have locally hosted data as western Europe.
“Of course, all countries use a lot of global technology but the service provider is most credible when he has staff, a company and datacentre and, of course, local contracts. Recent headlines only heighten their concerns about allowing a service provider to manage their data.” VMware said it began its EMEA rollout of VCHS in the UK because countries such as France and Germany have even more detailed data privacy laws to which it wants to adhere with the service. Richard Kerr, VMware’s director for channel alliances in northern Europe, said the heart of VCHS’ success is its local hosting element.
“Our strategy is to really work locally and have the data of all the various legislations ticked off locally, and this is a massive differentiator for other [partners] in the market working in that space. We see this as an opportunity and a differentiator.”
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