Despite continuing losses and growing concerns about friction between the partners, VCE, the Virtual Computing Environment Company, is escalating its assault upon the converged-infrastructure market with a suite of new products and services, including an Oracle offering. “Today everybody is talking about it (CI), but we believe we’re one of the only ones truly delivering it,” said Todd Pavone, Executive Vice President of Product Development and Strategy, VCE, a joint venture between Cisco Systems and EMC, with additional investments from VMware and Intel.
While not everyone agrees on just what is converged infrastructure — all integrated infrastructure offerings are equal, but some are more equal than others — the market has drawn a lot of interest from the likes of Dell, HP, IBM, NetApp and Oracle. According to a recent study from Technology Business Research, preintegrated or prevalidated stacks of compute, storage and networking hardware will generate close to $4 billion in US sales over the next 12 months, while IDC predicts the global market will reach $17.8 billion in 2016, up from $4.6 billion in 2012.
One of the stars of the CI world, along with HP and IBM, VCE is experiencing huge growth — “this year is going to be by far our best year” — with 50% year-on-year growth, revenues to be over $1 billion and 57% market share, said Pavone. Vblock is now generating approximately $1.2-$1.3 billion in annual revenues, is growing about 30% annually and most recently had a very strong order growth rate of 50% according to Cisco’s 4Q13 earnings call.
The company reports more than 600 customers and over 1,200 Vblocks deployed. However this success has come at a cost, a cumulative loss of $1 billion for EMC and Cisco combined since its 2009 inception.
There are also competitive challenges for the partnership as both Cisco and EMC look to expand beyond their respective core networking and storage/virtualization markets. Things first got complicated last year when EMC – excuse me, VMware – shelled out $1.26 billion for Nicira, Inc., the very small developer of the Network Virtualization Platform (NVP). That led to last month’s launch of the Nicira-based NSX, the Platform For Network Virtualization. This month Cisco announced it would acquire Whiptail, a developer of high performance, scalable solid state memory systems.
Despite multiple pronouncements by all VCE partners that these moves were not a threat to Cisco’s networking domination or EMC’s storage stronghold, at least the perception of trouble in CI paradise has emerged. Whiptail ‘s products compete directly against systems from EMC’s XtremIO unit, and indirectly against other flash-based EMC products. With the Whiptail announcement Cisco hasn’t thrown the gauntlet down yet, but the gauntlet is in their hands, said Zeus Kerravala, principal analyst at ZK Research. “It certainly does creation friction where there wasn’t any before.”
The Cisco-EMC partnership has already been pressured by the software-defined networking efforts of VMware’s Nicira unit, which stand to make it easier for companies to replace Cisco gear with rival/commodity hardware (if adopted), and there have been reports EMC has considered further encroaching on Cisco’s turf by acquiring a networking hardware firm.
VCE’s customers don’t seem to be concerned about any potential internal conflicts. “One of the metrics we’re most proud about is we’re seeing 50-70% repeat business every quarter,” said Pavone.
That’s perhaps the strongest evidence in favor of VCE’s digital factory vision and strategy, said analyst Charles King, Pund-IT. “That is a major vote of confidence for any company but one that’s especially important for a vendor just over 3 years old. That VCE is making so strong an impact in so short a time is a testimony to the uncommon quality of both its Vblock solutions and its market approach.”
Pavone also expects to see much broader adoption of Vblock, not just from the new products, but also from the benefits achieved by existing customers. According to new IDC research, and a similar study done last year with VCE customers, these benefits include: the ability to get services up 5x faster; 96% reduction in downtime; and datacenter infrastructure costs down 50%.
He expects the Oracle offering, which provides higher IOPS at lower price than Oracle’s hardware, to do particularly well. Following last February’s launch of the first specialized system for SAP HANA, Oracle is just the first use case for high-end databases, with versions for IBM’s DB2, SQL and others to be launched sometime in the future.
Feeds & Speeds:
-Vblock System 340, available immediately, offers up to four times the performance and twice the capacity of the previous Vblock 300;
-Vblock Specialized System for High Performance Databases, ,targeted for availability in Q4, architected for large database deployments such as Oracle, can handle environments requiring millions of IOPS, scalability to hundreds of terabytes, and constant availability;
-Vblock Specialized System for Extreme Applications, such as virtual desktop infrastructures (VDI), targeted for availability in Q4, features all-flash technology with inline data reduction;
-VCE Vision Intelligent Operations 2.5, targeted for availability in Q4, offers automated updates of new patches and software releases for Vblock components, proactive scanning and reporting on release and security compliance, as well as supporting the native discovery of Vblock Systems within the VMware vCenter Operations Suite; and,
-VCE Cloud Accelerator Services, available immediately, help customers plan, build, and implement scalable “as a service” cloud infrastructure environments.