VMware CEO Says Private Cloud Is the Future of Enterprise
83% Companies Move to Private Cloud, But Is Cloud Repatriation Real or Vendor Hype?
At last week's VMware Explore, Hock Tan, president and CEO of Broadcom, outlined plans for private cloud dominance. Alluding to a Barclays CIO survey 2024, Tan spoke about cloud repatriation, with 83% of enterprises moving workloads from public to private clouds. Considering that VMware - long known for its virtualization technology - has focused on bringing cloud-like features to on-premises data centers, including private clouds, it was not surprising to hear Tan say "the future of the enterprise is private" at the Explore event.
"Ten years ago, your CEO, your board of directors … drove you to the public cloud first," Tan said during his keynote address. "Because of this … you are now confronting the three Cs of the public cloud: cost, complexity and compliance."
Tan argued that public cloud solutions are "much more expensive, and costs 2X to 4X more [than private cloud]." He also cited increased complexity with "an additional layer to manage" regulatory compliance challenges, "especially with AI using [corporate] data." But, in an interview with Six Five Media at VMware Explore, Tan said VMware can co-exist with public cloud infrastructure.
The Barclays survey sparked mixed reactions in the tech industry. Michael Dell, chairman and CEO of Dell Technologies, posted the survey slide shown at VMware Explore on X with the comment "Not Surprising," aligning with his previous statements that not all workloads need to be on the public cloud.
As organizations implement best-of-breed solutions for computing, storage and networking, legacy data centers grapple with the resulting siloed infrastructure. Tan's company wants to address the issues related to these silos using its platform called VMware Cloud Foundation, or VCF. VCF aims to provide a set of microservices similar to those on the public cloud.
Tan is not the first to speak of repatriation. Last year, IDC's Workload Repatriation Trends Update showed that at least 70% of enterprises are repatriating workloads from public clouds to private cloud or on-premises infrastructure.
The Barclays statistic "signals a potential shift away from hyperscalers such as Amazon Web Services, Microsoft Azure and Google Cloud," said Larry Walsh, CEO and chief analyst at Channelnomics, in a blog post. "It also suggests a resurgence in commercial hardware sales after years of sluggish - if not declining - performance. Additionally, this trend implies that enterprises will require more software and support services, indicating potential growth for channel partners."
"The problem with the 83% figure is that it represents companies, not workloads. So if 83% of enterprises decide to move one workload from the public cloud to their local infrastructure, the number remains true. But that doesn't mean enterprises are racing for the public cloud exits. And we can see that as spending with hyperscalers continues to climb each quarter," Walsh said.
Industry Dichotomy
At last year's Gartner IT Symposium/Xpo, Gartner analysts said that cloud will become a business necessity by 2028 and that global public cloud services spending will total $679 billion by the end of 2024. This value is projected to exceed $1 trillion in 2027.
Vendors with an on-premises focus are driving a false narrative of widespread "cloud repatriation," said Andrew Lerner, distinguished VP analyst at Gartner. "Based on our research, very few organizations elect to repatriate primary workloads from public cloud solutions. Articles, blog posts and anecdotes often incorrectly suggest repatriation is a growing trend for organizations. Further, there are some well-known and highly publicized repatriations involving companies that are often cited as evidence of escalating public cloud abandonment but are more properly categorized as niche use cases that do not broadly apply to most cloud adopters."
Despite this trend, there are genuine reasons for repatriation, such as poor planning and evaluation - if an application was later deemed a poor fit for the public cloud - and inaccurate cost or effort estimate of porting the application to the public cloud.
"Some cloud projects fail because of design or implementation choices, such as a poor provider choice, low-quality architecture, the customer’s lack of skills, or low-quality work by the managed or professional service provider assisting with the implementation," Lerner said.
When Broadcom acquired VMware in November 2023, the tech community speculated about Broadcom's new strategic direction and how it would consolidate VMware's extensive portfolio of nearly 168 products with more than 8,000 SKUs. Customers and partners were concerned about the uncertainty regarding new pricing and packaging models.
Since then, Broadcom has made key changes to its strategy for VMware, consolidating 8,000 SKUs into just four product bundles. VMware has also clarified its new licensing policies to its customers increasing transparency.
The public cloud introduced IT sprawl with workloads spread across multiple clouds, making it challenging for CIOs to control costs. Broadcom is essentially attempting to give control back to CIOs while introducing simplicity in managing workloads. It aims to achieve this by offering the same type of features and services as public cloud - on-premises and on private cloud.
