Amazon Partners VMware for Hybrid Cloud Services to Rival Microsoft

Amazon.com is teaming up with VMware to let customers combine VMware's software for corporate networks with Amazon's internet-based cloud-computing services, a bid by Amazon to better compete with rival Microsoft in hybrid cloud solutions.

VMware will deliver, sell and support a product that lets customers use their existing VMware software with access to Amazon's cloud-based storage, database and analytic software, the companies said Thursday in a statement. Hybrid solutions allow customers to run applications on their own servers and through various remote cloud-based applications simultaneously.

Called VMware Cloud on AWS, the product will be available in mid-2017. Pricing will be disclosed closer to the release, the companies said. It will appeal to companies that want the flexibility and capacity of managing data via the cloud.

Amazon is trying to maintain its lead in the cloud-computing market over rivals Microsoft, Alphabet Inc.'s Google and IBM as more companies transition from using their servers to renting computing power and data space hosted remotely, which they access via the internet. Movie-service Netflix Inc. is a prominent example of a web company powered by Amazon Web Services.

(Also see: Google to Open New 'Cloud Region' in India Next Year)

VMware is shifting its cloud strategy to focus on selling products that work with existing leaders, rather than trying to establish itself as an alternative to the Amazons of the world. As more companies run applications on rented servers over the internet, providing services that link the different technologies customers use is a growing opportunity for VMware.

'Powerful' partnership
The alliance is a "very powerful collaboration" that gives companies flexibility in deciding whether to transition their data to the public cloud while maintaining investments they've made in on-premise data centers, said Tim Feeney, an analyst at Morningstar Inc.

"Essentially, the process of managing the hybrid cloud environment is significantly less of a hassle now," Feeney said. "This is a very powerful move for VMware because IT managers are more likely to retain VMware's services for longer."

VMware CEO Pat Gelsinger said he sees hybrid solutions providing business opportunities for decades into the future while the on-premise data business slows.

The Amazon partnership could be a blow to International Business Machines Corp., which has its own deal with VMware. IBM, however, said in a statement that 1,000 clients are already using the IBM cloud with software from VMware and the partnership has created "significant momentum."

Microsoft, responding to the Amazon-VMware agreement, said AWS is behind in offering hybrid cloud solutions.

"Microsoft Azure has always been hybrid by design, based on our decades of enterprise experience," the company said in the statement. "True hybrid cloud isn't just connectivity, it's consistency -- across development, management, and security."

Global public cloud spending is expected to hit $204 billion (roughly Rs. 1,363,638 crores) this year, up 16.5 percent from a year ago, according to researcher Gartner Inc.

© 2016 Bloomberg L.P.