Amazon.com Inc.’s (AMZN) dominating Amazon Web Services (AWS) public cloud platform has outrun competitors by a long shot, causing cloud rival VMware Inc. (VMW) to put down the fight and finally team up with the e-commerce giant. Alongside strengthening Amazon’s cloud presence above rivals Microsoft Corp (MSFT) and Alphabet Inc. (GOOG), the deal with virtualization and infrastructure company VMware also helps to rake in enterprise clients hesitant to make the full transition to the cloud off the bat. (See also: VMware Inks Another Big Cloud Partnership.)
Hybrid Cloud Offers Best of Both Worlds
By partnering with VMware, a hybrid cloud provider, Amazon essentially removes any excuse large-enterprise clients have in moving data to the cloud. The new hybrid cloud model attracts some old-style businesses who wish to have the best of both worlds, keeping their on-site data centers for some operations, while offloading the rest to AWS.
IBM Corp. (IBM), who just signed a hybrid-cloud partnership with VMware, could also take a hit from the new deal, as VMware now offers its customers a choice between public cloud players. With Amazon’s rising dominance in the cloud space, it’s nearly certain IBM will feel the effects of the new partnership.
Unprecedented Cloud Dominance
Amazon’s cloud business is projected to rake in $12 million in revenues in 2016, according to research from Forrester. Amazon Web Services, the internet giant’s most profitable line of business has grown exponentially, up 58% year-over-year in Q2 2016 with $2.9 billion in revenues. VMware CEO Pat Gelsinger, who got on stage in San Francisco with the AWS chief executive to announce the new deal, even noted how surprised he was by the quick adoption of the public cloud, particularly the rapid growth of AWS.
Ultimately, the Amazon-VMware partnership will not only steal clients away from other cloud providers but also lock in new customers by alleviating the discomfort of taking the full leap into the public cloud by providing a hybrid cloud offering. (See also: What the AWS-VMware Cloud Deal Means.)