VMware Acknowledges Partner ‘Challenges’ In VMware Cloud On AWS

VMware is ‘working directly with AWS’ to address issues stemming from channel partners saying AWS is swooping in on large channel-led VMware Cloud on AWS deals.

Channel powerhouse VMware is acknowledging partner “challenges” stemming from channel conflict between its partners and cloud behemoth AWS on VMware Cloud on AWS deals.

The public acknowledgement comes after VMware partners told CRN that AWS direct sales teams are swooping in on large channel-led VMware Cloud on AWS deals, resulting in the loss of millions of dollars in enterprise cloud migration deals for the channel.

These deals that are ultimately won by AWS were discovered, led by and even registered with VMware by the channel partner.

“There are partners who are working very successfully with both VMware and AWS teams, and many of those partners are seeing their wins, opportunities and pipeline grow. At the same time, we do recognize there have been some challenges for partners, which we are working directly with AWS to address,” said VMware in a statement to CRN regarding the matter.

[Related: VMware Partners: ‘AWS Scoops Up’ VMware Cloud On AWS Deals And ‘Pushes You Out’]

VMware is a channel stalwart whose partner program has received a five-star rating in CRN’s 2020 Partner Program Guide and has long held up its deal registration program as a model for the industry. AWS, meanwhile, does not participate in the CRN Partner Program Guide.

Several of VMware’s top channel partners told CRN that multimillion-dollar VMware Cloud on AWS deals have been lost at the last minute due to AWS direct coming in and offering customers a large discount through its Amazon Enterprise Discount Program (EDP).

One top executive from a global VMware partner said VMware needs to implement firmer rules of engagement and let partners know where they should play regarding large VMware Cloud on AWS—often referred to as VMC—potential deals.

“We need a better, concrete answer and solution [from VMware],” said the executive, who declined to be identified. “We want to make sure we’re not wasting time, energy, money, doing demos—all these things to chase million-dollar VMC offers that can just be taken away by AWS at the eleventh hour.”

Channel partners told CRN they pressed VMware to create general rules of engagement between AWS and VMware’s channel several months ago.

Solution providers believe the two vendors sidestepped the issue with a joint deal registration program with no specific line in the sand on which accounts AWS can target with EDP. VMware presented the new plan in July, which calls for a focus on what VMware is calling “customer choice” with an eye toward ensuring a “smoother transition for all parties.”

In addition, VMware said that the end buying decision would be determined by the customer, not VMware, AWS or the partner.

“They’re telling the channel partner, ‘We’ll register it at both VMware and AWS, and we’ll make sure they don’t swoop in.’ All I can hear is, ‘You need to tell the fox where the henhouse is, and we promise you, he won’t eat the chickens.’ I don’t believe it,” said one top executive from a VMware partner regarding the plan VMware presented in July.

Partners say the issue stems from AWS sales teams being able to leverage EDP on VMware Cloud on AWS deals, which significantly reduces the customer’s total AWS bill.

EDP provides a discount to customers in exchange for a prepaid, annual consumption commitment. AWS provides enterprises a discount off its services based on volume commitment. Under an EDP agreement, a customer’s prepayment is run down as they consume AWS services, including VMware Cloud on AWS.

The news comes as VMware Cloud on AWS demand is on the rise.

According to a new VMware Cloud on AWS market research report by Faction, interest in VMware Cloud on AWS is accelerating due to several factors, including the COVID-19 pandemic. Approximately 59 percent of the 1,054 IT and business professionals Faction surveyed in its report said they are either accelerating their cloud adoption timeline or moving as planned around VMware Cloud on AWS.

“The COVID-19 pandemic underscores the need to secure scalable solutions that provide cost savings while supporting strategic initiatives,” said Faction CEO Sean Charnock in a statement. “For the second year in a row, Faction’s research reflects a growing interest in VMware Cloud on AWS. This is in large part due to its dynamic solutions and use cases including data center extension.”

In addition, approximately 25 percent of respondents said they plan to add or increase workloads on VMware Cloud on AWS in the next 12 months, according to the report, with scalability being the top driver. The top use cases currently running VMware Cloud on AWS are data center extension, AWS integrated applications and cloud migration.

VMware Cloud on AWS is a jointly engineered solution that brings VMware Cloud Foundation to AWS with optimized access to AWS services, aimed to give VMware customers an easy fast lane to the cloud.

The offering provides quick cloud migration powered by VMware HCX and vMotion combined with consistent hybrid cloud infrastructure and operations, with the goal of allowing VMware customers to run their virtualized data center environments on AWS instances including vSphere, vSAN and NSX on AWS Nitro and EC2. Once applications are migrated, customers can run, manage and modernize applications with the VMware Tanzu portfolio as well as integrate native AWS services.