Cork virtually in driving seat as VMware targets US$50bn cloud market

28 May 2013

Jonathon Chadwick, CFO, VMware

Ireland’s efforts to position itself at the centre of the cloud computing revolution are paying dividends faster than anyone can have predicted considering the country is now playing host the next big battle space in IT – infrastructure as a service (IaaS).

Software virtualisation giant VMware, a 15-year-old tech company with US$5bn in revenues per annum, employs 630 people in Cork. Jonathon Chadwick, the company’s chief financial officer, said VMware is in a position to grow its Cork workforce to more than 700 people in the coming years as it targets the US$50bn IaaS market opportunity.

To date, this market has been largely dominated by Amazon Web Services, which enables corporations and entrepreneurs to go online and provision server space in the cloud to support new businesses and projects. In a heartbeat, a new start-up, government or big business can ramp up its IT infrastructure on demand.

In recent weeks, software giant Microsoft entered the fray with its new Windows Azure Infrastructure Services division and it has committed to matching Amazon’s prices for commodity services, such as compute, storage and bandwidth.

Microsoft has already invested US$630m in a massive data centre in west Dublin, where it hosts most of its global Azure services. Amazon already has significant data centre activities in Dublin and two years ago acquired a 22,539 sq-metre former Tesco facility at Greenhills Industrial Estate, also in Dublin.

Growth of VMware

Chadwick said VMware’s operations in Cork have been pivotal to the company’s growth. It located its operations in Cork when it was just a three-year-old start-up.

Two years ago, VMware announced a 250-job expansion in Cork, where it has three major facilities and space to grow to accommodate more than 700 employees.

“Ireland continues to play a key role for us in terms of our international distribution strategy. The workforce is highly productive, highly literate and multilingual in most cases,” Chadwick said.

This week, VMware revealed its strategic effort to enter the IaaS market later this year with VMware vCloud Hybrid Service.

“We see it as different from the existing cloud offerings that are out there,” Chadwick said.

VMware vCloud Hybrid Service basically allows enterprises, from SMEs to governments and corporates, to extend private clouds to outside the organisation.

“This is an elastic, highly available secure public cloud that is a replication of the internal private cloud,” said Chadwick.

In plain English, this means VMware can provide small and large organisations with secure access to their IT networks via mobile computing devices. It also allows organisations to create brand new IT infrastructure on a whim and make it available outside the firewall.

VMware’s legacy in virtualisation – a technique that allows organisations to host multiple virtual servers on fewer servers as opposed to having single servers for accounts, sales or HR – has potentially saved organisations significant capital expenditure.

Today, the technology is used by more than 500,000 organisations around the world.

“I don’t think there is a business out there today that isn’t thinking about the impact of the internet, cloud or hosted apps,” said Chadwick, who joined VMware six months ago from Skype, where he was also CFO.

“There is a lot going on with IT infrastructure and the pace of change continues to accelerate. This is one more natural step and it enables us to provide IaaS, whether within a premises or out on the cloud.”

The birth of cloud

Chadwick said the cloud trend really started in force when CEOs started bringing their iPads into the office and asked for email access on the devices.

“That’s one key example of how the pressure is now on internal IT departments to provide services,” said Chadwick.

“Managing workforces with devices like iPads, smartphones and laptops inside and outside the business firewall is quite a challenge.

“Doing it in a secure way – not being defensive but embracing it – is a challenge most IT departments still have to address.

What’s leading the charge is employees themselves wanting to work more flexibly and they don’t see why they should be hemmed or restricted by the device they are using or where they choose to work, Chadwick said.

“This plays to VMware’s strengths in terms of drawing the line between the worker’s device to the data centre, so this is a very strategic play for us,” said Chadwick.

According to Gartner, the technology research and advisory company, the public cloud IaaS market is one of the fastest-growing segments of the cloud computing industry today.

“This could be a US$50bn market for us by 2016 so I’m struggling to find what our limits could be. VMware currently has a US$5bn a year revenue run rate and is currently growing at a rate of 20% a year,” said Chadwick.

“We are addressing the key trends of IaaS in terms of providing compute power, server virtualisation, network virtualisation and virtualised storage on-demand.

“What will be really interesting is where the next 10 years will bring us and I predict a really radical transformation – the question is, how fast will all of this occur?”

A version of this article appeared in The Sunday Times on 26 May

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years