With the trend of virtualization at its back, VMware is one of the more dominant forces in the enterprise. But with the emergence of new open-source models for networking such as OpenStack and containers, it will be interesting to see how VMware adapts to cloud-native development models.

Let’s first look at the advantages VMware has: More workloads are running on VMware than on any other virtual machine. NSX has emerged as a leading network virtualization platform, according to SDxCentral research. In terms of at least outlining the future of a software-defined data center (SDDC), VMware is clearly an industry thought leader.

But clearly, open source is a threat to VMware, as well as it is to many other large incumbent technology providers. Google and Amazon’s model of building their own data center technologies has been observed, and larger IT organizations with significant engineering resources are tending to lean more on open source frameworks such as OpenStack. There’s also the debate over to what degree the rise of Linux container technology, which is also common in cloud environments such as Amazon and Google, poses a threat to VMware.

Many applications used in enterprise IT environments today are deployed on top of virtual machines to make them both secure and easier to manage. But as the IT security and management tools surrounding containers and open source continue to mature, there are many who predict that, in time, more applications will wind up running on bare-metal servers – eliminating the need for virtual machines and for VMware’s proprietary technology.

In general, David Goulder, president of EMC Information Infrastructure told EMC World 2016 World conference attendees that EMC believes investments in existing IT infrastructure technologies are starting to top-out, as IT organizations start to invest in more modern data center architectures designed to run cloud-native applications.

EMC says a new survey, conducted by Vanson Bourne on its behalf, suggests that cloud-native applications running in modern data centers will be at the core of most digital business strategies. Specifically, the survey finds that 73 percent of respondents said a centralized technology strategy needs to be a priority, and 66 percent are planning to invest in IT infrastructure and digital skills.

As a hedge against the rise of so-called cloud-native applications, VMware has been pouring resources into first making it easier to run containers and OpenStack by using the existing hypervisor and then, secondarily, a VMware Photon Platform that creates a micro-hypervisor specifically designed to run containers. The VMware Photon Platform consists of VMware Photon Controller, an open source distributed control plane; Photon OS, a minimal Linux container host; and VMware ESXi, a bare metal hypervisor.

This transition, of course, is occurring just as Dell is moving to close its acquisition of VMware parent company EMC. At the EMC World 2016 conference Dell CEO Michael Dell announced that VMware would be one of six major business units that will make up the newly christened Dell Technologies company. As part of that family of companies, VMware will play a key role in modern IT environments that Dell says will be defined by Flash memory, scale-out architectures, and cloud-enabled infrastructure that will be software-defined.

How VMware adapts – including tactics of its integration with Dell Technologies – will be defined by various approaches to software-defined infrastructure. In the case of VMware, there has been a lot of emphasis on its NSX portfolio, which VMware intends to see, not only deployed on-premises, but also on cloud platforms such as Amazon Web Services, Microsoft Azure, and Google Compute Engine. Dell, meanwhile, has lent a lot of support to various open networking initiatives as part of a software-defined infrastructure (SDI) strategy that has the potential to obviate the need for NSX. At the same time, there is no shortage of approaches to software-defined storage. As a result, it’s unclear that any particular horizontal framework will dominate all aspects of a software-defined data center.

In fact, more often than not, the SDDC itself is going to be bundled with a converged infrastructure platform, because it makes little sense to invest in an SDDC that is then deployed on legacy infrastructure. Of course, the most advanced SDDC platform in the EMC arsenal is the public cloud platform managed by Virtustream. Based on micro virtual machines developed by Virtustream, EMC has elected to not make that platform available to IT organizations that might want to deploy it themselves on-premises. Instead, it views SDDC as competitive advantage in a war with Amazon Web Services, Microsoft Azure, and IBM SoftLayer – which it intends to start pressing more aggressively.

At same time, VMware also plans to continue to invest in its VMware vCloud Air public cloud. Again, this appears to be part of a hedging strategy, to offer many different products to a client base that could use cloud infrastructure in different ways.

One thing that is clear at the moment is that VMware has a large installed base of customers that, for now, appear to be keeping the faith. Mansfield Oil, for example, is a long-time VMware customer that is just starting to embrace IT automation tools from VMware as part of a longer-term hybrid cloud computing strategy, embracing both private and external cloud service providers. But this strategy requires a delicate balance, and VMware will have to be careful that it does not lose the battle for new cloud application workloads that could have an impact on its licensing revenues for years to come.

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