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The much-anticipated public cloud service from VMware was formally unveiled, leaving channel partners to sort through the pros and cons of an offering that might open up a new market while presenting serious competition to solution providers that already roll their own VMware cloud service.

The expectation is that there is a lot of pent-up demand for VMware capabilities in the cloud. At the moment, only a relatively small number of cloud service providers are offering services based on VMware, largely because they prefer to use royalty-free Xen open-source virtual machine software.

With the general availability of the vCloud Hybrid Service scheduled for the third quarter, VMware is looking to significantly expand its presence in the cloud by delivering a service that allows IT organizations to seamlessly move an application running on VMware into a data center managed by VMware.

“Customers will be able to take the trusted infrastructure they use in their private clouds and seamlessly extend it to the public cloud,” said VMware CEO Pat Gelsinger. “This is part of what we call our inside-out strategy for seamlessly going to a public cloud.”

In addition to unfurling vCloud Hybrid Service, VMware also announced that it plans to allow customers to host instances of the SAP HANA in-memory computing platform in its cloud—either in a private cloud or as a shared public cloud resource. In contrast, SAP has opted to build a cloud computing platform that only supports the deployment of SAP HANA as a private cloud.

According to Gelsinger, the vCloud Hybrid Service is based on the software-defined data center technology that VMware has been developing for the past year. The basic idea is to allow roughly 500,000 VMware customers to more easily take advantage of cloud services, which should create a major opportunity for VMware business partners.

However, solution providers that have already developed their own service—or that rely on services from third-party cloud service providers—may soon find their services overwhelmed by the marketing muscle that VMware can bring to bear selling its own cloud service. That may force more solution providers to resell the VMware service rather than compete directly. Obviously, that could have a negative impact on overall profit margins, but it also means that those solution providers will no longer have to make capital investments in building out additional data center capacity.

Perhaps the best news from a channel partner perspective is that VMware has promised to share the technology it has developed with third-party cloud service providers.

“The intellectual property developed for vCloud Hybrid Service will be shared with partners via the VMware service provider program,” said Mercer Rowe, director of cloud services for VMware.

Major benefits of the vCloud Hybrid Service include the ability to manage hybrid cloud scenarios using a common management platform and the fact that regardless of where the instance of VMware is running, solution providers can lean on a single VMware support organization. In addition, the decision on where to deploy an application running on top of VMware can now be made at run time, versus having to commit up front to a private or public cloud computing deployment,

At present, VMware says that 3,700 applications have been certified to run on vCloud Hybrid Service. According to Rowe, most customers will take advantage of hybrid cloud services to deploy applications more flexibly, versus trying to dynamically shift application workloads across multiple data centers. However, over time, solution providers should fully expect the walls that separate one data center from another to virtually get thinner and thinner.

Michael Vizard has been covering IT issues in the enterprise for 25 years as an editor and columnist for publications such as InfoWorld, eWEEK, Baseline, CRN, ComputerWorld and Digital Review.