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Joe Sarabia
CST 300
February 2, 2016

An Analysis of Cloud Compute Infrastructure as a Service

Fifteen years ago, when businesses needed to implement a new server in their technology

infrastructure in support of an initiative or their operations, a common sequence of events would

include requisition, acquisition from the vendor, installation in a server room or datacenter, and

configuration by operations personnel. This process required long lead times, typically measured

in weeks, to be factored in to the organizations planning. Today, the process of implementing a

new server in ones infrastructure can be completed in minutes by using cloud based services.

Cloud compute infrastructure as a service is a rapidly growing field in the information

technology industry, which largely supplants a business need to purchase and operate its own

servers.

Cloud compute infrastructure as a service is a type of cloud computing service that

parallels the infrastructure and data center initiatives of IT (Leong, Toombs, & Gill, 2015).

According to Synergy Research Group, quarterly revenue for cloud infrastructure services in the

third quarter of 2015 surpassed $6 billion with an annualized growth rate of over 50 percent.

Amazon Web Services (AWS), Microsoft, IBM and Google control over half of the market share

and AWS alone accounts for over 30% of the market (The Big Four, 2015). The major

corporations in this industry according to Leong et al.s (2015) Magic Quadrant for Cloud

Infrastructure as a Service, Worldwide report are AWS, Microsoft, Google, CenturyLink,

VMware and IBM. These corporations either appear in the leaders quadrant, which Gartner

describes as having the highest completeness of vision combined with the highest ability to

execute (AWS and Microsoft) or they appear in the visionaries quadrant, which Gartner
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describes as having a high completeness of vision but a lower ability to execute (Leong et al.,

2015).

The cloud compute infrastructure as a service field began as an academic research project

in Silicon Valley. In 1997, Edouard Bugnion, Scott Devine, Kinshuk Govil and Mendel

Rosenblum published a research paper as part of their graduate studies at Stanford discussing a

prototype that they had built named Disco. Their prototype leveraged a technique that had been

popular in the 1970s but had not previously been applied to the x86 instruction set; specifically,

Disco implemented virtual machine monitors (VMM) that enabled large scalable servers to run

concurrent instances of the same operating system with minimal overhead and minimal

implementation effort (Bugnion, Devine, Govil, & Rosenblum, 1997, p. 412). With their

prototype, the inklings of a new industry had been born.

The functionality embodied in Disco would eventually come to be known as a

hypervisor, essentially an operating system for running other operating systems in a highly

efficient manner. One of the most fundamental capabilities of a hypervisor is to provide a layer

of abstraction that allows for the creation and simultaneous operation of one or more virtual

machines on a single physical server. The process of creating a virtual instance of a server rather

than a physical one is known as virtualization. Within this layer of abstraction, the VMM

dynamically provisions physical machine resources to virtual machines. Instead of a physical

servers resources being underutilized, such as a processor sitting idle, the hypervisor allocates

resources to the individual virtual machines that need them and constantly make adjustments as

demand for the resources fluctuates. This provides the ability to leverage the resources of a

physical server more effectively: without a hypervisor, a physical server runs a single operating

system at a time, with a hypervisor, a physical server can run many virtual machines
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concurrently, each containing its own instance of an operating system. Ultimately, this enables a

business to buy fewer servers and use their resources more efficiently. The impact of hypervisors

and virtualization would eventually have a profound impact on the entire information technology

industry.

In 1998, Three of Discos inventors, Mendel Rosenblum, Scott Devine, and Edouard

Bugnion along with Edward Wang and Rosenblums wife Diane Greene, took their prototype

from academia towards the commercial sector by incorporating to form the virtualization

industrys first pioneer: VMware. VMwares first 5 employees worked out of a single 500 square

foot office in a shopping center (Peacock, 2013). VMware released its first product VMware

Workstation in 1999. By 2001 VMware released ESX, the first version of its flagship hypervisor.

VMwares software was quickly in demand by chief information officers (CIO) at large

enterprises and VMwares early sales thrived amidst the challenging economic environment that

followed the burst of the late 1990s dot com bubble (Lashinsky, 2003).

VMwares creation of the virtualization industry fueled phenomenal growth. Its success

had caught the attention of the enterprise technology industry, and by late 2003, the storage

vendor EMC acquired VMware for $625 million in cash (VMware, Inc., 2015). After the

acquisition, VMware continued to operate as separate subsidiary (VMware, Inc., 2015). In 2007,

VMwares initial public offering (IPO) made a huge debut on the New York Stock Exchange. On

its first day its stock value increased by 73%, and by the closing bell VMware was worth $18.1

billion, which according to Harris (2007) made it Silicon Valleys third largest home-grown

software company after Oracle and Adobe Systems at that time.

VMware is one of the great success stories of Silicon Valley. By late 2015, VMware had

more than 18,000 employees in over 120 offices around the globe (ORegan, 2015) with annual
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revenue of over $6 billion dollars (VMware, Inc., 2015). Today, VMwares global headquarters

are located in the fabled Stanford Research park in Palo Alto, CA. Its Palo Alto campus spans

over 100 acres and VMware is the largest company in that city (Peacock, 2013). VMware has

major branch office locations across the globe, including 19 countries other than the United

States (VMware, Inc., n.d.-b).

Over the years, a team of industry veterans has led VMware. The year after its IPO, EMC

replaced then CEO Diane Greene, who was one of VMwares co-founders, with one of its own

executives, Paul Martiz. Mr. Maritz was a long time industry veteran who had spent many years

as a top executive at Microsoft before his time at EMC (Pivotal, n.d.). Today, VMwares 3 top

executives are Pat Gelsinger, Carl Eschenbach and Jonathon Chadwick.

Pat Gelsinger took over as VMwares CEO in 2012. Mr. Gelsinger spent over 30 years at

Intel where he led the Digital Enterprise Group and then had a short three-year stint at EMC

prior to taking the helm at VMware. He holds an associate degree, a bachelors degree and a

masters degree, all in electrical engineering. He was also awarded an honorary doctorate degree

(VMware, Inc., n.d.-c). While at Intel, Mr. Gelsinger was part of the design team for the 80386

processor, was the leader of the design team for the 80486 processor, and was their first CTO; by

his own account, he had a Cinderella career at Intel (Ganguly, 2015). At EMC, he was the

president and COO of EMCs Information Infrastructure Products. Mr. Gelsinger has a 92%

approval rating on Glassdoor.com, a popular jobs and recruiting website (VMware Reviews,

n.d.). He is also known for his devout dedication to his religious beliefs; while he was the CTO

of Intel, he authored a book entitled Balancing your Faith, Family & Work (Ganguly, 2015).

Carl Eschenbach is a long time veteran of VMware and its current president and COO.

He joined in 2002, making him one of the most tenured executives at VMware (VMware, Inc.,
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n.d.-d). Prior to his appointment to his current position in 2012, Mr. Eschenbach served as an

executive vice president and as a co-president at VMware (VMware, Inc., n.d.-d). Before joining

VMware, he held various sales leadership and sales management positions at technology

companies such as Inkomi, 3Com Corporation, Lucent Technologies and EMC (VMware, Inc.,

n.d.-d). In addition to his responsibilities at VMware, Mr. Eschenbach sits on the board of

directors at Palo Alto Networks (Palo Alto Networks, n.d.). There is no education data available

for Mr. Eschenbach in any of the commonly used resources for such information, including his

profile on VMwares website, his LinkedIn page, or his Bloomberg profile. Like Mr.

Eschenbachs education, there is also a paucity of information available about his reputation in

the industry.

Jonathon Chadwick has served as VMwares CFO since 2012. Prior to Mr. Chadwicks

appointment as CFO, he was the CFO of Skype at the time of its acquisition by Microsoft. Mr.

Chadwich holds an honors degree in electrical and electronic engineering.

VMware has a diverse product line that has grown substantially through acquisitions and

organic development efforts. As of early 2016, VMwares website lists 59 products in its

portfolio (VMware, Inc., n.d.-a). Historically, VMwares license revenue was driven primarily

by its VMware vSphere product, which combines its ESX hypervisor along with vCenter Server,

which is a management platform providing enhanced capabilities for collections of servers

running ESX; vCenter Server forms the foundation for what VMware calls the software defined

datacenter (VMware, Inc., 2015). After it became a publically traded company, VMware enjoyed

numerous years of strong double-digit license revenue growth, bolstered primarily by sales of

vSphere; however, by 2013 its revenue growth had slowed substantially. License revenue

increased 9% in 2013 and 14% in 2014 compared to 36% in 2010 and 31% in 2011 (VMware,
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Inc., 2015). In its 2015 K-10 filing, VMware attributed this decrease to vSphere stating that

over the last two years, the growth rate of our standalone vSphere product license sales has

declined as certain large markets for data center server virtualization have matured (VMware,

Inc., 2015). Given this decline, VMware has recently intensified its focus on increasing revenue

growth in other product areas.

In 2012, VMware made what was its largest acquisition to date when it paid $1.26 billion

for software defined networking startup Nicira (Williams, 2012). Software defined networking,

then in a very nascent form, promised to do for networks what VMware had done by providing

virtualized servers: namely the ability to deliver common networking hardware devices such as

routers and switches completely in software. In late 2013, VMware released NSX, its first

product to integrate the technology it had acquired through Nicira. VMware does not regularly

break out revenue numbers by individual product; however, by the end of 2014, NSX had

reached annualized revenue of $200 million (Bass, 2015). IDC estimates that the software

defined networking market will reach $800 by 2018 (Bass, 2015). Despite the growth of NSX

and the market opportunity for this product, it is unclear whether sustained growth of NSX

license revenue will offset the decline of vSphere license sales.

VMware has a very strong reputation in the industry. One metric used by organizations to

determine brand loyalty is called the Net Promoter Score (NPS), which according to Temkin

Group (2015) calculates the likelihood that customers will recommend a company to friends

and colleagues. In 2014, VMware achieved a net promoter score of 45, nearly double the

technology vendor average of 23.1 (Temkin Group, 2015). In 2015, VMware placed 65th on

Fortunes list of best companies to work for (Sutter, 2015).

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Over time, competitive hypervisors were developed and threatened VMwares market

dominance and incumbency in enterprise datacenters. Two notable hypervisors are the open

source Xen Project, which was released out of the University of Cambridge in 2003, and

Microsofts Hyper-V, which was released in 2008.

Eventually, software vendors realized that the capabilities of a hypervisor operating at

large scale created an opportunity to provide a brand new service to its customers: cloud

compute infrastructure as a service. In 2006, Amazon Web Services (AWS) released its EC2

service, and with it delivered the ability to instantly create a server from a web page and have

ubiquitous access to it. This was the first cloud compute infrastructure as a service offering in the

market. In todays marketplace the market leaders for cloud compute infrastructure as a service

are AWS, which runs on Xen, and Azure, which runs on Hyper-V. VMwares vCloud Air,

which runs on its own ESX hypervisor, is also a player in the field; however, at $400 million of

annualized revenue, and despite having pioneered virtualization which paved the path for cloud

compute infrastructure as a service, it isnt considered a serious threat to encroach upon the

market leaders share of this field (Gillin, 2015).

Success in this field is truly a multidisciplinary affair. It requires expertise in networking

and storage along with a strong understanding of computer architecture and how operating

systems function. In particular, because a hypervisor is an operating system for running

operating systems, it is beneficial to understand how an operating system manages memory and

what the performance characteristics of different memory management techniques are. This is

important because it directly correlates to the performance of systems managed by a hypervisor

and will aid in the ability to architect complex systems and identify and resolve performance

issues.
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When it comes to educational background, employers in this field commonly look for a

bachelors degree in computer science. The CS online degree completion program at California

State University, Monterey Bay is well suited for this requirement. Additionally, this program is

uniquely positioned as the only fully online undergraduate computer science program in either of

the university systems in the state of California, making it very well suited to working adults,

including those already working in the information technology field who are looking to advance

their careers.

Beyond the education requirements, employers in this industry are commonly looking for

candidates with hands-on experience working with specific technologies. While this can present

a challenge for recent graduates looking to gain employment in this industry, there are a myriad

of resources available to allow prospective candidates to learn about specific vendors

technology and obtain hands-on experience with it. Specific resources that can be used for this

purpose are VMwares Hands on Labs and online learning resources such as Cloud Academy.

In addition to education requirements, employers commonly seek candidates with

relevant professional certifications that demonstrate their knowledge and expertise with

particular technologies. A common method to gain hands-on experience outside of professional

employment that also provides great preparation for obtaining professional certifications is

building a home lab. The process of building and operating a lab that leverages virtualization

technology is an effective way to gain experience and insight.

Success in this field goes beyond the educational aspect. Another critical component

revolves around activity in the technology community. Industry conferences such as VMwares

VMworld, Microsofts TechEd and Amazon Web Services re:Invent are fantastic opportunities

to obtain a plethora of knowledge in a compressed timeframe. They provide extensive

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information on existing and upcoming products. Additionally, there are excellent opportunities

for networking at these events in both structured manners, i.e. organized events, and ad-hoc

manners. Beyond industry conferences, another effective mechanism for acquiring knowledge

and networking with industry professionals is participating in user groups, which are typically

free and often sponsored by industry vendors.

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References

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business-from-cisco

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behind

Bugnion, E., Devine, S., Govil, K., & Rosenblum, M. (1997). Disco: Running commodity

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