Google, VMware Bolster Alliance to Lift Sales

(Bloomberg) -- Google’s cloud-computing unit unveiled an expanded partnership with software maker VMware Inc., as the Alphabet Inc. division seeks to catch up to rivals that have similar deals.

The pact will help VMware, which makes virtualization and networking tools, satisfy customers who want to move VMware-based workloads from their corporate servers to Google’s public cloud, the companies said Monday in interviews with executives. VMware and Google are expected to formally announce the tie-up on Tuesday.

Google’s annualized sales for its cloud-computing business will be $8 billion this year, the company said last week during its earnings call. That figure includes internet-based computing and storage, as well as Google’s suite of productivity apps for word processing, spreadsheets and other office needs. Cloud revenue generated by market leaders Amazon.com Inc. and Microsoft Corp. dwarf Google’s expected performance this year, boosting the need for partnerships with common corporate vendors like VMware, which has tens of millions of enterprise workloads running on its software.

This “means customers can bring all their existing VMware tools, policies, practices from a private cloud on premise to Google Cloud,” Thomas Kurian, the unit’s chief executive officer, said in an interview. “Customers were asking us to make it easy to protect their investments in VMware.”

Kurian said customers also can access Google’s artificial intelligence, machine learning and analytics tools, as well as deploy their apps to all the regions where Google has data centers, beginning in the U.S. The Information reported earlier Monday that Google and VMware were discussing a cloud partnership.

Most companies have used virtualization software to combine different workloads on servers, which help save money and run corporate networks more efficiently. As many of those companies move tasks from their data centers to the public cloud, VMware, which is more than 80% owned by Dell Technologies Inc., has sought to keep its software relevant and customers have looked for ways to ease the transition.

“We don’t go into a customer and tell them what public cloud they should use,” Sanjay Poonen, the chief operating officer of VMware, said in an interview. “Customers have picked GCP for reasons particular to the strength of their platform, like AI. Since Thomas has taken over we have seen more interest in Google Cloud Platform.”

Google and Palo Alto, California-based VMware have been discussing the partnership for months, and sought to make their integration available as soon as possible. The software was engineered by CloudSimple rather than VMware, which put together its tie-up for Amazon Web Services.

“We wanted to get the fastest route to the market,” Kurian said.

VMware will also not directly sell the software integration with Google, unlike the dynamic in its partnership with Amazon, which VMware has described as its key cloud ally since its 2016 deal. Starting later this year, customers will be able to buy the product in Google’s cloud marketplace, and Google and CloudSimple will field any customer service inquiries should something go awry. VMware’s tie-in with Microsoft Azure, announced in April, is structured in a similar way.

Besides virtualization software, VMware customers will also be able to run networking tools through Google’s cloud. Previously, the companies’ software collaborated on a few less comprehensive tasks.

Kurian described the VMware partnership as his company’s third step into hybrid-cloud functionality, which lets organizations run and store data in their own servers as well as facilities run by large cloud providers. He ruled out the possibility that Google could follow AWS and Microsoft by offering hardware for customers to put in their data centers, describing it as “the surest way to create friction.”