Being a “trust but verify” type of investor, I have been kicking the tires a bit trying to get some clarity on the Kubernetes threat to PVTL and how SW went from the “war has been won” to a bit more cautious about technology trends and its impact on PVTL.
What seems clear to me is that this is not clear to practically anyone in the tech field based on what I reference further in this post.
The background environment that we are discussing regarding containers/databases includes a complex array of standards setting (kubernetes), strange bedfellows (GOOG and VMware), parent company control (DELL over VMWare and PVTL) and dynamic fluid partnerships that aim to give certain companies strategic advantages over another in more global battles (AWS vs GOOG).
It is a tangled web indeed!
Keep in mind that AWS is the King of the cloud…dwarfing GOOG, Azure and IBM. But they lack software prowess of the kind that MSFT and GOOG have so there are battles between them on levels far greater than just containers…though AWS has accepted Kubernetes as a standard…many believe that AWS will/must beef up its software offerings or they potentially see future erosion from GOOG and MSFT.
First let me state that I thought it was just me that didn’t get these PKS, Kubernetes, etc. tech trends…until I read this really great article that I would highly recommend you read straight through to provide some basic knowledge of where this industry started and where it stands…but let me reference specifically the questions it asks since I have been trying to understand it myself and it may give you some comfort that many experts are also scratching their heads:
Why does Google cloud platform have to run Pivotal Container Service, which requires people to build and operate it, and only AWS and Azure get this new VMware Kubernetes Engine that is operated by VMware? Moreover, why isn’t VMware Kubernetes Engine based on Pivotal Container Service, just a variant that VMware itself supports? How come Google Cloud Platform is not getting VMware Kubernetes Engine , and moreover, how come VMware Kubernetes Engine is not being offered on-premises on clusters running the VMware stack inside enterprise datacenters? And most importantly, why hasn’t VMware created a single substrate that can span public clouds and private clouds and provide a single, consistent, easy way of using Kubernetes, which can be run by enterprises if they choose or by VMware if they choose?
You see…this is a very tangled web…and it is far less clear than it first seemed.
If one considers who is winning this PaaS and Caas game, Kubernetes without question. Check out this 2017 article page 16 to see how they stack up…keep in mind that Cloud Foundry seems to be losing ground:
Page 18 shows how RedHat performs vs VMware…this was the genesis of the GOOG, VMW, PVTL partnership for their container kubernetes PKS solution…going after RedHat:
Meanwhile, PKS has its sights set on Docker, which has its own technology to manage containers. With VMware and Google behind it, Pivotal believes that PKS can grab market share from Docker, Watters said. Finally, VMWare is aiming at Red Hat, its longtime foe. The $17 billion enterprise-software company offers OpenShift, an application-development platform that’s similar in some ways to PKS. With the help of PKS and Google, VMware is hoping it can stem some of OpenShift’s growth.
“The three of us are coming for Red Hat,” Poonen said.
But PKS is predominantly an on-prem solution and many are questioning its success in the market…what happens to PKS over time as more and more companies move off-prem to the cloud?:
VMware and Pivotal this week released an update to their Pivotal Container Service (PKS), but adoption of the enterprise-focused platform remains up for debate. **Neither company broke out specific sales numbers for PKS.**Cowen and Company, which recently released results of a public cloud survey of more than 570 IT and cloud services buyers, noted lukewarm PKS interest so far.
“Our checks have not revealed any particular interest so far and it remains to be seen whether this will meaningfully affect [VMware’s] container positioning in the long run,” said Gregg Moskowitz, managing director and senior research analyst at Cowen & Company.
A recent customer survey conducted by cloud security platform provider Sysdig found that 82 percent of Kubernetes deployments were of the upstream open source version. By comparison, the study found that 14 percent of deployments were using a managed version like Red Hat’s OpenShift or Rancher Labs’ managed version.
And as to PVTL’s particular strength:
Dillingham wrote in an email. “The orchestration platform customers choose to consume that value on is secondary, but since Pivotal is the clear leader of the Cloud Foundry project but not Kubernetes, its preference for maximizing its differentiation will be to focus customers on its PAS offering over PKS.”
The Pivitol Application Service (PAS) you may recall is here:
It is with PAS that the author contends that PVTL will remain its key differentiator…not containers. The key question then is…is the PAS (PVTL’s real strength) enough to keep its momentum and grow revenue into the next decade???
When one goes back to their earnings call, it is clear that PAS is NOT enough for all customers:
Sure. We’re seeing a lot of adoption from existing customers. A lot of our existing customers are investing in PKS. They have workloads that they want to run – they aren’t necessarily a great fit for our PAS offering. And so, they’re really glad that Pivotal is bringing a Kubernetes offering to market and it runs on the same platform as PAS. And so, there, we have a lot of customers that are jumping in and getting their feet wet with that right now. What we think is a real advantage of it is that it enables a very small team of operators to deploy and update dozens or hundreds of Kubernetes clusters with relative ease and that’s something that’s differentiated. The VMware connection there is very helpful because we are activating their large sales force to help us go to market there; we’re also integrating with their networking capability, NSX T and that’s something that solves one of the biggest challenges of using Kubernetes in a private cloud setting.
We seem to be seeing a true cross selling arrangement with that GOOG/VMW/PVTL partnership for PKS…but what if that product…after the initial cross selling spike is over…what if adoption isn’t as great as they have touted…they do NOT breakdown revenue from PKS. We also know that VMW went rogue with their own kubernetes product without PVTL…so this is not necessarily a together with live or die partnership.
In case your head is not swirling by now, then we have arguments like this one that Cloud Foundry and Kubernetes will be run together with different use cases for each:
Kubernetes is, by design and definition, container-centric in its approach. It is described by one of its founders as “fundamentally a tool box.” Cloud Foundry, by contrast, container abilities like Diego notwihstanding, is application-centric. It is more production line than toolbox, in a sense. These approaches are neither mutually exclusive or inclusive, and indeed can and often are leveraged by different business units within the same organization depending on need.
So what does this all mean??? It means we have a tangled web indeed…it is far from clear where this is going and how PVTL’s predominant PAS expertise thrives in this age of rapid technology accelerations. It would be helpful if PVTL would parse out its revenue by PAS and PKS…doubt it will happen…there may be good reason for it. It would also be nice to hear what the cross selling revenue generation might be from the VMW relationship as compared to fresh organic growth. It would also be nice to know what the on-prem revenue was…especially since the trend in coming years is to the cloud.
Bottom line, if the whole discussion about PVTL has been confusing…it is for good reason! This is a very tangled web!
It speaks to the advice that Denny has given from time to time…that we cannot know what we cannot know…therefore, just follow the money. This company is far from a buy and hold IMO…many many complex issues and skirmishes are simultaneously occurring as noted above including containers/databases standards setting, strange bedfellows, parent company controls/cross selling and the many dynamic fluid partnerships that aim to give certain companies strategic advantages over another in larger global battles.
With such seminal events occurring at such rapid speed, being too confident in a recent IPO like PVTL might seem a bit careless. Hence, follow the money, remain nimble, don’t assume any war is won…ever.
And if you made it this far reading this post…you deserve a medal!