With Amazon Web Services and Microsoft Azure now on greater than $2 billion annual run rates and expanding their application services nearly weekly, it’s starting to look tougher than ever for traditional hosters, enterprise cloud players and managed service providers to compete against them. When you just can’t see how to win, the better option might just be not to try.
That seems to be the new trend in enterprise cloud vendor strategies as evidenced this week in moves by Datapipe, Google, and VMware. These moves follow similar shifts in strategy taken by Accenture, Rackspace, and others in the past quarter. The strategies acknowledge a reality that is redefining what they hoped hybrid cloud meant.
That reality: Hybrid means Hyperscale +.  
Sorry, CIOs, but hybrid cloud does not mean your traditional on-premise environment plus the enterprise cloud of your choosing. It has meant from the beginning, and many CIOs are sadly coming to this realization a bit late, a public cloud service connecting back to your traditional IT environment. And you’re all hybrid; and have been since the sales team connected Salesforce.com to your data center.
Managed service providers have been slow to acknowledge this reality as well, hoping they could add and mature their public clouds faster than your developers could figure out how to leverage AWS. Wrong answer. Datapipe saw this coming early on and pioneered a unique offering in 2008 where this traditional hoster would manage your applications deployed atop AWS. While not explicitly in its marketing, the subtle benefit to Datapipe here was that in taking this position they could help customers realize that certain apps and elements of complex systems simply didn’t fit on the AWS platform (weren’t elastic or transient, or needed their own hardware or the commercial software license was too expensive on a pay-per-use platform) and thus should instead be placed in Datapipe’s cloud or traditional hosting environment. This offering positioned Datapipe as one of premier AWS partners and won them a ton of business as the cloud platform market emerged. Enough business, in fact, to fill its coffers with cash and investments that let them pick up key rivals LayeredTech and more recently GoGrid to expand their data center footprint and in-house skills. 
Now they have expanded this Hyperscale+ management strategy through a formal partnership with AWS that culminates in a jointly funded center of excellence in hybrid deployment and management. 
This is a new more proactive approach to hybrid by AWS. Whereas before they had helped Eucalyptus maintain EC2 and S3 compatibility for its private cloud software solution, that was more passively supported by AWS. This joint effort is one AWS is actively supporting and investing in. 
Microsoft is fostering similar partnerships with managed service providers. It signed a hybrid management deal with Accenture in late 2014 and has been helping Rackspace manage Microsoft applications and services running on Rackspace or hybrid within Microsoft public cloud data centers. Rackspace has yet to formally extend this program to Office 365 or custom apps on Azure but that seems only a matter of time at this point.  
Bigger players in the market are less willing to concede defeat to AWS and Azure. Such is the case with VMware and Google. Both have aspirations of competing head to head with Amazon and Microsoft but need help in getting there faster. VMware’s vCloud Air is mostly a standard IaaS offering with limited application services and thus limited developer appeal. To get there faster it’s signed on to resell selected Google Cloud Platform services to its cloud customers and to do the integration work so they appear “native.” VMware will also sign HIPAA BAAs for deployments that span the two services.
Google has the ear of many a modern app developer but nearly no reach into enterprise I&O departments. This partnership lets them ride in on the backs of the VMware sales channel.
This approach would be solid strategy if their two public cloud offerings were fully complimentary but they certainly are not. An enterprise vCloud customer can’t use Google’s compute instances from their vCloud account, nor the many GCP and Google App Engine services Google offers and VMware doesn’t resell. You'll have to get a separate GCP account for that. The trend in public cloud platforms is towards providing more application services that make modern apps easier to build and developers more productive. Google has a distinct advantage here and will likely turn many VMware resales into native accounts. This puts even more pressure on VMware's (and the greater EMC's) R&D teams to accelerate application services for vCloud Air – or hand over their clients. 
What does this change in thinking in the cloud service provider space mean for enterprises? All goodness, really. You already have relationships with traditional managed service providers and enterprise vendors who are waking up to cloud. Now you can use those same relationships to ensure developer productivity and hybrid deployments that meet your corporate IT standards. 
You’re not going all cloud anytime soon, and the learning curve for your I&O teams to manage the hyperscale cloud environments is steep. The right managed service provider fills this gap and will take on the liabilities and custom SLAs you continue to want but can’t get from the hyperscalers. Win, win for you and the hyperscalers.