When VMware announced last week that it would loosen the radical change in price structure it announced only a month ago, it was doing more than mollifying a few disgruntled customers. It was responding to a revolt among customers, analysts say, even at large companies that rarely considered competing virtualization platforms due to VMware's lead in the technology.\nVMware was also responding to increasing pressure from a whole new class of competitors who see the cloud not as a higher level of abstraction on the data center (as VMware has traditionally approached it), but as the primary platform on which end-user companies can run the applications they actually want. \nLast Tuesday, for example, startup CumuLogic announced the beta of a new product designed to automate and manage the process of configuring and deploying workloads on several different cloud platforms at once. \nUnlike the traditional approach of virtualization players like VMware and Citrix or cloud providers such as Amazon or Terremark, CumuLogic doesn't provide the cloud platform on which the application runs. It is designed to take an application written in Java and add the code required to run on a platform-as-a-service (PAAS) cloud\u2014including the virtual machine, description of requirements for storage, compute power, access rules and external services such as database management. CumuLogic then configures the workload to run on one of the cloud platforms CumuLogic supports, which include Amazon's EC2, Eucalyptus, Cloud.com, Vsphere, or in CumuLogic's next release, OpenStack. \nCustomers then send the workload off to that cloud as they would any other, except that CumuLogic's monitoring and management apps will monitor performance and watch for developing problems. Take my infrastructure\u2014please!\nPAAS is becoming a much more important part of the cloud equation as customers become more comfortable leaving the infrastructure to someone else and focusing on the Java or Ruby applications they build from scratch, according to Bernd Harzog, an analyst covering virtualization performance and capacity management at The Virtualization Practice. In fact, the ability to rent highly sophisticated enterprise applications from vendors such as Salesforce.com, or build them using highly automated, time-saving application development languages such as Ruby on Rails or Java have changed the whole market for corporate application development, according to a May report from Morgan Stanley.\nBuilding the logic for an application is relatively easy compared to the hardware, facilities, systems-maintenance and operational costs of running a 24\/7\/365 data center to support it. The opportunity to skip that cost, or pass the bulk of it to a PAAS provider, makes customized, highly automated IT available to far more companies than ever before, the report concludes. \nThe key to that ability is PAAS, which is "set to be the environment of choice for application development and deployment going forward, given its ease of use, low up-front capex requirements and time-to-market advantages," according to Morgan Stanley analyst Adam Holt, lead writer on the report.\nHolt predicts the number of workloads running on public clouds will double during the next three years and drive a massive build-out among PAAS providers that will expand the market to more than $50 billion per year. A rosy future for cloud\nThe outlook for PAAS is great news for VMware, which should be able to continue its growth rate of 20 percent over three years, but the rise of PAAS will benefit other companies even more, Holt wrote. \nMorgan Stanley predicts Salesforce.com, which bought PAAS vendor Heroku last December, could boost its billings 53 percent in fiscal 2011, though its mainstream business may grow just 11 percent during the next three years. The increases all come from the growth in the number of cloud-based workloads, which Morgan Stanley expects will be more than 50 percent per year, raising Salesforce and Heroku along with all the other boats in the PAAS pond. \nMicrosoft doesn't fare as well in Morgan Stanley's expectations because of its emphasis on on-premise software, but the company still shows a lot of potential for growth in its Azure PAAS service and the SaaS version of its Dynamics CRM application, Holt wrote. Behind the VMware pricing plansVMware failed to fully account for the cloud phenomenon in its pricing plan, according to Harzog. Consequently, VMware customers have become accustomed to buying servers with low-powered processors and all the memory they could carry because VMware charged by the processor socket, which made each additional VM almost free. \nSome virtual machines ran on slow servers but used more than 1TB of memory to keep their performance high. Under the original virtual RAM (vRAM) pricing plan such "monster VMs" would require as many as 20 of VMware's highest-cost licenses\u2014enterprise licenses\u2014rather than just one, because the virtual RAM (vRAM) prices increased with the number of gigabytes. \nUnder the new vSphere 5 pricing plan, the amount of memory allowed per license is more than double the original version and VMware put a cap of 96 GB on the number of gigs-per-virtual-machine for which VMware would charge. \nUntil it announced the first version of the vRAM plan, VMware customers rarely complained about VMware prices and rarely switched to competing products or cloud platforms largely because of VMware's functionality and the belief that Microsoft's hypervisor is worth what you pay for it (essentially nothing), says Gary Chen, research manager for enterprise virtualization software at IDC. A raft of new competitors\nMore than prices have changed. \n"It might not have been true a couple of years ago, but the competitors have come far enough in developing new capabilities that they're close to VMware\u2014at least before vSphere 5\u2014at a much lower cost," Harzog says. "For a lot of them it has turned out that 'good-enough' virtualization is good enough, VMware's competitors can supply that, and the future direction people are looking toward is more PAAS and cloud infrastructures that could use more than just vSphere as a virtualization platform." \nNew competitors include newcomers such as CumuLogic as well as previously secondary players such as Salesforce.com. They also include Microsoft Azure, Amazon's EC2 and Elastic Beanstalk, Terremark, Red Hat's Openshift, Intuit's Quick Base service, NetSuite's Suite Cloud, RightNow Technologies CX and VMware's own platform-independent PAAS-configuration management suite Cloud Foundry, according to Morgan Stanley. Harzog and other analysts say VMware is pushing customers to these competitors. \nHarzog characterizes the number of legacy apps custom-written for scaled-out PAAS platforms as "tiny" compared to those running on VMware products now. "But," he adds, "it probably represents the future of application development." \nThe number of new competitors, the rate of their growth and of PAAS in general, and the radical shift from on-premise, single-platform computing to multiplatform PAAS-based apps all pose the danger that PAAS could displace much of what VMware offers. \nStill, VMware does have a large, loyal base of customers, Holt wrote. And while the pricing flap didn't ruin VMware's relationship with its largest customers, it did cause many to question their decision to rely so much on one virtualization and cloud vendor, analysts agree. Despite the pricing uproar, Harzog believes VMware has a bright future. "During the vSphere 5 briefings, VMware said its enterprise customers were a bit less than 40 percent virtualized\u201440 percent of their physical servers," he says. "That means the runway in front of them is one-and-a-half times as long as the runway behind them. They can more than double in size as a company before they run into any danger of running out of room. All they have to do is make it easy enough for customers to stay with them for virtualization."