I wouldn't be very surprised if the other CSP's are the customers that VMWare are really interested in. Yeah, they will be huge/big enterprise customers, but .... With quite a few playing with CloudStack, and the number of people getting it to "work well" may require the fingers of my "other hand" to count, this could be the embrace phase although you could make a case that preventing defections is the overriding goal.
The hardware is cheaper, the software licensing costs get more expensive to get the hardware "working well" and people are the anchors on your devops albatrosses having a tough time getting off the ground. If they ever do make it, it'll be gorgeous. If ever. At the end of the day, VMWare seems to be offering the substitution of licenses for the people, less of them required for a given chunk of data center capability.
I'd personally come down on the side of people as I can train and retrain them, been doing it almost my whole damn life (four decades+). More expensive to trade up, but doable. Licenses, especially expensive licenses. No. And using some elses staff, hardware, and licenses is probably a bit more expensive. If not a lot.
Still, this is VMWare, a company I've known since they were working on the very first beta, and that was a lot of fun. True. Lots of talent, lots of money, lots of enterprisey business sense except for a couple of bobbles. And who knows, like Cisco and all the other players, they may get something that actually works into our hands. I wish them well -->