Experton Group Weekly IT News

VMware's New Reality

By: Cal Braunstein

Microsoft Corp. releases Hyper-V and VMware Inc. cuts its earnings forecast and replaces its CEO. VMware's new CEO comes from Microsoft.

Focal Points:

• Microsoft released the final version of Hyper-V, its free hypervisor for Windows Server 2008, which competes with VMware's ESX server. Hyper-V is a first generation virtualization product that does basic partitioning. The hypervisor supports Microsoft operating systems and Novell, Inc. SuSe Linux guests. Hyper-V also provides the ability for snapshots of a running virtual machine so that the system can revert to a previous state. This version of the product does not support "live migrations," which VMware calls its VMotion technology. It is also lacking strong management tools.
• VMware lowered its revenue expectations for the year to be slightly below its previously stated goal of 50 percent growth. This caused a steep sell off in the shares of both VMware and its parent, EMC Corp.  EMC owns approximately 85 percent of VMware. EMC CEO Joe Tucci, who also serves as Chairman of VMware, announced the departure of Diane Greene, a co-founder and CEO of VMware. He also announced that Paul Maritz would replace Ms. Greene as CEO and President.
• Mr. Maritz was at one time part of the core Microsoft leadership team and prior to his new role, was president of EMC's Cloud Computing Division. In 2003 Maritz founded Pi Corp., a software firm focused on creating cloud computing based solutions for personal information management. EMC acquired Pi in February. Maritz states he will be expanding the virtualization software company's role to providing Internet-hosted computing services – i.e., cloud computing – to its clients.

Experton Group believes VMware will focus its strengths on the mid- to high-end of the virtualization market and allow Microsoft and others to fight over the low-end of the market. The company will seek to add functionality to remain ahead of the pack and pursue alternative channels and strategies so that it can remain the perceived thought leader in the virtualization space. IT executives should expect to see VMware move up the stack in the current virtualization market, as well as develop leading edge cloud computing solutions and provide imbedded functionality inside EMC offerings. Given VMware's need to maintain its momentum, IT executives should press the company to explain its roadmap and strategy, and seek deeper discounts, enabling a better return on investment on VMware-based virtualization projects.