S.J.VAUGHAN-NICHOLS
Does VMware
Have a Real Future?
Price is a big
weakness
when every
player in the
virtualization market
is offering a
free option.
WE ALL KNOW that technologies come and go. Sometimes, technology companies do the same thing. I’ve long thought that VMware’s days were numbered, and not because there’s anything wrong with its technology.
Steven J. Vaughan-Nichols has been
writing about
technology and the
business of technology
since CP/M-80 was
cutting-edge and
300bps was a fast
Internet connection —
and we liked it!
He can be reached at
sjvn@vna1.com.
VMware has dominated the virtualization
market ever since that market came into being.
It has done so the old-fashioned way: by offering
good software and support. What could go wrong?
Well, price is a big weakness when every player in
the market, VMware included, is either offering a
free virtualization program or baking one into their
operating systems. It’s hard to compete with free.
Though VMware provides its low-end offerings
for free, it can’t stay in the game by relying on
those alone; it makes its money exclusively from
selling high-end virtualization and virtualization
management software. Unlike its competitors,
VMware doesn’t have much of a revenue stream
from operating systems and other products. And
when it attempted to overcome that weakness, it
was blindsided. More on that in a bit.
VMware’s biggest problem is one that has
laid other companies low: Microsoft. Slowly but
surely, Microsoft’s Hyper-V has been making gains
against VMware’s ESX. Gartner projects that in
2012, Hyper-V will account for 27% of the market,
up from 11% two years ago. Within that projected
27%, Gartner says Microsoft will take 85% of all
small businesses that use virtual servers.
On top of that, Windows 8 Server boasts a
greatly improved version of Hyper-V. Enterprise
customers who believe they can’t go wrong buying
Microsoft are going to start asking why they need
VMware as they move to Windows 8 Server.
But Microsoft isn’t the whole story, not even
when you throw its buddy Citrix, with XenServer,
into the mix. Multiple big IT vendors, includ-
ing IBM, Hewlett-Packard, BMC Software, Intel
and Red Hat, have banded together in the Open
Virtualization Alliance to promote an open-source
virtualization platform — Kernel-based Virtual
Machine (KVM) — as an alternative to VMware.
