VMware Enters Brave New World at VMworld, Desktop and Server Virtualization's Biggest Stage

By Scott Ferguson  |  Posted 2008-09-11

VMware Enters Brave New World at VMworld, Desktop and Server Virtualization's Biggest Stage

In the summer of 2007, VMware, with a successful IPO under way and hardly any serious competition in the market, began to look more and more like a critical darling of the IT industry and the company poised to dominate the x86 virtualization market for the foreseeable future.

Now, in the autumn of 2008, those days seem long gone.

It started almost immediately after the VMware IPO, when Citrix Systems laid down $500 million to buy XenSource to challenge VMware both in the data center and on the emerging desktop virtualization scene. Then Microsoft-belatedly-rolled out with Hyper-V, which could help the software giant build a franchise with small and midsized businesses that are interested in virtualization but had not already invested in VMware.

Those two major developments ignore many of the other challenges that have sprung up, from Oracle to Red Hat's acquisition Sept. 4 of desktop virtualization specialist Qumranet to Sun Microsystems' release of its version of its open-source xVM VirtualBox software a week later.

While VMware forged ahead, the company hit another bump in the road when parent company EMC and its top management decided to oust VMware CEO and President Diane Greene, who co-founded the company and led it through the 2007 IPO. It came as no surprise that Mendel Rosenblum, VMware's chief scientist, co-founder and Greene's husband, announced Sept. 8 that he would leave. Other executives have left as well.

In July, VMware pulled in $456 million in revenue, but that did not stop EMC from letting Greene go. Industry observers believe part of EMC's problems with Greene were that VMware-s revenues have been below Wall Street expectations, causing the stock to slide.

Customers Not Turning Away


Still, customers don't seem to be turning away from VMware, despite the growing number of options on the market.

In a 2007 study of worldwide virtual machine software by IDC, VMware held a 76 percent market share. However, the numbers came in before the release of Hyper-V by Microsoft this year.

Now, new CEO Paul Maritz, a former Microsoft executive who was heading up EMC's cloud computing division when he was appointed to his new post, and his keynote talk at the 2008 VMworld conference in Las Vegas, which kicks off Sept. 16, is expected to be closely watched by industry insiders and customers to take the pulse of not only VMware but where x86 virtualization is headed in the next 12 to 18 months.

During his talk, Maritz is expected to focus on what VMware will do to make its virtualization technology the cornerstone of the new effort to build out the infrastructure of cloud or grid computing data centers. This seems to show that VMware is looking enhance virtualization from a mere hardware consolidation tool into a technology that allows for much greater automation, high availability and management of assets, both physical and virtual.

Gordon Haff, an analyst with Illuminata, said VMware is still a leader in virtualization when it comes to server consolidation, but that competition from Microsoft and Citrix will force the company to make changes. Martiz's keynote will shed light on what direction the company will go now with Greene and Rosenblum gone from the scene.

Cloud computing is just one aspect of what VMware has to tackle. Another challenge is determining how the company will work with EMC now that Greene is gone.

"One of the questions for VMware, as for a lot of these ISV infrastructure providers, is how do they play in a cloud world given that people like Google effectively roll their own from open source?" Haff said.

VMware also showed a major shift in strategy in July when Maritz announced that it would start shipping a version of the company's hypervisor, called ESXi 3.5, for free. This, along with security features and new innovations for virtual desktop infrastructures of VDIs, is expected to dominate the talk at the VMworld conference.

Customers Enthusiasm for VMware Still There


For customers, the enthusiasm for VMware is still there and many are hoping for a slew of new innovations that will make it easier for them to bring more virtualization into their data centers.

Michael Skaff, CIO of the San Francisco Symphony and an eWEEK Corporate Partner, has been using VMware products dating back to the days of GSX, about two years ago. While he remains confident in and impressed by the technology, he also concedes that, from what he has seen, most VMs in the industry are still only used in test and development environments.

Skaff told eWEEK that the free version of ESXi 3.5 should help the next great wave of virtualization adoption. The trouble, he said, is convincing IT managers that any hypervisor-Microsoft's, VMware's or Citrix's-is integrated enough with the hardware and stable enough to be placed in full production environments that handle mission-critical workloads such as database applications.

"There is still a lack of understanding around the security paradigms for VMs, so that is something VMware needs to focus on educating their customers about," Skaff said. "There is still a lack of confidence that VMs can deliver production-level availability."

However, there are key issues that virtualization is playing a role in, including server consolidation, creating a more efficient and dense data center, and overall green IT initiatives. Greg Smith, vice president and CIO of the World Wildlife Fund, said the latest version of VMware's ESX hypervisor, combined with Intel-based Hewlett-Packard blades, is helping his organization achieve those goals.

While Smith and his IT department at the WWW are pleased with the overall VMware platform-particularly its ability to bring virtualization to his x86 environment and create a better disaster recovery system for mission-critical data-he is looking for more security and recovery features in the upcoming versions of VMware's virtualization suites.

"When I talk about recovery, I'm talking about recovery at a variety of levels from cold to warm to hot and on and off site," said Smith, who is also an eWEEK Corporate Partner. "I don't think they do it as well as they could. I would also like VMware to focus on testing and testing and testing their products to make sure [they are] as good as possible."

When it comes to testing, he said he is concerned about some of the problems VMware encountered when it pushed out a faulty update for its ESX and ESXi products in August that caused problems with the Vmotion features and led to some systems shutting down.

However, even with some of the flaws, the additional competition from Microsoft and Citrix and the shakeup in management, Smith said the VMware platform still offers the best virtualization. He also pointed to a key advantage that VMware-given its head start in the industry-has over its growing competition: businesses' tendencies to stay with a vendor once a full deployment is complete.

"When we find something that works and it's robust and scalable, it's going to take an act of God to move us off of that and move to a competing product," Smith said.

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