VMware: Say Hello to Number Two

It has been a great ride for VMware of Palo Alto California.  They stated out as an obscure project with deep roots in engineering and software development.  In fact, I’ll never forget the first time I saw Linux running inside a VM on Windows; it was spectacular.   Today, with the backing of EMC, VMware is the dominant player within an infantile x86 virtualization market. 

As with all disruptive and innovative technologies, it is time for the market to grow up.  When Xen was purchased by Citrix for $500 Million a tremor was felt across the industry.  Xen was busy developing an OSS hypervisor and creating a commercial software and OEM business.  With Microsoft’s release of Hyper-V and Microsoft System Center Virtual Machine Manager, the earthquake has begun.

While VMware is not going out of business anytime soon, they are in jeopardy of losing their dominant position to Microsoft.  Why?  It comes down to; Volume, Reach, Ecosystem, Strategy, Marketing, and Money.  Microsoft has the sales teams, channels, relationships, partners, marketing, and money to pull it all together.  To put it another way, what has taken VMware years to build, Microsoft already sustains.

I am the first to admit that Microsoft remains a polarizing figure within the technology community; either you love or hate them.  The VMware faithful point to themselves as the only “production ready” VM technology.  I think IBM, SUN, and HP may have something to say about this as they have been doing virtualizations for years.  The truth is that virtualization technology, aka the hypervisor, is a commodity.  It belongs buried within the operating system (Windows, Linux, Solaris, etc.) and processors (Intel, AMD, PowerPC, etc.); neither of which VMware controls.

Here’s how it will happen.  Hyper-V is buried within Windows 2008 Server.  Windows 2008 Server is an awesome operating system (How they got Windows Server so right and Windows Vista so wrong I’ll never know).  Microsoft maintains close relationships with both the chip manufacturers (Intel, AMD, etc.) and the computer manufacturers (Dell, HP, IBM, Lenovo, etc.) for distribution.  Microsoft continues their relationship with Citrix (or buys them) to improve Hyper-V.  Windows 2008 will pick up steam in the SMB and large enterprise.  This entices them to “try” Hyper-V.  Microsoft will release incremental service packs to slowly but steadily improve Hyper-V.  As it improves, Enterprises will begin to deploy Hyper-V instead of buying third party technology from VMware.  VMware will respond by dropping prices limiting their ability to conduct strong R&D and Marketing campaigns.  Finally, one day Microsoft overtakes VMware as the number 1 x86 virtualization technology and begins to push their agenda and controls the market.

Once the hypervisor war is over, the real battle over x86 virtualization will crystallize; Management.  Organizations have begun to realize that while virtualization solves many issues, it creates its own set of challenges.  In the end, Microsoft will remain the dominant OS and hypervisor vendor and VMware will morph into something different.  If not, there will be plenty of challengers who’d “settle” for number two.

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