Summary:

Anticipated new products should advance VMware’s already-aggressive strategy to transition its dominant virtualization market share position into a full-scale takeover of the cloud. But with formidable competition on its heels, whether or not VMware can capitalize on its large footprint remains to be seen.

In some ways, it’s premature to discuss VMware’s cloud computing strategy with VMworld right around the corner, but thanks to ceaseless M&A activity and rumors over the past year, as well as some “leaked” information regarding its upcoming vCenter Service Director, we can get a pretty clear idea of what’s on the horizon: a full-scale push to transition customers to the cloud, however they define cloud computing. As I detail in a research note at GigaOM Pro, the virtualization market leader seems determined to make cloud computing ubiquitous, and to be an integral part of it at every level of the stack.

The opportunity to succeed at this mission and expand its customer base certainly exists, what with virtualization adoption increasing so quickly. According to a survey of IT management vendor Spiceworks’ 1 million-plus users, 44 percent were already using virtualization technologies as of February 2010; that number should creep toward 70 percent by the year’s end. Further, 41 percent expect to increase investment in virtualization software during the rest of 2010. For many organizations, virtualization will be the foundation for cloud computing, so the larger its footprint, the better chance VMware has of pushing its cloud agenda.

Of course, succeeding at such lofty goals will be easier said than done. VMware has competition across the board, including formidable foes like Microsoft, Red Hat and Oracle. The proprietary VMware products also face a constant fight from open-source projects (e.g., the Rackspace-led OpenStack project) and startup vendors that are getting hotter by the day (e.g., Nimbula, which yesterday announced another $15 million in VC funding). Further, a push for true hypervisor interoperability to enable fully functional, heterogeneous virtualization environments calls into question VMware’s self-centric approach.

In VMware’s favor, however, are market share, thought leadership, a savvy management team and — especially compared with some competitors — a fat stack of cash. Technology-wise, VMware’s wildly popular ESX hypervisor (now called vSphere Hypervisor) forms the foundation of VMware’s cloud efforts. But it’s just that: the foundation. Dynamic management tools make virtualized environments more flexible, and a growing stable of service-provider partners should make hybrid cloud computing a reality. An aggressive application-platform strategy, meanwhile, means developers might not need to think about virtual servers at all.

I don’t suspect VMware will corner the cloud like it did early on with the hypervisor, but it certainly will be a market leader, if not the market leader. However, with true competition nipping at its heels, we’ll finally get to see how VMware innovates when there’s a sense of urgency involved.

Read the full report here.

Image Source: flickr user kevindooley

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