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Much has been made of the supposedly declining fortunes of virtualization giant VMware (s VMW), which faces increasing competition from free virtualization platforms bundled into operating systems, including Windows Server. So yesterday, on the heels of a sterling quarterly report from the company, I paid a visit to its Palo Alto, Calif., campus to get the lowdown on how the company is fighting back. Contrary to some reports, beating everyone at virtualization remains the game plan.
A quick look at a five-year chart of VMware’s stock illustrates the competitive turmoil that the company has faced as virtualization platforms — ranging from open-source offerings such as Xen to Microsoft’s (s MSFT) Hyper-V (bundled in Windows Server) — have proliferated and become freely available in most major operating systems:
Under relatively new CEO Paul Maritz, a longtime Microsoft executive, VMware has been making big acquisitions, first picking up SpringSource (GigaOM Pro, subscription required) to gain a foothold with application developers and the open source community, and more recently, buying Zimbra, which offers cloud-based mail and collaboration applications. The acquisitions have been widely interpreted as attempts to move up the software stack from the virtualization layer, and into applications. However, in interviews I did yesterday with executives at VMware, they described how focused they remain on virtualization, and the following competitive advantages that they claim they can leverage:
One Of the Toughest Computer Science Problems. When I asked Bogomil Balkansky, VP of product marketing in VMware’s server business unit, about threats from free, bundled virtualization competitors, he stressed that VMware offers its own free hypervisor, and that the management, security and disaster recovery tools that it offers on a paid basis are key differentiators, especially for IT administrators focused on “control.”
“The idea that lots of eyeballs from the open source community produces a better product is not the case in our market,” he said, noting that VMware has more than 3,000 engineers working to make its virtualization platform more efficient. “Efficient virtualization is one of the toughest problems to solve in computer science,” he said. With regard to competition from Microsoft, he and other company executives claimed that Microsoft is years behind VMware in research on virtualization. “Also, it’s one thing to get a blue screen [of death] for a single operating system, and quite another thing to get 10 of them across multiple operating systems,” he said.
The Double Down: 16 Virtual Machines Per CPU. I also got a demo of some of the forward-looking moves VMware is making from Raj Mallem Pati, director of product marketing for VMware’s desktop business unit, and his team. Clearly, VMware is very focused on greater efficiency in data centers that serve desktop users at enterprises. Specifically, the team noted that in current tests with Intel’s (s intc) Nehalem processor, they are able to efficiently run 16 virtual machines per CPU in servers. That’s double the maximum amount found in many deployments, and could potentially help users save on space, power and physical servers in data centers. As it works toward this goal, the team is also focusing on reducing latency in many types of enterprise applications.
Virtualization As the On-ramp to Cloud Computing. In a talk with Steve Herrod, VMware’s CTO and SVP of R&D — and also one of the “graybeards” at the company — he characterized virtualization as “the on-ramp to cloud computing,” and, in many ways, a prerequisite for it. He said VMware has more than 1,000 partners focused on cloud computing solutions, ranging from carriers such as AT&T (s t) and Verizon (s vz) to cloud hosting providers. When I asked whether he believes most businesses will want hybrid private/public clouds, he said very much so. With regard to local applications, he also noted that VMware itself uses many of them.
In response to questions about possible threats from operating systems bundling virtualization platforms, he noted that VMware remains operating system-agnostic, and works closely to tie its platform to popular operating systems efficiently. “Operating systems are rigid,” he noted, “and with efficient virtualization helping to manage hardware, the operating system doesn’t need to worry about as many things.” Herrod also anecdotally noted some of VMware’s more unusual field deployments, including installations at the F.B.I., and “in many nuclear submarines.”
Throughout my visit, there was no question that everyone at VMware is aware of increased competition on the virtualization front. (Oracle announced renewed focus on virtualization just today.) Time will tell whether the company’s operating system-agnostic, proprietary software strategy will pay off, but, flying in the face of free things, one thing’s for sure: VMware is going to have to offer more for the money.
Top image courtesy of Dearoot on Flickr.