15 September 2008

Is VMware’s star on the wane?

It’s not long ago that VMware was at the pinnacle of the virtualisation industry. And of course it still is, by any measurable criterion. It has the biggest market share by a long way, has the widest user base and the biggest roster of partners -- its famed ecosystem. But as the company this week cranks its VMworld show into action once more, recent events suggest that VMware’s star may have reached its zenith.

When the company started nine years ago, it set out to develop and popularise virtualisation technology, which then looked like a nice-to-have, in that it can cut hardware maintenance costs, allowing the number of admins per server -- a common metric for assessing the productivity of IT services departments -- to plummet.

Virtualisation technology carries hidden costs too. While you have fewer hardware servers to manage, the number of software servers is likely to end up even higher than their original hardware counterparts. Each of these needs to be managed to ensure that they’re patched, the security software is kept up to date and so on.

What’s more when you consolidate, say, one hundred servers into ten servers, the throughput required remains the same as before. This can entail costly upgrades of ancillary equipment such as data centre backbones and other elements of the network. additionally, those ten servers will need to be highly specified for internal throughput, so they won’t be ten times cheaper to buy.

What you then need is virtual machine management software -- stuff that can orchestrate all this, and ensure that backups are kept so that, would hardware or software failure occur, you have a duplicate or mirror somewhere in the mix to get that service back up and running. Sound complex? Yes, it is.

But is all becomes worthwhile once you factor in the big win in today’s eco-aware climate. There are energy, carbon and emission savings to be had by reducing the data centre’s power draw. Plus, many data centres are already at the limits of the mount of power they can consume, so virtualisation is key to meeting the relentless demand for more computing resource.

This makes VMware’s situation at the top of the virtualisation hill a good place to be. Virtualisation technology remains a burgeoning market, with fewer than 30 per cent of the world’s servers virtualised according to one recent set of figures, so there’s a lot to play for.

Yet there are lot of pretenders to VMware’s crown out there. The biggest and most threatening of these is Microsoft. Having just cut the price of its hypervisor product to zero dollars (only from its original US$28), Microsoft is doing to VMware what it did to Netscape in the browser wars of the 1990s. The basic virtualisation kernel will, as VMware freely acknowledges, become free and commoditised, while the value-add -- and the big revenue earner -- will be the management software.

Yet VMware’s successful efforts to build a partner company ecosystem around its hypervisor product could mean that its core differentiator is undermined by the vigorous development efforts of those partners, many of whom are focusing on the thorny issue of managing hundreds of virtual machines in a data centre environment. Niggling away in the background is the knowledge that parent company EMC has effectively fired the two people who started the company: CEO Diane Greene, and CTO and Stanford professor Mendel Rosenblum -- both her husband and the technical driving force behind the technology.

Can VMware stay on top? Will the appointment of an ex-Microsoftie to run the show mean that VMware has an inside track on combating one of the most fearsome and aggressive competitors on the planet? Will EMC regret its meddling with a company that wasn’t broken?

Such questions have to be answered. Yet there’s still a lot of momentum behind VMware, a huge number of very smart (and, for that matter, likeable) people driving the company forward, and a large number of partners and customers who want to see VMware carry on.

But in the long run, will it be enough? Time will tell but it will doubtless be an interesting battle to observe.

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