VMware Making Moves to Stay Ahead of Microsoft in Server Virtualization

by Paul Rubens

With Microsoft closing in on VMware's market leadership in the server virtualization space, has VMware been nimble enough to maintain its lead?

Slowly but surely, competitors such as Microsoft are eating into VMware's market leadership in the server virtualization space. Just last month this column talked about how the Microsoft-Oracle deal is good news for users of Microsoft's Hyper-V hypervisor but not so good news for VMware.

VMware isn't standing idly by, though, waiting for its server virtualization ecosystem to become irrelevant. And the extent to which this is true is apparent from the company's financial results — Virtually Speaking most recently its Q2 2013 figures, which were recently released.

Revenue was up 11% to $1.24 billion, and when adjusted for divestitures and the like, the actual figure is more like a 15% increase. Even more impressively, net income (profit) was up 28% to $244 million.

So what has VMware been up to in ensuring it stays ahead of the pack?

There have certainly been some big acquisitions, such as Nicira in the software-defined networking space and Virsto in the storage hypervisor space. And there's also been the formation of Pivotal, a company created out of technology, people and programs transferred from both VMware and parent company EMC.

Pivotal includes Greenplum, Cloud Foundry, Spring, GemFire and other products from the VMware vFabric Suite, allowing VMware to focus on its core server virtualization and public, private and hybrid cloud-enabling technologies without getting bogged down with peripheral projects.

But aside from these long-term strategic moves, the company has also been ducking and diving in the server virtualization milieu, doing a deal here, sealing an agreement there, working non-stop to try to maintain its preeminent position.

Some examples from the last quarter include:

  • Launching the VMware vCloud Hybrid Service, which is an Infrastructure as a Service (IaaS) public cloud that is actually operated by VMware, rather than by VMware partners.
  • Sealing an agreement with ERP giant SAP to deliver SAP applications in the vCloud Hybrid Service using an opex pricing model where customers pay a subscription for both the software and VMware's public cloud service.
  • Doing a deal with NTT, the Japanese mega-telco, which sees NTT deploy VMware network virtualization (think Nicira) as a core technology for Enterprise Cloud, its new public cloud service. By incorporating VMware network virtualization into its EC service, NTT will be able to provide connectivity between customer data centers and the NTT public cloud without changing the IP addresses of customers' existing, on-premise environments.
  • The introduction of vCenter Log Insight, a cloud log management and analytics product that enables organizations to examine Big Data consisting of logs generated by applications, physical hardware and virtualized infrastructure.
  • vSphere integration with Hadoop. MapR's Distribution for Apache Hadoop is now certified for VMware vSphere, as is Cloudera Enterprise Hadoop subscription offering.

In the technology space the usual plot is for the market leader to become so big and unwieldy that it eventually loses out to more nimble and agile upstart startups. But through some deft management, key strategic acquisitions and the offloading of non-key activities into Pivotal, VMware still looks nimble enough to maintain its market leadership for some time to come.

And when the upst4art startup that's giving VMWare a run for its money is actually none other than the big and unwieldy Microsoft — a company undergoing yet another restructuring — then perhaps that's not altogether surprising.

Paul Rubens is a technology journalist and contributor to ServerWatch, EnterpriseNetworkingPlanet and EnterpriseMobileToday. He has also covered technology for international newspapers and magazines including The Economist and The Financial Times since 1991.

Follow ServerWatch on Twitter and on Facebook

This article was originally published on Wednesday Sep 4th 2013
Mobile Site | Full Site