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Red Hat Looking to Poach from VMware with RHEV 3.6 Release?

By Paul Rubens (Send Email)
Posted June 3, 2016


RHEV 3.6, which emerged onto the scene in March, has been designed to create an easier and more cost-effective path for users migrating from vSphere workloads, according to the company.Virtually Speaking

One of the key new features of the latest RHEV release is VM-to-VM (v2v) integration, enabling customers to identify critical Linux workloads to move to Red Hat Enterprise Virtualization by connecting directly to vCenter and providing click-through steps to migrate the workload over.

"This select workload migration strategy can lower total cost of virtualization and improve performance of mission-critical Linux workloads without the pain of rip and replace," the company said.

That's aggressive stuff, isn't it, particularly when it comes to VMware.

Gunnar Hellekson, Red Hat's director of product management for RHEV, Red Hat Enterprise Linux (RHEV) and Red Atomic, puts it more gently:

"Red Hat has enhanced its virtualization platform offering to provide benefits for organizations moving towards the bimodal IT model," he said. "The simplified workload migration introduced in this newest release of Red Hat Enterprise Virtualization enables users to combine existing investments and move away from a fully proprietary virtualization platform to implement a multi-hypervisor strategy."

Red Hat Has VMware's Customer Base in Its Crosshairs

All in all, it's clear Red Hat would like to pinch as many of VMware's server virtualization customers as it can, and it's providing the tools to make it as easy as possible for VMware customers who are so minded to defect to Red Hat's hypervisor. With some of their workloads, at least.

A few years ago VMware might have been extremely worried about these developments, but fortunately for the company it has diversified well beyond server virtualization technology through recent acquisitions such as the $1.3 billion 2012 purchase of Nicira. That acquisition led to VMware's NSX network virtualization product.

The diversification strategy is paying off, if VMware's Q1 2016 financial figures are anything to go by. Revenue for the quarter was up 6% year on the year (constant currency) to $1.59 billion, resulting in (non-GAAP) earnings per share of $0.86, ahead of analyst forecasts of $0.84 (but unchanged on the previous year).

"Q1 was a good start to 2016. We made solid progress with our strategic goal of building momentum for our newer growth businesses and in the cloud," said Pat Gelsinger, VMware's CEO. "We continue to see momentum across our portfolio of growth products and businesses, including NSX, Virtual SAN and End-User Computing."

VMware: Diversification Away from Server Virtualization?

Amongst the highlights of the quarter, the company mentioned VMware Workspace One, a digital workspace platform; its vRealize Suite 7 cloud management platform; Virtual SAN, its storage system for vSphere; and AppConfig, an enterprise app configuration community of which VMware's AirWatch mobile device management company is a part.

Notice something missing? No mention in the least of old-fashioned server virtualization technology. It didn't make the news at all.

So it's no wonder that VMware appears unconcerned by Red Hat's attempts at incursions into that part of VMware territory. It's not a growth area, and the company has bigger fish to fry.

This diversification away from server virtualization may be a sound business strategy, but that's not been a huge benefit to investors in the company: the stock price has been in pretty steady decline over the last two years.

(Of course, nothing is simple with VMware stock thanks to the fact that much of it is owned by EMC, which in turn is being acquired by Dell. At least some of the stock price decline is probably due to uncertainty over the deal and what Dell ownership means for EMC and ultimately VMware.)

But the stock price got a welcome bump on the day of the results announcement and with the news that the company is set to buy back $1.2 billion of stock.

The process is likely to bolster the share price, and indicates the company believes it is undervalued by the market.

But cynics might also say it's simply a sign of a company that has run out of ideas on how to make money and is instead using its existing capital to buy back its own stock.


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.

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