Virtually Speaking: Is the Party Over for VMware?

By Amy Newman (Send Email)
Posted Jul 15, 2008

It's been a week since Diane Greene's involutionary departure from VMware, and still the story looms large. With its founder and CEO out, Hyper-V breathing down its neck and its parent company pulling it closer, the glory days may be over already for the virtualization market's bellwether company.

Theories, as far as reasons and the future course, abound. Among the analysis who commented last week, Gordon Haff of Illuminata raised an interesting point:

So, the bottom line seems to be that Diane finally pushed too hard for VMware independence with an EMC organization that, in no small part, has been longing to pull it in more closely.

It makes sense. VMware is a cash cow for EMC. Add to that a history on EMC's part of not generally loosening the reins on companies it swallows. That it has allowed VMware to flourish somewhat independently for as long as it has is notable.

Lower than expected earnings aside, EMC's timing is interesting. The game is changing for virtualization and it goes beyond Microsoft and Hyper-V's release. Virtualization has become ubiquitous, and is now a factor in everything from the chips that go into the servers to the boxes themselves.

It's taken as a given that management software, especially automation software, will be used in actual virtual environment. As Michel Feaster, director of Business Service Automation for HP, told ServerWatch, "Virtualization is rampant in dev and QA. We're at a tipping point; the minute [virtualization] tips past it, we will need a new model in manageability."

Feaster also noted, "We believe virtualization is most going affect the storage-server relationship." She cited both EMC's ownership of VMware and the "tremendous customer traction around this use case" that she has observed.

The virtualization/storage synergy is well-known, and EMC's tighter embrace of VMware gives food for thought as to whether we will see even tighter coupling between the two entities.

HP found its way to virtualization via its acquisition of Opsware last year. Unlike EMC, which kept VMware as a separate entity, HP integrated technology from Opsware, Peregrine and Mercury into its software business.

With Hyper-V here and EMC kicking things up a notch, what does it mean for the the smaller players? No doubt they'd like to avoid what one editor here described as the inevitable, "Everyone will end up working for the 'Redmond Behemoth' in the end."

Perhaps, but not if Xen and Virtual Iron have anything to say about it. After EMC's bombshell the two got into a tiff over whose product was better. Xen argued that it owns the hypervisor, while Virtual Iron merely consumes the product. Virtual Iron snapped back that Xen is open source and therefore fair game.

The reality, as IDC analyst Stephen Elliott told, is that both parties are fighting over market recognition. And neither has a significant market share at this time. Given how quickly the virtualization landscape is changing and how rapidly the technology has become ubiquitous, it's even more critical.

Especially for a company that doesn't wish to be the Behemoth's afternoon snack.

Amy Newman is the managing editor of ServerWatch. She has been covering virtualization since 2001.

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