Once X86 server virtualisation was revolutionary in the IT world, but the hypervisor is fast becoming a commodity, forcing VMware to differentiate itself by building bigger and better tools to manage virtualised data centers.
VMware has done well in broadening its technological capabilities, but still faces threats from rivals Microsoft and Citrix, and smaller vendors such as Parallels, analysts say.
"VMware understands they're in a race," says Burton Group analyst Chris Wolf.
Earlier this year, the Burton Group said VMware's hypervisor was the only one on the market that was ready for production-class workloads in the enterprise. But things change quickly -- Citrix recently added new security features allowing its own hypervisor to be certified as "production-ready" by Burton Group. Microsoft is catching up as well, having added live migration to its System Centre Virtual Machine Manager, a key capability allowing movement of virtualised workloads from one server to another with no downtime.
Both Microsoft and Citrix are attacking VMware for instituting new policies which allegedly restrict competition at next week's VMworld conference, to be held in San Francisco from Monday to Thursday. Citrix claims VMware denied its application to sponsor VMworld, and Microsoft says the new policies will prevent it from demonstrating its latest virtualisation technology on the show floor.
The sniping among vendors is illustrative of how much the virtualisation market is changing. VMware completely dominated the market just a few years ago, and is still the acknowledged market share leader, but IT customers have more viable options now. Numerous variations on the open source Xen hypervisor are on the market, at much lower prices than VMware's enterprise-class product lines.
Citrix and Microsoft each offer their own hypervisor, and have teamed up to provide common management tools for customers who want to use both. Microsoft's tools even manage VMware's hypervisor, whereas VMware has refused to manage products from competing vendors.
New survey numbers from Information Technology Intelligence Corp. (ITIC) show growing interest in Microsoft's virtualisation tools, and also that many IT shops are using multiple server hypervisors.
The survey of 700 IT managers worldwide found 30% using VMware's ESX Server, and 26% using VMware Server, a free version of VMware's platform. Meanwhile, 32% were using Microsoft's Hyper-V, and 20% were using Microsoft's Virtual Server, an older product. Citrix XenServer clocked in at 9%. Parallels, which has focused on the Mac market, is at 8%.
The percentages add up to more than 100% because of IT shops using multiple products. Although Microsoft's numbers look good, ITIC lead analyst Laura DiDio notes that VMware still has the highest number of end users.
"You cannot equate percentages [of companies] with installed seats," DiDio says. "There is no doubt that VMware's ESX server has a greater number of end users and installed seats than Microsoft."
At next week's VMworld, dozens of vendors will announce new virtualisation products, and VMware will likely reveal some details about its product roadmap for the next year.
DiDio advises VMware to become more open and allow interoperability between its virtualisation platform and those from other vendors. Forty percent of respondents to the ITIC survey indicated they intend to use multiple server virtualisation products, she says.
"Even Microsoft was forced to concede the point that Linux is not a cancer, it's not going away, and you need to be interoperable," DiDio says. "The only thing you do by clinging to the notion of closed and proprietary is hurt your customers."
Two strategic moves made by VMware this year shed some light on the direction the company will take through the end of 2009 and beyond. First, VMware released vSphere, the latest version of its virtualisation platform, and started calling it a "cloud operating system," claiming that its method of aggregating virtual resources is ideal for building private and public cloud networks. (Read our review of vSphere.)
Second, VMware acquired Java vendor SpringSource, and said it will use the company's technology to build cloud-based platforms for the building and hosting of Web applications.
Both of these moves will help keep VMware in a strong position relative to its competition, analysts say.
The success of any operating system depends upon adoption from developers, Pund-IT analyst Charles King says, noting that VMware has defined vSphere as an operating system for the cloud.
"VMware is making a big bet on Java being the application development platform of choice for future cloud deployments," King says.
Burton Group's Wolf advises VMware not to focus so much on the public cloud that it ignores other enterprise concerns, such as building more automation and self-service into internal systems.
Even in the face of increased competition, King says VMware can make a strong case that it should still be the virtualisation vendor of choice. VMware has long boasted that its technology is used by every company in the Fortune 100, and 150,000 customers worldwide.
"VMware can say 'yes, we're seeing more pressure from Hyper-V and Citrix, but we continue to have a more evolved, sophisticated and more able product, and the enterprise customers that constitute the vast majority of VMware customers seem to be on board,'" King says.