Microsoft's tanks roll onto VMware's lawn

Does the virtualisation leader have what it takes to repel invaders?

By Manek Dubash, Techworld | Techworld
Published: 01:00 GMT, 28 January 08

The big question in virtualisation today is whether Microsoft can seriously dent VMware's lead in the virtualisation market. Industry observers are starting to argue that Redmond has that capacity and that it's starting to become evident - but are they right?

The virtualisation business - by which I mean the one that VMware revived in 1999, not the mainframe technology that IBM invented in the 1960s - has in some ways been a fairly staid one since its inception. VMware has dominated the market, even if the penetration rates of virtualisation technology remain low - common consensus is that only about nine percent of servers run virtualisation software, together with a miniscule number of desktops.

Yet there's not a great deal of animus against VMware - apart from its competitors that is, who all complain bitterly about it. But then, they would, wouldn't they?

Rather, enterprises have bought into VMware's technology pretty much by default. Of course, it doesn't have the market to itself but no competitor has looked close to disturbing the Palo Alto-based company's smooth cruise to IPO and beyond.

Its US$28 billion market cap looks excessive for a company whose quarterly revenues were US358 million for the last reported quarter in October; there's a fourth-quarter report due on 28 January. But the background is that the figure was a chunky 90 percent up on the year before.

Post-IPO, VMware has used its cash to cement its market position with new products. As well as the hypervisor itself in the shape of ESX Server - which analysts generally agree will become free in the near- to medium-term future - VMware has a fairly strong, enterprise-focused product set surrounding its virtualisation technology.

The focus now is on datacentre management via VMotion and associated technologies, as well as test and development tools such as Workstation, Lab Manager and Stage Manager. And there's a range of third parties - VMware loves the ecosystem metaphor - such as Platespin, bringing applications such as high availability and disaster recovery.

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