Analyst to EMC: If You Love VMware, Set it Free: Page 2

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EMC refused to comment for this article. A company spokesperson cited the usual financial quiet period ahead of the impending IPO of VMware.

But Microsoft was willing to go on record, albeit careful to steer clear of invoking any conflict.

Asked if Microsoft's delays and VMware's dominance in server virtualization and continued innovation were too great to overcome at this point, a Microsoft spokesperson sent internetnews.com the following statement, attributed to Jim Ni, group product manager for server virtualization at Microsoft:

"Microsoft's strategy and areas of investments – from desktop and application virtualization to datacenter virtualization - can help customers businesses become more dynamic and self-managing. And Microsoft is providing customers investment protection with a clear transition from today's virtual machine technology to tomorrow's hypervisor-based virtualization technology."

"Microsoft is innovating in this space as well. We do have migration capabilities; this feature was introduced with Virtual Server 2005 R2, and will also exist in our next generation of virtualization, which will be a feature of Windows Server 2008. Furthermore, while VMware has done a good job in the market over the last seven years, latest analyst reports indicate that virtualization is only appearing on 3 to 5 percent of the new servers.

Pund-IT analyst Charles King agreed with Bittman's belief that VMware is dominant in the server virtualization space and added that the holistic value of server virtualization "has moved beyond simple server replacement toward an integrated server/IT infrastructure management value proposition."

That is, it's not just about consolidating servers, but managing the fleets of virtual machines that accumulate in a datacenter. VMware has VirtualCenter, while Microsoft is banking on System Center Virtual Machine Manager to do this.

However, while King isn't so ready to crown VMware over Microsoft yet, he's not so sure Redmond will catch up to VMware.

"For the company to overcome VMware will require Microsoft to deliver a solution set that offers at least as much functionality and as many capabilities as VMware," King said. "If VMware can continue its drive to innovate and define its market, it'll take Microsoft awhile to catch up, let alone surpass them."

King is also leery about EMC spinning off VMware, or adding a server startup to its mix. By having VMware, King argued, EMC has essentially set it up as a virtual systems vendor, where it can attach its storage to the back of any x86 server running VMware.

"It basically gives them a way to play in the systems vendor space without taking on any kind of overhead or risk or hardware sales," King said. "Hardware is only going to get faster and cheaper and it's going to be increasingly difficult to compete there."

"If I was an EMC investor, I'd love them to spin it off," he added.

Regardless of which way EMC goes with VMware -- under the vest or integrated into its product lines -- Bittman said there is a lot of potential for Microsoft and VMware, startups Virtual Iron and SWSoft and open source purveyors XenSource in the virtualization market.

After all, he said it's a market that's seen only four percent penetration to date. However, he expects 90 percent of the Fortune 1000 to be virtualizing x86 machines by the end of 2007. By 2009, more than four million virtual machines will be installed on x86 servers, which is about 20 percent of the total potential market.

"We're talking billions of dollars of revenue potential."

This article was first published on InternetNews.com.


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