VMware to Undergo Major Strategy Shift
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Turning up the heat on VMware
Meanwhile, the competition was ramping up -- Citrix unveiled a new version of its desktop product, Red Hat announced support for KVM, which is a hypervisor embedded in the Linux kernel, and Microsoft suddenly moved up the release of its Hyper-V hypervisor from early August to June, all in the space of about two months.
That "put a lot of pressure on VMware to do something different," but Greene wasn't going to budge, and her vision "wasn't going to satisfy the market in the long term," said Andi Mann, research director at Enterprise Management Associates.
Hyper-V is available at a nominal charge, and many other operating systems, such as Unix, Linux and several mainframe operating systems, include a hypervisor for free. But VMware charges $495 a pop for its ESXi hypervisor, although it also offers a free, limited server VMware Server, currently in beta.
The high price of ESXi "flew in the face of market pressure," Mann said, especially as his research in April, when Hyper-V was still in beta, showed that 30 percent of enterprises planned to adopt Hyper-V.
That's not all: Hypervisors based on the Xen open source product, from Oracle, Sun, Virtual Iron and Citrix, have 44 percent of the enterprise market. How could VMware then claim to have 85 percent of the virtualization market? Simple: There are several different types of virtualization -- server, operating system, application and desktop.
The average enterprise has 11 different virtualization technologies, platforms and vendors, and the environment will continue to be very heterogeneous, Mann said. "There's still lots of room for everyone to play and VMware had taken the attitude that they'd won, and you can't do that, especially when Microsoft has entered the market."
Greene's ouster was part of a natural evolution because she "may not be the right person for the next phase, which is dealing with competition, and with partnerships," Gartner vice president Tom Bittman told InternetNews.com. "It's hard to find a partner who was happy working with VMware."
Maritz is expected to make several changes, and observers consider him the right man for the job. "VMware needs to become a very competitive, business-driven company, and the hiring of an ex-Microsoft person as their CEO is a smart move because he understands from the inside how Microsoft operates and how to deal with things," Embotics' Litkey said.
VMware now has to fill out its portfolio, look at more acquisitions, see how the companies it acquired over the past year will work together, and do acquisition management, Mann said. EMC "wants to change the control structure," which is why it appointed Maritz to VMware's board of directors, as a sign that change will be driven from the top.
Maritz may have to look further afield than just at Microsoft. While the Redmond giant looms large in VMware's vision, "ultimately the money will be in virtual datacenter management, and you're now looking at IBM's Tivoli, HP's OpenView, CA and BMC," Litkey said.
Cisco (NASDAQ: CSCO) and Symantec (NASDAQ: SYMC) have also stated they want to be major players in the virtualization market, and Litkey expects a major shakeout and several consolidations over the next few years. "There's not enough spots to have five, six, seven, eight gorillas in any marketplace, and there's going to be a tremendous struggle among the players to be among the top three," he added.
That may just be the ticket for Maritz. The man who developed the style of bare-knuckle fighting with which Microsoft crushed Netscape might just be able to use it to bring VMware back to market leadership.
(Updated to include the comment from 451 Group's Chalmers.)
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