VMware Dives Into Freeware

The rapid expansion of x86 virtualization solutions during the past year raises an interesting question: How, and at what point, does an IT solution become ubiquitous?

Of the notable products one can consider related to this, the IBM-compatible personal computer offers a good example. A host of readily available, industry-standard technologies and practices allowed Microsoft and other vendors to successfully free computing from cloistered data centers.

Then, as demand blossomed, competition increased, and prices fell, PCs became common in businesses and homes across the globe. In retrospect, the launch of VMware in 1998 hardly shadowed similar events. At that point, virtualization was confined to enterprise data centers which had the infrastructure resourcesand skilled personnel required to leverage the technology.

By developing virtualization solutions robust enough to exploit x86 system resources, yet light enough not to overwhelm them, VMwares both enhanced the value of customers’ IT investments and enabled them to evolve along with x86-based server and desktop products.

But even then, virtualization remained largely in technophile realms inhabited by IT professionals and hardcore enthusiasts. That situation is changing, as a raft of new, more easily deployable and manageable virtualization solutions come to market. As a result, opportunities are expanding for VMware, which clearly leads the x86 virtualization market in both share and revenues.But significant challenges have also arisen during the past year. First, Citrix acquired XenSource and its solutions based on the open source Xen hypervisor. Second, Microsoft made good on its promises and the delivery schedule for its Hyper-V hypervisor solutions. Finally, vendors from specialist Virtual Iron to larger companies including Oracle and Red Hat are delivering their own branded solutions based on the Xen hypervisor.

Are these events precursors to brutal price cutting of virtualization products that mirror similar events in the PC market? Perhaps, but, if so, then what is VMware’s best course of action? In short, to provide a basic hypervisor (ESXi) as a no-cost commodity. This should allow the company to counter aggressive pricing for competing solutions, such as Microsoft’s Hyper-V, and also provide VMware a platform for highlighting the superiority and value-added attributes of its other products and services.

That said, a free or cheap hypervisor alone is not enough for any vendor to find success. Instead, we believe that server vendors, ISVs, and channel partners will also play crucial roles in making and keeping virtualization solutions ubiquitous. To that end, we find VMware’s efforts among major vendors (all of whom are embedding ESXi in their server solutions) and positioning ESXi as the platform of choice for virtual appliances to be spot on.

By giving away ESXi, the company can significantly increase the value and ROI of its partners’ solutions. How this will all eventually play out is uncertain. Microsoft and Citrix are able and aggressive competitors who play to win, and other vendors’ offerings are also finding success. While VMware’s solutions enjoy richer features and functionalities than competing offerings, that gap is likely to narrow over time.

Despite those issues and pressures, VMware’s ESXi strategy demonstrates that the company intends to meet opponents head to head.One thing is virtually certain: virtualization will eventually be another example of a one-time enterprise technology that, freed from the data center, will be a useful ubiquitous solution benefiting broader business and consumer markets.

— Charles King, Pund-IT president and principal analyst, focuses on business technology evolution and interpreting the effects these changes will have on vendors, their customers, and the greater IT marketplace. Charles began working in Silicon Valley in the early 1990s writing on technical, business, and strategy issues, then became an IT industry analyst in 1998. Since founding Pund-IT in December 2004, Charles has published the Pund-IT Weekly Review, which contains this blog and additional industry analysis. King has also produced numerous client projects, and has been quoted in a wide variety of IT industry and media outlets.

Have a comment on this story? Please click "Discuss" below. If you'd like to contact Byte and Switch's editors directly, send us a message.