Years ago, I spoke with then-VMWare CEO Diane Greene about Microsoft's coming threat. I was curious why VMWare wasn't pursuing antitrust complaints against the software giant, since Microsoft had announced that it was going to bundle a hypervisor-based virtualization platform with Windows Server. (That software was since released as Hyper-V.) VMWare had no interest in pursuing Microsoft in the courts, I was told. Instead, the company would compete with Microsoft in the open market, and Greene was convinced that VMWare could maintain its technological lead.
I told her that was a mistake. Microsoft understood then, as now, that virtualization is key to the future of computing, and it would go after this market with the same dogged determination it used previously in establishing NT as the low-cost workgroup computing standard. I'll spare you the serial killer analogy I used at the time, but you get the idea. Microsoft isn't a competitor to be trifled with. And you don't want to be in its crosshairs.
Today, Microsoft has released its second generation Hyper-V technology, and though VMWare does still maintain a huge lead in the virtualization market, Greene is out. She's been replaced by Paul Maritz of Microsoft (and NT) fame, and it's probably equally notable that his number two, Tod Nielsen, is also a Microsoft alumnus.
[ Read more about Hyper-V 2.0 in my Microsoft Hyper-V Server 2008 R2 Preview. ]
As you probably know, VMWare held its annual VMWorld conference last week, and I spent a bit of time with Bogomil Balkansky, the vice president of product marketing at VMWare. There was a bit of competitive did-not-did-too silliness between VMWare and Microsoft at the show, but rather get bogged down in that--it amounts to Microsoft being punished for infractions at last year's show--I'd like to focus on VMWare's products and strategy, and how they compare to what Microsoft is doing.
At a very high level, it's fair to say that VMWare got here first, has the more mature technology, and has a decidedly cross-platform approach that is lacking on the Microsoft side. VMWare, for example, can claim, as Balkansky did with me, that Microsoft's chortling this year over closing the gap with Live Migration capabilities is cute, but VMWare had that feature (VMotion) years ago. The point here is clear: While Microsoft's virtualization solutions are starting to catch up, they're still years behind what VMWare is doing.
There is some truth to that. VMWare's current virtualization platform, vSphere, which is based around the ESX Server 4.0 hypervisor, is still in some ways dramatically more capable than Hyper-V. Microsoft will tell you, however, that VMWare's solutions tend to be more expensive, in some cases a lot more expensive.
Maybe you get what you pay for. But Microsoft's virtualization strategy should be familiar to anyone who was around in the NT days: Establish a beach head as the low-cost alternative, add capabilities until you're at least comparable to the competition, and then watch your growth start outpacing that of the entrenched market leader. There is one difference this time, however. While Microsoft had no real server presence in the early days of NT (at least outside of workgroup-based LAN Manager installs), this time around the company is a major player in the server market. And when Microsoft shops start looking around for a virtualization play, the freebie that comes with Windows Server is an obvious option. Especially when, again, the differences between that solution and the VMWare solution are starting to dwindle.
In short, VMWare's position hasn't really changed much over the past few years, but I think we're on the cusp of a dramatic change in the market. Fortunately for VMWare, the market is only going to grow, and this year's gains with vSphere 4 hint at years of growth to come. But with the overall market growing, Microsoft's share of that market is going to grow too. And eventually, I feel, it will outpace VMWare and other competitors (and partners) like Xen and Citrix.
[ Discover what Microsoft's strategy is this year around its virtualization solutions. ]
It's way too soon to start the "VMWare is doomed" talk. But this is a company that needs to do everything it can to prevent the shedding of share to Microsoft. This will involve lowering prices, inevitably, and giving away more of the crown jewels. But that's a natural side effect of the commoditization of a market that was previously a niche specialty. Today, virtualization is on its way to becoming a common and accepted part of the computing experience for businesses of all sizes. And there's no reason VMWare can't emerge as a major player--perhaps the major player--going forward. But it's going to have to start taking Microsoft a lot more seriously.
You've been warned, VMWare. Again.
An edited version of this article also appears in the September 8, 2009 issue of Windows IT Pro UPDATE. --Paul