Virtualization market leader VMware launched several bold initiatives in 2011--and made several missteps.

Charles Babcock, Editor at Large, Cloud

November 30, 2011

3 Min Read

Competitors such as Microsoft and Oracle made much of the fact that they were sticking with the established per CPU pricing, an approach that favors customers as the number of cores and amount of memory per CPU climbs upward. But if VMware makes a virtual asset "use" metric stick, look for competitors to adopt similar pricing--after VMware has taken the heat. Otherwise, they're leaving a lot of money on the table, based on the growing usefulness of the product sitting on more and more powerful hardware. Asked about the fall-out of its pricing move, VMware CEO Paul Maritz said at VMworld in Las Vegas Aug. 30, "Every time you try something new, you have to expect some feedback. We got that feedback and we had to adjust. I don't think that's the end of this journey."

At the same time VMware will be closely watching its revenue stream. Any flattening of that growth curve could mean that customers have decided the time has come to shift to one of the commodity hypervisors in the market, including Microsoft's Hyper-V or Citrix XenServer, which also are lower priced than VMware. Some shift seems likely. But the most aggressive implementers will also have to calculate what a shift would actually mean in terms of, say, managing databases under one hypervisor and running some applications under another. Nevertheless, some customers will at least give those competitors' hypervisors another look. VMware found that 38% of its customers were considering such a move, according to a survey compiled by a third-party supplier to the VMware environment, Veeam. (See VMware Users Hear Siren Song Of Lower Costs.)

No 2: Falling behind in the desktop virtualization race.

Although there's no precise count to show it, I think VMware fell behind in desktop virtualization in 2011, thanks to Citrix' multi-pronged approach to delivering a quality desktop experience and that company's growing credentials for delivering secure virtual desktops. Citrix has been cooperating with the U.S. Air Force and Defense Intelligence Agency to build secure desktops that they can use in hazardous settings such as behind enemy lines. That gives Citrix the right mojo as enterprise IT tries to protect sensitive data. However, there's still a long ways to go before desktops will be widely virtualized--only a fraction have been so far. So there's no need to count VMware out of the race.

No. 3: Losing focus with end user app acquisitions.

I hesitate to call this an outright mistake, but I can't help thinking its moves in that market reflect a growing fear about losing ground in virtualized desktops. The thinking might be: Put together a killer set of applications for the virtualized desktop, and it can make up the lost ground and ensure domination of this side of the virtualized enterprise as well. VMware has acquired Zimbra, SlideRocket, and WaveMaker, which are questionable in terms of contributing to VMware's immediate strengths and goals.

VMware officials explain it's a post-PC era, and they're preparing to supply the post-PC virtualized environment with applications end users need. The functionality found in these applications could be made available as services to Cloud Foundry developers, aiding thousands of independent developers in building next generation apps that keep VMware virtual machines at the forefront. And maybe that's where the payoff comes. But as far as I'm concerned, the jury is still out on these acquisitions.

Charles Babcock is an editor-at-large for InformationWeek.

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About the Author(s)

Charles Babcock

Editor at Large, Cloud

Charles Babcock is an editor-at-large for InformationWeek and author of Management Strategies for the Cloud Revolution, a McGraw-Hill book. He is the former editor-in-chief of Digital News, former software editor of Computerworld and former technology editor of Interactive Week. He is a graduate of Syracuse University where he obtained a bachelor's degree in journalism. He joined the publication in 2003.

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