Virtualization Gets Even Hotter

Steve Hamm

When VMware introduced virtualization software for the PC in the late 1990s, it occupied a small, arcane corner of the computing world. Now, a lot of people/companies are getting into the act, and that's a very good thing for corporate computing mavens who want to get a lot more use out of the PC servers they already own. Virtualization is the ability to run more than one application on a single server by setting up virtual operating systems within one box, and also the ability to move an application from one machine to another to make the best use of server capacity. On July 17, Microsoft threw more of its weight behind the virtualization bandwagon by (surprise!) announcing it will work with XenSource to promote interoperability between the next version of the Windows server operating system and Xen open source virtualization software. Linux servers are so popular with big banks etc. that Microsoft wants to be able to have its virtualization products swim in the same ocean with Linux and Xen. IBM and Novell also announced support for Xen on the same day.

What does this all mean for VMware? More competition, for sure. Until recently it has had the booming virtualization market practically to itself. And it shows. Last week, when parent EMC revealed second quarter results, VMware's business posted a very healthy 73% increase to $158 million. That puts it on track to rack up around $630 million in sales this year. VMware very slyly in February released a free version of its basic virtualization software to head off the threat from Xen. (It still charges for maintenance) Now its main bulwark against rivals is innovation. Analysts say it has a solid lead on both Microsoft and Xen. That's the way you like to see a technology battle fought--on what's best for the customer.