VMware Wants to Reign Supreme

VMware President and CEO Paul Maritz has bet the farm on cloud computing.

In the mid-1960s, the computer scientists at IBM Corp. confronted a tough problem. Mainframes had plenty of power for the time, but the applications were as monolithic as the hardware. IBM desperately wanted to do more with a single box, which would make it more efficient and attractive to customers. The answer? The IBM System/360 Model 67 mainframe, a machine that ran applications in virtual machines (VMs) and, in fact, virtualized all the hardware interfaces as well. That machine, and the first VM hypervisor, came out in 1968.

The Model 67 may have gone the way of the dodo, but 30 years later, in the mother of all refresh cycles, an upstart named VMware Inc. reinvented the IBM mainframe-virtualization technology--this time for x86 servers. VMware then enjoyed a 10-year honeymoon without serious competition during which it developed server virtualization products that led to market domination and laid the groundwork for the company's fateful decision to bet its future on the cloud computing market some 12 years later.

Paul Maritz was heading up the EMC Corp. Cloud Services and Infrastructure Division in 2008 when he was chosen to replace VMware co-founder Diane Greene, who was suddenly ousted by the VMware board in 1998. Maritz, a 14-year Microsoft veteran, hit the ground running as president and CEO, and since then he has presided over the company's ongoing server virtualization supremacy, accelerated its desktop virtualization efforts, and moved steadily down a one-way road to the cloud.

The financial reports have been positive, and the Q2 2010 numbers reported July 20 are no exception. The company reports revenues of $674 million, up a healthy 48 percent over the same period a year ago. Looking back at the past 12 months ending June 30, operating cash flows were $1.1 billion, up 3 percent over the previous year. Second quarter U.S. revenues jumped 43 percent to $334 million, while international revenues were up 53 percent to $340 million. Q2 license revenues checked in at $324 million, or 42 percent more than the same period a year ago. Service revenues--including software maintenance and professional services--reached $350 million, a 54 percent gain.

Asked to evaluate Maritz's job performance, Gartner Inc. Research Director Chris Wolf replies: "Outstanding. It was the right move at the right time, especially if you look at VMware's commitment to the desktop and application space. Really, the desktop and user applications were more of an afterthought to VMware prior to Paul Maritz, but Paul understood the big picture."

Gartner Vice President Tom Bittman is also complimentary of Maritz, saying, "I think Paul has done a very good job of articulating a very interesting and realistic vision for VMware. I think his job is to make that vision come true."

Raghu Raghuram, general manager and VP of the VMware Server Business Unit, has had the opportunity to evaluate Maritz close up, and says of his boss's management style: "It's very collaborative, and secondly it's a very open model where he delegates to the rest of the organization in terms of executing strategies." Raghuram adds, "He's also a very good listener. He listens a lot before he ventures his points, and then engages you in one-on-one conversation."

So is it true Maritz has tied the future success of VMware to the cloud market?

"It's fair to say that," Raghuram responds.

Plying the Cloud Paradigm
Looking at it on a base level, Raghuram--who reports to Richard McAniff, executive VP and chief development officer--says that by using virtualization as a core building block, VMware wants to provide Infrastructure as a Service (IaaS) by combining all servers and storage in a giant pool of resources and allocating them on-demand to applications via private clouds in the datacenter, or public clouds offered by service providers. The next step in the VMware cloud transition is using SpringSource--which was acquired in August 2009 for its Web application development and management expertise--to deliver application Platforms as a Service (PaaS), by enabling end users or developers to provide application clouds that VMware runs, scales and manages. The third step is developing the software applications themselves, and area in which Raghuram says VMware will play a "supporting role."

Even as the company works toward its IaaS and PaaS goals, Raghuram says it still faces additional challenges, such as enabling customers to continue running their existing applications, providing customers with the quality of service (QOS) they've come to expect in their legacy infrastructures, and offering them choices regarding their mix of internal and external services. When it comes to letting customers continue with their existing applications, Raghuram says one of the great benefits of virtualization is its ability to run a wide variety of applications in a virtualized context, whether they're based, for example, on Windows 95, Windows NT or older Linux environments. "Anything that's written in the universe, we can run it," Raghuram declares.

QOS is an understandably sensitive issue for companies that are dependent on the reliability and availability of their dedicated infrastructures. Because they're already apprehensive about migrating to cloud, these companies demand non-negotiable levels of application uptime and performance. Any cloud, private or public, that fails here is destined for a quick rejection, but Raghuram maintains that VMware has done its due diligence, and customers can count on high-level QOS in their shared cloud environments.

Having choices when it comes to the mix of internal and external services is also a must. As Raghuram puts it: "If I'm a CIO, I want to have the choice to go to one service provider one day, and another service provider the next day, or use one set of service providers for one part of my infrastructure, another set of service providers for another part of my infrastructure, and then use my datacenter for the third part of my infrastructure and applications."

VMware wraps these issues up in its vCloud solution, which it says allows customers to "run, secure and manage applications in the private cloud or have them federated on-demand to partner-hosted clouds within vCloud." vCloud also includes vCloud Express, an IaaS offering that provides on-demand, pay-as-you-go infrastructure, and VMware Cloud API (as of mid-July in technology preview), which is designed to enable private clouds that use the company's technology stack.

 "We still have a long way to go in converting our customers over to running their datacenters as a private cloud."

Raghu Raghuram, General Manager and Vice President, Server Business Unit, VMware Inc.

Raghuram says VMware measures its cloud success along two metrics. The first is getting service providers lined up behind vCloud, and during the past year, some 1,500 of them have done just that. The second is enabling customers to deliver private clouds, which he says is the intention of "large numbers" of VMware customers. Based on these developments, he says the company has successfully satisfied both metrics, even though, "We still have a long way to go in converting our customers over to running their datacenters as a private cloud."

Bittman acknowledges the importance of signing up cloud service providers who are using VMware, but he says amassing private cloud customers is more important and should be done first. Once that happens, the service providers will come when VMware tells them how many customers it has building on VMware infrastructures and how the company is building bridges for them to cloud service providers.

Bittman says VMware is well placed to seize the "huge business opportunity" that comes from migrating legacy applications in private and public cloud environments. He notes the addition of SpringSource is going to "make [the company] a lot of money" over the next couple of years by enabling new applications via an advanced applications architecture. Between now and then, he says, the big open area for VMware is investing in application performance tools and service governors that manipulate what's taking place inside VMs. Calling these tools "application-knowledgeable," Bittman says they need to be created or acquired.

Addressing the apprehension customers have about migrating to the cloud and their desire to implement hybrid systems, he states: "VMware makes it easy. It gives customers a gradual onramp to cloud computing that allows them to evolve at their own pace. That's very important, and that's where VMware has the best story right now."

When asked to evaluate his company's competitors, Raghuram claims that blogs from Inc. customers describe a "noisy neighbor" problem in which they experience varying application response times that may run from 20 milliseconds to two seconds. As for Microsoft, he says Redmond is telling customers they should convert to internal clouds based on Microsoft technologies, and then connect those to Windows Azure, the company's hosted cloud environment. The VMware approach is superior, says Raghuram, because it's faster, less expensive and provides a choice of service providers.

Pricing: A Sore Subject
This brings up the issue of pricing. There's a widespread belief in the market that, despite its many virtues, VMware is considerably more expensive than its competitors. Raghuram rebuts that assertion by saying that while Microsoft Hyper-V is free, it has to be purchased along with an operating system and the System Center management product. "If you look at apples to apples, we come out actually lower on cost per application," he says. "Not only do we come out lower on cost per application, we can run more applications on a given server than any of our competition. Customers are trying to run a certain number of applications on their platform, and therefore our cost per application from a managed perspective is much lower than anybody else's."

Bittman takes issue with Raghuram's comments, noting that benchmarks can always be designed to make companies look good. "There's no doubt that VMware costs more than Microsoft on average--usually by a factor of two or three," he states. He does, however, go on to note that another way to measure costs involves the VMware use of memory overcommit, which allows users to configure more memory to all of their VMs than is actually available on hardware. Under normal conditions, this increase in density allows users to run approximately 25 percent more VMs per server than comparable products--such as Hyper-V--that lack memory overcommit.

 "VMware makes it easy. It gives customers a gradual onramp to cloud computing that allows them to evolve at their own pace. That's very important, and that's where VMware has the best story right now."

Tom Bittman, Vice President, Gartner Inc.

Despite its protestations, VMware is sensitive to the price issue, and that was evident in its July 13 unveiling of VMware vSphere 4.1. The announcement made it clear that the torch is being officially passed from the venerable ESX architecture to the ESXi architecture, which VMware calls "the next-generation hypervisor architecture from VMware." The former free ESXi single-server edition hypervisor has been renamed VMware vSphere Hypervisor (it's still free). Raghuram says, "Both ESX and ESXi are functionally the same. They have a different management model, and as a result, they have a very different footprint." For example, the ESX hypervisor uses a Linux OS, referred to as "the service console," to execute scripts and install third-party agents for systems management, backup or hardware monitoring. Raghuram notes that VMware vSphere Hypervisor doesn't have the service console feature, which means it has a much smaller footprint than its ESX counterpart. VMware claims the reduced VMware vSphere Hypervisor code base enhances security and reliability because it represents a smaller "attack surface" and a reduced amount of code to patch.

Cost controversy aside, the fact also remains that VMware is associated with quality, and the company has been able to charge more for that quality--though that may now be changing as the competition grows stronger. In the end, it's a moot point because there are few, if any, established VMware customers who are going to yank out their entire virtualization infrastructures and start over with Citrix Systems Inc., Microsoft or anyone else just because they resent VMware price points. Some companies may bring in an alternative hypervisor for specific environments, but the odds are there will be no palace coups.

According to Virtualization Review blogger and columnist Rick Vanover, some established ESX hypervisor customers have expressed discomfort with their migration to vSphere Hypervisor (formerly ESXi) and some security experts say its smaller surface area also means there are fewer tools on the host to manage connectivity-related settings. However, Vanover goes on to say the situation is different for new VMware customers. "They haven't gone through all the learning curves on ESX and will take the recommendation to go with ESXi [now vSphere Hypervisor] from the start," he explains. "In my personal virtualization practice, I've gone all-ESXi because VMware has made the long-term vision clear."

Server Virtualization Strong and Growing
The future prospects for VMware remain bright, considering the approximately 75 percent of servers that have yet to be virtualized. Despite industry reports of "VM stall" relating to the need to update management capabilities, Raghuram believes that even as the economy bottoms out, VMware customers are planning to accelerate their plans for virtualization during 2010 and 2011.

"It's no longer a question of, 'Should I virtualize?'" he declares. "It's a question of, 'I want to do virtualization for all of my servers. How do I go about doing it, and what is the timing for each of my applications?'"

Wolf agrees that users are trying to accelerate their server virtualization plans, adding that some of his clients have already virtualized their entire x86 infrastructures. He also says these users are consolidating servers because they understand the business continuity benefits of virtualization, as well as the potential power and cooling savings it offers. Another propulsive force behind projected growth is the emergence of the Intel Xeon 5500 series quad-core processors, which offer massive performance upgrades over their predecessors.

"The server virtualization business is still growing, everybody's growing--that's the bottom line," Bittman says. Regarding VMware, he adds, "The [company] still got a long way to go, and a lot of revenue to make."

Mini Market, Major Competition
Desktop virtualization--and its most renowned subset, Virtual Desktop Infrastructure (VDI)--have become high priorities at VMware, and even though this market is still relatively small, it promises to provide huge revenues down the road. In VDI environments, enterprise desktops computers are virtualized and maintained at datacenters, from which they're accessed by users via LANs or WANs. VDI advantages include the security that comes from being housed in datacenters, the comfort that comes from working with a familiar desktop interface and the significantly reduced setup time required for implementation (typically minutes instead of hours).

In anticipation of VDI's glittering potential, a new crowd of vendors is already jockeying for position--and survival. Despite this vendor proliferation, however, the two companies that are receiving the most attention are VMware (with VMware View) and Citrix (with XenDesktop). Microsoft partners with Citrix on complex, high-end VDI deployments. Since last summer, VMware and Citrix have been fiercely debating the pros and cons of their respective products and their underlying technologies.

Looking at it on a macro basis, because VMware had about a two-year head start on Citrix, it has built a significant lead in the number of VDI seats sold. In the eyes of many experts, however, Citrix seems to have a slight technology edge over VMware due to its FlexCast delivery technology--which Citrix says allows IT to deliver any type of virtual desktop in a VDI environment to any user on any device--and its use of its enhanced HDX adaptive technology, which includes the Independent Computing Architecture (ICA) protocol. VMware counters with its PC-over-IP (PCoIP) protocol, which it says compresses, encrypts and encodes the entire computing experience at the datacenter and transmits across a standard network to endpoints. The compression algorithm adapts dynamically with existing conditions to enable the optimal user experience for any network connection.

Scott Davis is CTO for the VMware Desktop Business Unit, and a staff member in the VMware Corporate Office of the CTO. He reports directly to Raghuram, but has a dotted-line relationship to corporate CTO Steve Herrod. Among his many responsibilities, Davis manages advanced technology projects, speaks to customers, and acts as a bridge between sales, customers, engineering and product management.

Davis says VMware customers have been on a "journey" which involves "breaking apart everything you want to accomplish with software on either a server or a client and separating that from the physical hardware that you use to accomplish the task in a completely isolated and encapsulated manner." He goes on to say that customers want all aspects of their digital lives to be separated from the physical devices, so that if the physical devices are lost, stolen or broken, all their data remains safely resident in a datacenter. Then it's simply a matter of creating new instances rapidly on demand without having to install a lot of programs on physical devices and worrying about backing up or migrating them.

Davis refers to this "profound change" in managing computer systems as part of the "consumerization of IT," which is creating a more diverse landscape beyond running Windows on laptops. This new landscape includes Linux desktops, iPhones, BlackBerry devices, Androids and iPads. "Making sense of all that in a way that enables IT to still provide the client security and manageability of end-point devices is what our customers are looking for us to accomplish," he says.

Davis expresses strong opinions. He says Windows 7 is incompatible with many customer applications and perpetuates the Microsoft model of tethering end users to physical devices, which requires excessive provisioning. Windows 7, he claims, would benefit from the VMware ThinApp application virtualization product, which eases Windows 7 migrations by encapsulating older apps and separating them from each other and the base OS.

David Davis (no relation to Scott Davis) is a columnist for Virtualization Review and a VMware instructor at Train Signal Inc., which offers video training for IT professionals. He reacts to Scott Davis's comments by saying the widespread adoption of Windows 7 is a "gift" for all desktop virtualization software companies, and recommends that VMware embrace--rather than criticize--it because customers need a desktop virtualization company that understands Windows 7 and strongly supports it. He goes on to say that in the current version of VMware View (4.0.1), Windows 7 is still classified as an "experimental/tech preview" and unsupported as either a client OS or guest OS.

VMware has been criticized for not making View more compatible with WAN-acceleration products, but Scott Davis asserts that PCoIP provides the necessary amount of WAN acceleration without the intervention of dedicated WAN-accelerator products. Davis says the inability of PCoIP to integrate with current WAN accelerators is "really irrelevant."

Regarding Davis' comments on WAN acceleration, Wolf states, "To simply discount WAN acceleration as not important is pretty incredible in my opinion. It's one thing to say that each PCoIP stream can do some native compression, which is fine, but that's not really the point. If there are two-dozen users in a branch office, and they're all watching the same training video from HR, it's not helpful that there are 24 compressed instances of the same video, because there should be no need to send those 24 streams over the wire. I should be able to benefit from the WAN accelerator, and I should be able to de-duplicate that down to a single stream and take advantage of that redundancy," Wolf explains.

Wolf makes positive points about both PCoIP and HDX. When it comes to PCoIP, he says his clients have been favorably impressed with the software version as implemented by View. He also notes that PCoIP has a favorable progressive-build feature that's highly dynamic in terms of how it utilizes network bandwidth to build images. By way of comparison, he points out that HDX is not statically locked in to a pre-configured amount of bandwidth, and, as he puts it, it might consume 800MB or 200MB of bandwidth for a user--or it might be only 200KB because it dynamically adjusts to delivery capabilities.

Bare-Metal Client Hypervisors
Back in September 2008, VMware said it would develop a type 1, bare-metal client hypervisor. When Citrix announced its type 1 development plans in January 2009, VMware renewed its commitment to the device, saying it would debut during the second half of the year. 2009 passed without any such debut, and Citrix ended up taking the wraps off XenClient at its Synergy show in May of this year.

Type 1 hypervisors are referred to as "bare metal" because they sit directly above the hardware, and all guest OSes access the hardware through the hypervisor. VMware ESX hypervisor is the classic example of this hypervisor style. By comparison, a type 2 hypervisor runs on a host OS to provide virtualization services. With type 2 devices, guest OSes run at the third level above the hardware.

 "The first thing you'll see us do is handle this bring-your-own-PC, employee-owned IT use case--and that it will be with a technology that we call View Client with Local Mode."

Scott Davis, CTO, Desktop Business Unit, VMware Inc.

These days, VMware CTO Davis is playing down the value of bare-metal client hypervisors, saying they're invasive for contractors and consultants who go from job to job, and that the Apple Inc. end-user license agreement precludes users from running a Mac OS in a VM. Overall, he says, VMware has both the type 1 and type 2 technologies required to run View-managed VMs on endpoints, and the company will release technologies in multiple stages for multiple different architectures.

"The first thing you'll see us do is handle this bring-your-own-PC, employee-owned IT use case--and that it will be with a technology that we call View Client with Local Mode," Davis declares. "That's a type 2 solution for running View-managed VMs, and we think it's the absolute right technology for bring-your-own PC, employee-owned IT."

In bring-your-own PC, employee-owned environments, client-side hypervisors provided by corporations enable personal PCs to become separate entities via a secondary VM that provides IT-controlled work environments.

Not content to rest on his company's server virtualization laurels, VMware President and CEO Paul Maritz has made it expressly clear that VMware will live or die based on its success in the rapidly burgeoning and highly competitive cloud computing market. Toward that end, he's taking customers on a journey up the cloud stack and at the same time driving his company deeper into the next big payoff, which is desktop virtualization. Servers, clouds and desktops are the touchpoints that VMware is checking off as it barrels into the future.


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