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While VMware Inc. may have stubbed its toe, with revenues in its most recent quarter falling just shy of Wall Street analysts' expectations, it remains one of the hottest software companies in one of the industry's hottest markets. The company did surpass the $1 billion mark in revenues in 2007, to $1. 3 billion, an 88 percent growth rate over fiscal 2006. In 2007 the company also went over the 100,000 mark for customers and now has more than 10,000 partners.

Adding to that good news was a successful conference in Cannes, France, in February. During the show, Greene took time out to talk to Virtualization Review contributor Ed Scannell.

What's been the overall vibe at VMworld Europe? What seems to be front of mind for users and partners?
People seem really excited about the future of virtualization. I would almost characterize 2008 as the year for automation and management of the virtual data center. People are starting to understand that once you have these virtual machine containers, you really have the power to automate things like they've never been automated before.

Do your hypervisor bundling deals with large OEMs give you new access to markets?
Yes, the 3i Hypervisor announcements we made with IBM, Dell, HP and Fujitsu have got people excited here. So people are really interested in the idea that we now have a great way to reach the SMB markets and how much they will benefit from that. It will bring VMware virtualization to a much broader audience because when you buy these servers that are 3i enabled, people can try out single server consolidation and actually experience it. What we've seen is that when people use our products they usually like them and then they'll want to do more with virtualization.

"People tell us it's been really important to see the huge power savings possible through virtualization." -- VMware CEO Diane Greene

Will embedding the hypervisor in these servers increase the price of them? ESX, after all, is not a free product.
We've already lowered the price of ESX. But ESX 3i, which is separate from ESX, is much thinner with only 32MB [footprint], and is much more secure. Now, different hardware vendors will handle things [like pricing] differently, but 3i is available off our Web site for $495. The nice thing for users is when they get their server, it's preinstalled, preconfigured and ready to run.

You made some product announcements at VMworld that help crystallize your vision of the data center itself being one, big, self-managing, flexible utility. Are some IT shops and business partners buying into this?
I really think they are. Having a server come virtualization-enabled with a hypervisor makes it very clear that you are buying your server with 3i and so it's ready to do single-server consolidation, but there's so much more you can do. And by separating the two -- the VMware infrastructure and the 3i hypervisor -- it brings the idea home to people. And I think people here are seeing our automation product for disaster recovery [DR] systems, where maybe for the first time people can actually test a DR system. I'm seeing people now thinking about this as software in a VM they can get at to run on all those hypervisors, and that you can actually have aggregated in a virtual data center.

What's your plan for connecting laptops and a range of other mobile devices to be a seamless part of a virtualized environment?
I feel we have a pretty broad solution around the virtual desktop at this point. We have products for larger corporations where you can put policies around the virtual machine running on the laptop. You can control what cache level it is and where it comes into the corporate network, when it expires and what it's allowed to do. In fact, maybe the sexiest announcement we made here was this portable virtual machine where you can post a desktop virtual machine on a server and then you can check it out onto a USB key and take it with you and run it anywhere in a disconnected state and then, of course, check it back in. So you get all the advantages of a centralized, managed and updated desktop, but you can also check it out and take it with you if you're not going to be on the network. We've also shown that by hosting a desktop on a server you can save as much as 35 percent of the power requirements.

And has there been a lot of priority shown for green computing at VMworld?
Yes, that's another big theme of this conference. People tell us it's been really important to see the huge power savings possible through virtualization. We have a green calculator up on our Web site that's pretty cool. Basically it's a translator that tells you things like, for every server you have virtualized, that's the equivalent of 1. 5 cars off the road, or 55 trees planted means 4 tons of CO2 eliminated.

Microsoft and Citrix have formed a closer working relationship since the last time we spoke in the fall. Do you get the feeling this alliance is aimed squarely at VMware?
[Laughs] I think it's entirely possible, yes. It's actually a testament to our leadership.

Speaking of that, how do you handle the pressures on VMware? You're the clear leader in one of the fastest-growing market segments, and now you have these larger companies teaming up on you.
Well, I certainly think about Microsoft as a competitor all the time. That said, I think we're doing some pretty good things for customers like saving them time and money and power and space, as well as operational things and Cap X and Op X savings. So that's our focus, along with making sure things really work well for our partners. There's not a lot more we can do. We work as partners with Microsoft and Citrix to the extent possible.

With the looming recession in the United States and abroad, are you getting any sense that customers are growing more reluctant to spend money on virtualization products, at least over the first half of 2008?
I think it depends. I think in the financial sector where you have some pretty major losses, I think it's on their minds. Elsewhere, we're not so much seeing it. Of course there's this realization that by going with a virtual data center you could actually do more with less, and save money on your budgets that you can deploy elsewhere.

What did you think of Microsoft's recent announcement promising to work more cooperatively with open source vendors? Will this have any ramifications for how they'll deal with virtualization?
We really don't know yet. We're still trying to sort that out. We're certainly hopeful that it's good for opening up the virtualization markets. But I can't see exactly what it means yet.

VMware has been criticized in some quarters for being a closed-proprietary company. Is this criticism justified, and what steps are you taking to cooperate in the area of open standards?
Well that's a bit surprising to hear. We contribute actively to the management standards in the DMTF group. We've opened up our source code -- we have over 70 partners with source code licenses. We've published our APIs. We've published our format for the virtual machine. Not sure what else we could do. We hold onto our IP but, other than that, I think we've been groundbreakingly open, given the lead we have in a brand new market.