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Looking Back at Issue No. 1: Can VMware Remain on Top?

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I recently started a series of posts on the first-ever issue of Virtualization Review magazine, looking back at the state of the industry then, vs. what it is now. This time, I'll examine our cover story, which was an overview of the three dominant players in virtualization in 2008: VMware, Microsoft and Citrix. And wow, are there some interesting nuggets to pull out of that feature.

The first article, written by me, was called "View from Above." It was about how VMware became the biggest company in this fledgling industry, and where it might go from there.

Familiar Complaints
Even way back in early 2008, VMware was seen in some ways as a threat. Here's what I wrote then: "Some of the chief complaints about the company are the proprietary nature of its software, the high cost of its products and a fear from some competitors that the company is becoming too powerful -- all of which comes with being 'King of the Hill.'"

These complaints are still being heard today. By comparison, for example, Microsoft has become much more open source-friendly than VMware. And many still lament that VMware is the most expensive company out there for strictly virtualization-related products like vCenter. The counter-argument is that despite the expense of its products, VMware still has a commanding market share in those areas, so those offerings seem to be the ones that companies want most.

Increasing Saturation
Another tidbit from the article is that VMware sales in Q4 2007 were $412 million; the similar quarter last year saw revenues of $1.7 billion. That comparison also shows the growing saturation of server virtualization, which continues to be VMware's cash cow; the 2007 number reflected 80 percent year-over-year growth, while the Q4 2014 income was an increase of 16 percent year-over-year.

Related to that, I wrote: "But VMware, perhaps sensing that hypervisors may be moving to the realm of commoditization, is quickly adding to its portfolio of non-hypervisor-based offerings." The company has continued to do this at a very steady pace, not settling for just being a server virtualization business. Its offerings have gone beyond just new virtualization-related wares, too: it does a brisk business in mobile device management with AirWatch, for example, and continues to try and find its way in cloud computing. It's also worth noting that in 2014, VMware surpassed $6 billion in sales for the first time.

Keeping Ahead of the Competition
I also discussed VMware's competitors, and whether it could keep ahead of them to remain at the top. Dan Kusnetzky of the Kusnetzky Group (and now a columnist for Virtualization Review), said it faced real challenges: "As far as their share of the industry's mindshare," comments Kusnetzky, VMware is the "dominant supplier and able to charge premium prices; but that's under attack from Microsoft on one side and the open source players on the other."

Indeed, there are still plenty of competitors out there, and they still include Microsoft, Citrix and various open source companies like Red Hat. But thus far, VMware has managed to hold them off, mostly by continuing to innovate in its core areas and careful expansion into others.

Not Easy Being Greene
This article was accompanied by an interview with co-founder and then-CEO Diane Greene. Ironically, it would be one of the last interviews she did as CEO: she was ousted just three months after this issue hit, and replaced by ex-Microsoft exec Paul Maritz. She was a true visionary, and did a lot to make VMware a dominant company. She was also one of the few female CEOs in the industry, a situation that sadly continues to this day.

Greene hasn't been much in the public eye since then, although she appears to still be active in technology startups while keeping an extremely low profile.

Posted by Keith Ward on 06/30/2015 at 8:54 AM


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