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What's up with VMware?

VMware is laying off employees, exiting business units, and its CTO and CEO have left. Should customers worry?

By , Network World
February 04, 2013 04:33 PM ET

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Kerravala's research backs this up, too. A recent survey found 20% of respondents reporting they have deployed Microsoft Hyper-V in production data centers, with another 20% exploring it. The most surprising aspect of the survey: The respondents were all VMware users. "Microsoft is having a bigger impact than a lot of people believe," Kerravala says.

The rise and maturation of Microsoft's "good enough" Hyper-V is only part of the new dynamics in the virtualization market, though. The bigger issue is that hypervisors are becoming commoditized and VMware needs to look beyond just hypervisors for its growth moving forward, Bartoletti says.

Mergers and acquisitions seem to be VMware's recent method of choice to expand its portfolio, but in doing so, the company has created new tensions with some of its oldest partners. VMware's biggest splash in the M&A market was to drop $1.26 billion to buy Nicira, the virtual networking startup headed by the creator of the software-defined networking (SDN) protocol OpenFlow. While propelling VMware into the heart of the debate about next-generation networking, the acquisition also put strain on VMware and parent-company EMC's relationship with networking giant Cisco. In response, Cisco has hinted at moves to distance itself from EMC and VMware, including recently cozying up with EMC competitor NetApp.

[ RELATED: Why VMware spent $1.26 billion to buy Nicira ]

The M&A strategy could be related to the layoffs VMware has recently announced. While company officials declined to provide additional information about which sections of the business will be cut back, Kerravala says it's only natural after M&A that efficiencies can be created by eliminating duplicate positions. Having CTO Steve Herrod leave less than six months after his former boss, Paul Maritz, left the top job at VMware, means a fresh shot of new ideas for the company, Kerravala says.

Customers don't seem to be hugely worried or swayed by the recent goings with the company. In fact, Kerravala says all in all, increased competition between VMware and Microsoft, as well as Citrix with Xen Server and Red Hat with the Kernel-based Virtual Machine (KVM), is a good thing for customers, Kerravala says.

Chris Harney is founder and president of the New England VMware User Group, which recently changed its name to the Virtualization Technology User Group to reflect the rise of non-VMware hypervisors used in the market. Harney says customers are choosing their virtualization technology based on their skills sets, pricing and availability.

"If you're really good with Citrix, then Xen is probably a good away to go," he says. VMware has the advantage, he says, because the company's been around longer, but he says there's a "perfect storm" of other hypervisors maturing, like Microsoft Hyper-V, while customers are looking for other options on the market. "I don't sense a lot of concern by users about problems VMware may be having," he says. As long as it doesn't impact the product, users likely will not care. "I don't expect to see people jumping ship, but it is interesting to see that there are other viable options out there on the market now for virtualization."

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