4 Reasons Microsoft Will Crush VMware

Microsoft's momentum in virtualization is growing quickly, as evidenced by September 8th's "Get Virtual Now" virtualization extravaganza showcase. Microsoft announced Hyper-V Server 2008 will be free to download along with System Center Virtual Machine Manager 2008 and Microsoft Application Virtualization 4.5. Availability will be sometime around the next 30 days. At the same time, VMware is hemoraging leadership following the ouster of the founding CEO Diane Green and the ensuing turmoil the company has experienced. VMware stock (VMW) hit a 52 week low again this week at $31.51 when the stock was jumping back into the $70's in May and early June earlier this year. And it's been less than a year since VMware's stock was in the $125 range.

Clearly, Microsoft's been behind the proverbial eight ball in the virtualization market and is just began gaining momentum with Hyper-V's release in Windows Server 2008 and now these announcements. So... no better time to strike than while VMware is down, hurting and dazed. Here's my take on the 4 reasons Microsoft can unseat VMware at the top of the virtualization podium.

1. The Tidal Surge Strategy. Experts often say the most severe damage and destruction from hurricanes occurs due to the overwhelming tidal surge and massive flooding.  When Microsoft eventually gets the company behind something, they can create their own market tidal surge, sweeping up most everyone along the way. Microsoft often doesn't have the best product or the product with the most features, but that surge can cover over a host of deficiencies Microsoft will eventually solve along the way. Hyper-V in Windows Server 2008 and September 8th's events are just the beginning. Microsoft's going hard at the enterprise and the service provider markets. Add in the thousands of motivated Microsoft partners worldwide and you've got a leviathan on your hands, something VMware will find increasing hard to battle against with each passing day.

2. Free And Pervasive Software. Citrix Virtualization CTO, Simon Crosby, has been banging the "commodity hypervisor" drum for some time now, and Microsoft has picked up the banner and turned that drum into a canon. All I have to say is free Hyper-V Server 2008. Nuf said. We can thank both open source Xen and VMware's early free download business model for accelerating commoditization of the hypervisor in the industry. I know my first exposure to hypervisors was downloading VMware's free version. Microsoft took the added step of bundling Hyper-V with Windows Server 2008. VMware's CEO departure and subsequent turmoil were due to pricing pressures VMware was already feeling in the market, impacting VMware's revenue expectations. The dynamics behind the business model that made VMware the darling of the software are all changing and we have yet to see that VMware can recover and get back up on its feet.

3. It's All About Management. It's obvious now that the management capabilities, along with high availability capabilities, are where virtualization vendors have placed their bets. Microsoft's had Virtual Machine Manager in beta for some time and it will be released in a few weeks. VMM can be used standalone, making it easy to get started with Hyper-V virtualization, and then integrate VMM with the full Microsoft System Center suite. Microsoft's made some other strategic changes by supporting VMware in VMM, simplifying virtualized software licensing, and establishing a virtualization certification program for other virtualization products. System Center VMM has the advantage of being integrated into the overall management software suite, not another standalone management console only for virtualization. As goes IT Operation's ability to manage virtualized environments, so goes the success of virtualization in the data center. Even lacking some of the sophisticated high availability features VMware's implemented, Microsoft clearly has and will continue to have the upper hand in overall management infrastructure over VMware.

4. War Of Attrition. If history is any indicator, and it usually is, Microsoft has the tenacity and persistence to keep at it until they dominate a market. They also have the coffers to stay in the game until they win. Wars are often won through a war of attrition, the victor being the last one standing. VMware's already down, we just don't know how seriously and they haven't recovered yet. VMware has the advantage of having a more mature product with many more high availability and recovery capabilities still missing in Hyper-V. The question is, what will VMware have when Microsoft catches up in those areas? Unless VMware can stay three steps ahead, that gap is going to close and Microsoft customers have shown they will wait for Microsoft to catch up with the market. Can VMware establish a beachhead in some industry, application or technology vertical? There's no clear indication of that happening yet. VMware has a tough road ahead. 

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