Will VMware's sales double forever?
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Ask Microsoft Analysis My friends in the financial industry keep lobbing the same question - how long can VMware keep up its growth? The answer to that query revolves around Microsoft and how competent it decides to be.â¦
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(InfoWorld) - Sales growth for x86 servers slowed in the fourth quarter of 2006 as buyers adopted virtualization technology and waited for quad-core processors, according to a Gartner report released Thursday. Hewlett-PackardÂ sold the most servers, but IBM collected the most money for them in 2006, the report said. Worldwide server shipments in the full year 2006 grew by 8.9 percent to 8.2 million units, but revenue grew only 2 percent to $52.7 billion, compared with 2005, according to Gartner. HP led the competition in server shipments, sending 2.2 million units out the door, up 8 percent from 2005. But IBM took the top spot on revenue with $16.9 billion, up 1.7 percent from the previous year. Shipments of x86 servers, the most widely deployed server platform, slowed in the fourth quarter, which held down full-year totals, said Gartner analyst Jeffrey Hewitt. The growth was "slower ... than we have seen in most recent years," Hewitt said in a prepared statement. "Most of that slowdown seems to be attributable to a lengthening of the sales cycle due to the anticipated introduction of quad-core x86 processors, with some lesser impact from x86 server virtualization." Virtualization software increases the utilization rate for servers, so a company could buy fewer servers than without virtualization. The report also showed continued strength for Sun, which posted a 15.4 percent gain in server revenue in 2006 to $5.7 billion. Sun also increased its revenue market share to 10.8 percent, replacing DellÂ (10.3 percent) in the number three spot. IBM led with 32.2 percent of the market, followed by HP at 28.2 percent. While Sun was the only vendor to report double-digit revenue growth, it shipped just 368,000 units, about one-seventh the number of units that market leader HP shipped.
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(InfoWorld) - Three years after being bought by EMC, VMware is going public.Â EMC announced plans Wednesday to offer 10 percent of its virtualization software subsidiary in an initial public offering (IPO). The offering will "unlock more of VMware's value for EMC shareholders," and help the company "retain and attract the software industry's top talent," EMC Chairman, President, and CEO Joe Tucci said in a statement. "We think now is the point where the planets are aligned and this makes sense," Tucci said on a conference call with financial analysts. WhenÂ EMC acquired VMwareÂ in 2004, it had 300 employees; today it has 3,000, he said. "The growth rate of this company has been phenomenal." EMC plans to file a registration statement with the U.S. Securities and Exchange Commission in late March or early April for the planned IPO, and the shares could be available for sale some time in the second quarter, said David Goulden, executive vice president and chief financial officer of EMC. The shares to be put on the market will be new shares, not ones already owned by EMC, Goulden said. The proceeds will "provide VMware with the financial resources it needs to achieve its full growth potential and provide EMC with the potential to return a portion of the original investment in VMware to EMC shareholders, while enabling them to continue to enjoy the vast majority ownership in this strategic and fast-growing business," Goulden said. Virtualization, which allows a server to better run multiple applications simultaneously, has helped businesses reduce the number of servers they need, reduce their energy consumption and assist in data center disaster recovery efforts, said Diane Greene, who founded VMware in 1998. She is president of VMware and executive vice president of EMC. "The IPO is a powerful way for us to accelerate our vision of a pervasive, industry standard virtual infrastructure. We see an incredible opportunity ahead of us," Greene said. More than 10 percent of new x86 server workloads are running on VMware virtualization software, and VMware is used by more than 20,000 customers, Greene said. Analysts have recently speculated on whether EMC would spin off VMware, said Gordon Haff, principal IT advisor with research firm Illuminata Inc. "EMC wants to get some of the money while VMware is clearly a hot property," he said. "On the other hand, they clearly want to retain a very large chunk of VMware." EMC's stock (EMC) has been stuck in the $10 to $15 range for the last three years. The IPO was announced after the New York Stock Exchange closed for the day. In after-hours trading, EMC shares rose $0.91 to $14.55. Tucci's comments about unlocking VMware's value "might be less politely phrased as 'hopefully getting the shareholders off my butt,'" Haff said. VMware is an early leader in one of the IT industry's hottest market segments. The company's revenue was up 83 percent in 2006, totalling $709 million, EMC said. The IPO should generate capital for VMware to invest in innovation, said Allan Krans, an analyst with Technology Business Research. Although VMware is the industry leader in server virtualization software, MicrosoftÂ is expected to introduce an update of its Microsoft Virtual Server in the fourth quarter of 2007, which could increase competitive pressure on VMware.
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InfoWorld - Hoping to keep the heat on archrival Microsoft, VMware on Wednesday will give developers a glimpse of an early version of its Virtual SMP product that allows a single virtual machine to work with as many as four processors, which in turn can more effectively drive mission-critical applications.
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InfoWorld - Microsoft has laid out plans to become a bigger force in the market for virtualization software, stepping up its assault on established leaders such as VMware.
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Storage maker EMC&#39;s profit increased dramatically compared to last year&#39;s third quarter, lifted again by continued growth of its VMware subsidiary and EMC&#39;s recent sale of a slice of the company.Net income for the third quarter ending Sept. 30 was $492.9 million, or $0.23 per diluted share, which was 77 percent more over the same period a year ago, EMC said Thursday. Those figures included the&#160;sale of 6 million shares of VMware to Cisco Systems.Excluding the VMware gain, EMC&#39;s net income was $377.8 million, or $0.18 per diluted share. Analysts predicted $0.17.EMC, which&#160;acquired VMware&#160;in 2004 for $635 million, said in February it would&#160;sell off 10 percent of VMware in an IPO&#160;(initial public offering), which was completed in August. EMC said the money would go toward stock compensation for its employees as well as boost the stock price. Intel now also owns a stake in VMware.VMware maintains a huge, 85 percent market share for virtualization software, which allows multiple operating systems to run on one piece of hardware.The technology remains a hot area, since&#160;virtualization enables servers to perform at a higher level, reducing the need for more servers. EMC, which has retained a majority stake in VMware, said third quarter revenue came in at $354 million, 90 percent higher than for the same quarter a year ago.EMC said its Information Storage business reported 8 percent higher revenue, backed by sales of its Clariion and Celerra networked storage systems plus other backup and recovery products.RSA, EMC&#39;s security business, saw revenue grow 22 percent over a year prior. Those gains were attributed to RSA&#39;s authentication business, consumer applications, and event management business.&#160;
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Sun announced Tuesday that it is buying Innotek, maker of VirtualBox, virtualization software that may have more value for software developers than datacenter administrators.Steve Wilson, vice president of&#160;Sun&#39;s nascent xVM virtualization line, called the purchase a &quot;huge deal&quot; for xVM and &quot;even Sun as a whole,&quot; on his official blog Tuesday. Terms of the deal to buy the German company, expected to close in Sun&#39;s fiscal third quarter, were not disclosed.&quot;VirtualBox is software designed to allow users to run multiple operating systems on top of whatever OS they currently have installed,&quot; he wrote. &quot;Whether you choose Windows, Mac, Linux, or Solaris as your default desktop of choice, VirtualBox will ride on top of it and allow you to &#39;host&#39; any arbitrary collection of operating system instances. Software developers everywhere are starting to discover this way of operating, and these desktop virtualization solutions are quickly becoming part of the common developer toolkit.&quot;&quot;While there are other applications that provide this capability, VirtualBox is free, open source, and supports a wide range of operating systems,&quot; Wilson added. The software has been downloaded more than 4 million times since it was released roughly one year ago, according to Sun.VirtualBox may sound similar to Sun&#39;s own xVM Server, but the two products are targeted at different markets, Wilson said. xVM Server, announced in November, is a hypervisor that installs on top of the hardware. &quot;It&#39;s a purpose-built software appliance with functionality to enable server consolidation and dynamic IT. ... This is datacenter grade virtualization,&quot; he said.In comparison, VirtualBox is &quot;a software developer&#39;s dream,&quot; he said. &quot;You can easily set up multiple virtual machines to develop and test your multitier or cross platform applications -- all on a single box. ... Where xVM Server is competitive with something like VMware ESX Server, VirtualBox is more like VMware Workstation/Fusion or Parallels Desktop.&quot;The product will continue to be free, and for strategic reasons, according to Wilson. &quot;The developers that build applications have a huge amount of influence on how they&#39;re deployed. We believe that developers using VirtualBox can help guide their friends in the data center towards xVM Server as the preferred deployment engine,&quot; he said.Sun may also look to align VirtualBox with its other developer-oriented assets, such as NetBeans and Glassfish, he said.&quot;Having a virtual lab story -- assuming it works and developers and QA like it -- is good for a developer-friendly company like Sun,&quot; said Michael Cot&#233;, an analyst with Redmonk. &quot;But I&#39;m not familiar with VirtualBox, so I don&#39;t know if it in particular is good or bad.&quot;Programmers who aren&#39;t using virtualization now ought to start, Cot&#233; said. &quot;You&#39;d have to be one of those self-flagellation types to not want virtual labs in your developer tool-chains,&quot; he said. &quot;Maintaining a bunch of physical machines is tedious. If I&#39;m a developer and I have to write software that runs on four different platforms, spread out over however many different versions of Windows, Linux distros, OS X, et cetera, all of those machines add up. And then creating &#39;fresh installs&#39; of them for testing gets worse.&quot;
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(InfoWorld) - As large enterprises embrace the concept of virtualization to more efficiently manage their information technology systems, vendors are now targeting the small-to-medium size market. VMwareÂ on Monday is introducing a new low-cost service plan to give small-to-medium businesses (SMB) a taste of what virtualization can do for them. It's entry level bundle includes a free download of the VMware Server software for virtualizing servers and a $1,500 support plan called Virtual Center. Although less than the $5,000 support program for enterprise customers, the $1,500 support plan is limited to three two-socket physical servers that could be converted into multiple virtual servers. If an SMB customer wants to virtualize more servers, the support would cost an extra $400 for each extra server. Virtualization refers to the practice of managing a data center holistically to make the best use of the hardware available, reduce the capital cost of new servers and the operational cost of electricity to run them. Virtualization software like VMware Server makes it possible for one server to run multiple software applications at the same time. VMware sees growth potential in the SMB market, given that 70 percent of 1.2 million downloads of the free VMware Server software since June 2006 have been to SMB customers, said Ben Matheson, vice president of product management for VMware, a division of storage vendor EMC. He defines small-to-medium businesses as those with fewer than 1,000 employees or an average of 100 physical servers in their businesses. "There is a lot of market awareness of the value of virtualization in the enterprise...but we think it's useful for all companies," said Matheson. He anticipates many of the SMBs downloading the free VMware Server are just taking virtualization out for a test drive. "There are definitely a lot of trials, getting it into their labs and using things like virtual appliances and testing them. But there is also quite a bit of production use," he said. Server vendors have also been making overtures to the SMB market. Hewlett-Packard began offeringÂ a Virtualization Assessment Service on Feb. 1 to analyze an IT infrastructure to see how it might benefit from virtualization. The service is being offered through HP's resellers who typically serve its SMB customers, while HP's own sales and engineering force tends to large enterprise customers. IBM even calls its initiative a "Virtualization Test Drive." IBM launched in 2006 a virtualization education and sales initiative targeted at SMBs. IBM said that more than 65 percent of their virtualization sales are driven by IBM partners targeting SMBs.
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Sales of server systems rose 7.7 percent globally in the second quarter to $11.55 billion as demand for Information Technology remained strong after a three year downturn, market research firm Gartner said in a statement.
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A Microsoft-sponsored study says that Windows Vista will generate some $70 billion in revenue and create up to 100,000 jobs in the first year of its release. The report also forecasts rapid and widespread adoption of the OS.
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Hoping to keep the heat on archrival Microsoft, VMware on Wednesday will give developers a glimpse of an early version of its Virtual SMP product that allows a single virtual machine to work with as many as four processors, which in turn can more effectively drive mission-critical applications.
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In a matchup between VMware Server and Microsoft Virtual Server 2005 R2, our reviewer says they're both capable products and that the differences is "on the margin." Making the right choice is all about deciding what's most important to your infrastructure.
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The price of the ft4400 is far higher than that of a clustered solution, Infoworld's reviewer says. But if your goal is a completely fault-tolerant single-server, Linux-based solution, he says, look no further.
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Oracle may be willing to spend a record sum -- over $6 billion -- to acquire a middleware provider it believes will give it a permanent leg up on Microsoft's SQL Server. Does it still take a huge M&A like this to stay on par with Microsoft?
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Three months to apocalypse Comment Does anyone else get the feeling that the relationship between VMware and EMC has some very rocky times ahead of it?â¦
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Refines upgrade path VMware has embraced the world of 64-bit computing via a pair of point releases to its flagship products.â¦
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InfoWorld - Like other adopters of server virtualization, Purdue University was concerned that its datacenter would hit the wall, exceeding physical space, power, and cooling limits. The use of EMC VMware let it combine 140 physical servers into three Hewlett-Packard DL-585 servers, a 40:1 compression ratio, says Mike Rubesch, director of IT infrastructure systems. &quot;It helps postpone the inevitable,&quot; he adds.