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Ripple Effects From Virtualization

Ripple Effects From Virtualization

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Published by George Gilbert

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Published by: George Gilbert on Feb 20, 2012
Copyright:Attribution Non-commercial


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Strengths: Overwhelming leader in revenue share and enterprise deployments. Well-
developed channel and multi-year lead on Microsoft in maturity, performance of

Weaknesses: Still depends for a material share of revenue on basic functionality that
Microsoft is trying to commoditize. Needs to earn credibility with and build channel to
application owners and ultimately CIOs to sell future functionality. This erosion in
price and the tail-off in shipments for server consolidation is what we believe concerns
many investors in VMware. The most important takeaway, however, is that
virtualization is a platform for follow-on functionality that either keeps prices from
eroding as fast or actually pushes prices higher over time, depending on how the
platforms evolve and how well they are accepted.

Opportunities: Has couple year lead in building and selling HA/DR functionality.
Can also move in a direction Microsoft does not want to go in offering user-centric,
occasionally-connected, operating system-independent virtualized desktops.

Threats: As more advanced management functionality gets built on top of the
hypervisor, it will be easier for Microsoft to leverage non-virtualization-related assets
that it has been developing for some time.

Perspective on VMware:
Major product cycle expected to ship in May could provide catalyst

What‟s new

•ESX 4 and VI4, renamed vSphere, expected to be announced 4/15 and to ship in early May
•Expect VMware to reposition this as a 3+ year lead over Microsoft's upcoming Windows Server 2008 R2
and Citrix's current XenServerand Essentials management offerings
–Increased scalability: Able to treat up to 64 machines as a single cluster
–Increased performance: per virtual machine, supports 8 CPUs (prior: 4), 256 GB of memory (prior: 64),
networking at 40 GB/s (prior: 9) and 200k IOPS (prior: 100k)
•vSphere(virtual data center operating system)
–Key differentiator: forms the foundation of private clouds / next-gen mainframe based on pools of server,
storage, and networking infrastructure
–Will position Microsoft R2 and current Citrix products as merely enabling hypervisors to communicate

with each other

–Not publicly de-emphasizing management effort, but we believe VMware no longer has pretensions or
desire to compete head-on with full Microsoft Systems Center family, CA, BMC, HP, IBM

What to watch for

•Early indications that mission-and business-critical application are being virtualized
–For instance, currently only 2-5% of SAP production instances
–Virtualization performance overhead still an issue
–Oracle Fusion middleware later in 2009 likely to be more virtualization friendly
•How much value is placed on management functionality
–Is VMware app-agnostic 80/20 approach good enough for customers?


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