VMware deserves tremendous credit for tuning in to the need for virtualization software on x86 gear so early. Greene's husband Mendel Rosenblum and partners at Stanford University began working many years ago on shifting IBM's server slicing techniques to commodity hardware. A post-bubble slowdown in technology spending created the first mainstream interest in VMware's code. And now we find the company capitalizing on the beefy chips pumped out by Intel and AMD.
The lead VMware established with x86 virtualization software drives the endless adoration for the company.
VMware has more or less doubled revenue every year of its existence. That was cute when it made a few million. It's astonishing now that VMware brings in $350m per quarter.
This meteoric rise in revenue has left the rest of the virtualization market looking foolish. Microsoft, for example, still claims it hasn't missed the virtualization party because the market is so young.
"Wouldn't you say that if you were them?" Greene said.
VMware CEO Diane Greene not on a boat
Well, sure, but Microsoft can charge in with Windows Server 2008 and slap a hypervisor on a huge chunk of hardware before VMware even has a chance to pick up the phone.
"We are pretty well partnered with the hardware vendors," Greene said. "It's hard to run virtualization without a server."
To Greene's point, VMware has already struck deals with HP, IBM and Dell to have its new ESX 3i hypervisor go out the door with select server models. Not surprisingly, Greene expects the vendors to one day offer an embedded hypervisor on just about every system they sell.
"If you have a virtual infrastructure or a VMware infrastructure and you get a server that's virtualization enabled, you just plug that thing in and automatically all of the loads get rebalanced to take advantage of that. Automatically all of the clustering is their to failover to if it needs it. The power management. Everything just works. It's plug-and-play.
"We are virtualizing the hardware. That's the right way for it to come. I believe that generally when something is that right it happens."
The Irrational Stuff
Isn't that the one major lingering question about VMware? How right is it?
Wall Street appears to be judging this question in both rational and irrational ways.
VMware is on pace to churn out more than $1bn in annual sales at a quicker clip than giants such as Microsoft and Oracle. The analysts see this and pump VMware's share price up to reflect where they think sales will be in a couple of years. That's the quasi-rational part.
At the same time, the investment houses are dealing with a market that's largely lackluster except for a handful of wonder stocks - Apple and Salesforce come to mind. Our friends on Wall Street say they're being pressured to buy more and more of VMware because they don't want to fall behind rivals. The only way to make big gains in this market is to ride these select out-performers. This is a practical approach for gun-to-your-head professional investors but an irrational, unsustainable trend for the market as a whole.
As a result, you end up with VMware claiming a market cap of $47.5bn, and EMC, which owns 86 per cent of VMware, claiming a market cap of $53bn.
Last month, EMC's market cap sat at $43bn. As anyone can tell, VMware is directly responsible for EMC's recent growth. The company's share price had languished around $13 before VMware's sex charged IPO. Now EMC trades at $25 per share.
EMC's ownership of VMware has always proved uncomfortable for the likes of HP, IBM and Dell (a close EMC partner). These companies fight with EMC for storage sales and see EMC encroaching on their server software turf as well through a number of acquisitions.
"The relationship is continuing like it always has because we were always an independent subsidiary," Greene said. "We are more independent now. It really is pretty much business as usual. They never sold our product. They never set our strategy."
I'm running the free Linux version of VMware Server
on this Debian box. I've got a Windows 98SE guest session running reliably and stably in the window behind this one running my Eudora mail client. I've got Ubuntu running in a second guest session. I can run applications on the same filespace from three different OSs. (at the same time if I'm careful) It would be interesting to run OSX as well, but the fact that it isn't available is Apple's fault, not theirs. But it would be nice to be able to run applications without particular regard to what OS it runs on if Apple ever decides to join the real world.
The VMware stuff works on the desktop. My experiment with virtualbox was less successful, and since Xen doesn't support guest/host clipboard, it's useless for a desktop, so I haven't tried it. I wouldn't be surprised if they can execute the more radical ideas described in the article.
It looks like the company made a bad deal with respect to acquisition, but that happens, and sooner or later, that company is going to become a lot less profitable with a board run by EMC suits that presumably really doesn't understand what they're making or marketing. That's necessarily their problem, and a warning for technology entrepreneurs.
But I'm happy in the meantime, and will wait with interest to see what they'll do next.
VMware works for me
I am a very happy VMware Workstation customer. I don't even remember why I bought it. It doesn't matter, I find new uses for it every day. I can try out that new Linux distribution without messing with hardware. I can run apps requiring RHEL 4 on my computer. I can emulate a server and its clients. I can connect the network port on a virtual machine to a physical ethernet card and test new hardware without setting up a separate network. I could go on and on. All this and no bugs! 100% of the software cost on my Linux machine went to VMware. This is a company with a bright future.
apples and pears
Funny how the wallstreeters compare VMware with Microsoft in dollars, to show that VMware will grow faster....when Microsoft started growing a dollar was worth more than twice what it is now. It's just like horseracing and touts, isn't it?