Original URL: http://www.theregister.co.uk/2006/01/31/vmware_qand_a/

VMware's Chief promises to play nice with Microsoft and Xen

If they ever catch up

By Ashlee Vance

Posted in Servers, 31st January 2006 04:16 GMT

Interview VMware has become one of the most successful x86 server software franchises around, and proprietary and open source rivals have taken notice. They would love to eat away at the more than $100m in revenue VMware does per quarter - a figure that's been doubling year over year.

But Microsoft and XenSource, VMware's two main competitors, will likely struggle to grab serious server virtualization market share any time soon. Microsoft has warned that it plans to phase out its current Virtual Server product in favor of a new software package due in the server version of Windows Vista sometime after 2007. Meanwhile, XenSource is working to get its open source wares onto the market and to create complementary, profit making products. The start-up has yet to announce a single customer as compared to the thousands VMware can point to.

We recently sat down with VMware Chief Diane Greene and asked her to discuss how the virtualization market will evolve in the coming years. How will VMware fend off these attacks and defend its pricing?

In addition, we asked Greene to explain how VMware expects to remain nimble inside of EMC. Wouldn't it be smarter or at least more lucrative for investors to have EMC spinout VMware and do an IPO?

As always, Greene provided frank responses, and we thank her for that. Greene is the real deal.

El Reg: Most of our readers know VMware well, so there's no need to go into the basics of how customers use your products. But can you give us an idea of any trends or shifts you're seeing?

DG: Yeah, we think this has been a transformational year because really two things have happened. One is that we moved beyond server consolidation.

When we first developed this thing, we saw huge ROI on things where server consolidation was just a small piece. Things like disaster recovery, high availability, provisioning, security and manageability. This year, all of a sudden, people are realizing that.

What that has led to is companies standardizing on a virtual infrastructure. So, we now have a lot of customers that have thousands of virtual machines and are deploying applications first and foremost onto our virtual machines as their standard environment.

El Reg: What kind of applications are companies still a bit nervous about moving onto a virtual machine?

DG: I would say it is completely horizontal in the apps they are doing, but the apps where somebody might not do it is where you have something that uses every bit of a huge machine - like a giant database.

People run databases in the virtual machines, but a giant database that is using a whole machine and could use even more isn't on a virtual machine today.

I do think that will happen one day, but I think it will happen when the hardware support for virtualization gets further along.

El Reg: How many companies really do run Oracle on top of a virtual machine?

DG: Lots.

We see SQL Server and Oracle all the time. It's pretty widespread.

It's databases, it's e-mail servers, it's web servers, it's file and print and servers, it's certainly test and dev environments and departmental applications. When we do surveys, the types of software are pretty spread out.

El Reg: What about middleware? I don't hear much about folks putting CRM or ERP apps on virtual machines.

DG: We do that. We have people that want to run Siebel, PeopleSoft, SAP and all that stuff too.

El Reg: You just seem to hear much less about that than say web serving in a virtual machine.

DG: We now have all the ISVs supporting their software in a virtual machine. The CRM companies were the last to get comfortable with supporting their software. For awhile, they were discouraging it, but they're not doing that anymore.

It is a good thing for them because it's really good for their customers. Often they will have a lot of applications, so now you can run them all on the same machine, and that's good. Then you can get better disaster recovery and other availability aspects.

El Reg: So now that you have customers with thousands of virtual machines, is your software still a tough sell for certain types of customers? Is the average business really willing to put their key software on virtual machines? Aren't people still a bit weary of the idea?

DG: No, I don't sense that at all anymore.

People no longer question whether or not this works. It is out there so much.

We have been shipping product for seven years now. We have customers telling us that we have the robustness qualities of enterprise Unix and mainframe-class machines. This is now a data center package that they can feel comfortable putting on x86 machines.

Our customers are quite vocal about how well it works. We can give you a long list of reputable customers.

The conversations are now more about what it will mean to deploy the software in an organization and how it will affect training and other things.

El Reg: As you become such a central piece of the data center, it's clear you're in some ways challenging Microsoft and other x86 operating system vendors for the key point of contact with regard to managing servers. How does this affect your relationship with a company like Microsoft?

DG: Well, you are still running Windows no matter what, if you want to run a Windows-based application.

So, I think we are doing good things for them. We want to work with the industry. We want to push standards. We are opening up our source.

When it comes to Microsoft, certainly they are coming into this space because it's a huge space and close to what they do. I just think that eventually we are going to work well together because that is what the customers want.

El Reg: With regard to Linux, a lot of customers moved in that direction to get away from the Microsoft hooks. Aren't you just introducing new proprietary hooks into the open source world?

DG: We work very well with the Linux community. We donate a lot of software to the community. We are still donating software. We are giving APIs and code.

We make sure we work extremely well with Linux, and we listen to them.

I wouldn't call us so proprietary with our community source program.

El Reg: Right, but it's like I have just gotten rid of Microsoft, and now I have VMware as my master on the server.

DG: You are moving onto a company that produces software as opposed to a community that produces software.

We let you be Red Hat, SuSE, Windows and VMware all at once. I think that is a win for the customer.

El Reg: So you have Microsoft and Xen attacking you with relatively immature products, and meanwhile, you're building out your tools arsenal. Is that the immediate plan - to focus on the tools?

DG: We are doing two things.

We are moving the platform forward, which is a huge job. In the last year, there has been Intel's VT, AMD's Pacifica, multi-core chips and 64-bit. That was just moving with the industry.

Internally, we added SMP support and performance enhancements and all the different devices. And then we are spending millions and millions of dollars on our labs for certification and testing.

That is a huge effort that we are going to continue.

Then, the solutions we are definitely moving forward. We are adding distributed availability services where you can failover and then you get distributed resource management where you get load balancing across a cluster. Then, we have consolidated backup and single console monitoring and security controls across the cluster of virtual machines.

And then we are also exploring really interesting areas in the labs where we are pushing virtualization to see what it's going to do. We did the Player, which is incredibly exciting for us.

It's over one million downloads now. All these people are building interesting virtual machines.

El Reg: I know you wouldn't dare reveal a future, unannounced product, but could you give us a flavor for something in the labs?

DG: On the high-level, what we see is that the data center will transform to where you can manage your hardware separately from your software, and you can think about them as more aligned with what is going on in the business.

We also see really hard security problems that can be solved by using virtualization.

El Reg: Changing directions, we're curious if life has changed for this plucky start-up since you became part of the giant that is EMC.

DG: I think EMC has been remarkably strategic about letting us thrive and grow on our own. Joe (Tucci, EMC CEO) has been very supportive.

There are a certain amount of things you do that aren't related to moving the company forward in the industry when you're a public company. The amount of work I've done that wasn't related to that is very minimal.

El Reg: You mean to say that had you ended up as the CEO of public company, you'd have to do a lot more socializing with the financial analysts and whatnot?

DG: Yes. As a public company, you spend a lot of time with investors.

El Reg: What's the real advantage of being linked with EMC though? You guys always stress that you don't get marketing or services help from the big parent.

DG: Well, they did help us in this way. We were busy scaling worldwide with our sales force. And we didn't have to deal with setting up offices and the legal requirements because we could tap into EMC. That was a nice thing for us. It helped us grow our international support presence.

El Reg: I'm still not totally clear on why you'd avoid an IPO if you weren't going to leverage EMC more. What's the point of joining a huge company?

DG: Well, it was a really good event for the company. Going public would have been a huge distraction at that point because we had a lot going on.

We had also given out a lot of stock to employees. So it was a reward for them.

El Reg: So a rather impressive pundit wrote a story suggesting EMC should spinout VMware to boost shareholder value. Have you talked about that plan?

DG: (Laughs)

A VMware spokeswoman stepped in that point to note that the company does not comment on rumors.

El Reg: Well, it was worth a try.

On the competitive front, we know for a fact that there are some very busy folks at XenSource. The company won't talk about any customer wins, but we hear rumors of some significant deals with large banks and other Linux-friendly financial institutions.

At the same time, the Xen software isn't that mature.

El Reg:Does Xen keep you up at night?

DG: You know, I think there is a lot to this software. There is no question. We have been at it for eight years. It is running your whole system, so it better be darn robust.

The more functionality we provide, the higher the customer's ROI will be because they can do more with it.

Xen is just emerging as something that you can actually run. If Xen turns into something that is really great, we'll embrace it. I don't think our customers would be very happy if we embraced it today.

El Reg: How would you "embrace" Xen?

DG: What Xen is doing is actually not that big of a piece of what we do. It's just a hypervisor, and we have never been just a hypervisor. So, we'll monitor it.

It would be this one thing if we were a one trick pony that had just built a hypervisor and never built anything else. But we built Workstation, and then we came out with GSX and then we came out with ESX Server and then added SMP to ESX and then we added VMotion and then we added VirtualCenter and now we are adding distributed resource management, distributed availability services and consolidated backup.

That looks pretty rich to me regardless of what happens to Xen.

El Reg: Looking very, very, very far forward to when Microsoft plans to bundle its basic virtualization software with Vista Server, do you think a time will come when you'll have to give away a basic version of your product as well?

DG: I don't know what we'll do, but already if you carved out just the hypervisor functionality, there is a tone of stuff that customers want. You could argue that all the value is over and above the hypervisor today. It just depends on how it's packaged.

El Reg: We're just saying that at some point it seems you'd have to give away a low-end version of ESX Server.

DG: What's wrong with that?

El Reg: Nothing. We're trying to understand if that's something you plan to do.

DG: I don't know if that's what we'll do, but I don't see anything bad about it.

I don't know how the software may get packaged. One thing for sure is that we'll keep adding a lot of value. If our software doesn't add value, then fine. We'll do other software.

I think we are adding unbelievable value right now.

El Reg: How long can you keep up this kind of growth?

DG: I don't know. It's great to have software that is making a big difference for people. There is a lot of headroom in the servers out there. So, we'll see. ®