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

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.