It's All in the Tools

Can VMWare stay on top? It says it can because it's all in the tools!

Everywhere VMWare turns, it seems like a new threat is popping up in the virtual machine world.

Oracle appears to be gearing up to be a competitive threat to VMWare. Oracle's virtualization software, announced November 12, "does not affect VMW's position as the de facto standard in server virtualization," says a Citigroup analyst report. VMware is an investment banking client of Citigroup.

Oracle's unveiling of VM, which stands for virtual machine for open source Linux business server environments, shook virtualization leader VMware.

But the jury's still out as to whether VMware can avoid a slowdown to its 90% growth rate.

Should VMware be worried? "Not today," says Gartner analyst Donald Feinberg. But Oracle is closing the window on VMware's long-term growth potential, he adds.

As hardware makers such as Hewlett-Packard add virtual machine management to their servers and partners such as Quest Software take on desktop virtualization, "it's becoming less and less obvious that there's going to be a need to have something like VMware."

Many analysts do not believe Oracle's virtualization software will have a short-term impact on VMware, which maintains a two-year technology lead. He said use of Oracle's VM "will be limited to Oracle-dominated shops, which are a rarity in today's heterogeneous enterprise datacenters."

Anaylsts say VMware, which has a commanding 90% share of the virtualization market, will maintain its edge for specialized software that allows servers to run multiple operating systems because its management software tools are superior to those of their competitors, including Microsoft.

Market share will be determined by the sophistication of virtualization management tools. VMware has a clear start in these tools, said Michael Cherry, an analyst with Directions on Microsoft. He spoke last week at a Citigroup-sponsored analysts session on Microsoft.

Cherry said Microsoft, which recognizes the benefits of virtualization as a means for building big data centers, is going to be behind VMware in the development of these tools for some time to come.