The Microsoft VMware Smack Down: Behind the Headlines

All eyes are on post-Greene VMware (VMW) as it prepares to announce earnings on Tuesday and as analysts speculate about how much cleanup will be included in the results. Yet I think the most important questions to be addressed in the upcoming quarterly earnings call will have more to do with VMware’s competitive response to Microsoft’s (MSFT) recent Hyper-V launch.

And who better than Paul Maritz to be at the helm during the critical questioning; he was, after all, a major player at Microsoft for fourteen years. Diane Greene will certainly be missed. Her legacy as one of the Valley’s most successful entrepreneurs won’t be tarnished by her abrupt exit.

As a preparation for the questioning I’ve included a series of Archimedius posts about the hypervisor smack down. I’ve already seen some of my comments taken out of context to suggest that I’ve predicted a winner. Hardly. In the following posts from ARCHIMEDIUS I’ve talked about competitive positioning, strengths, weaknesses and recommendations. It would be nuts to make a prediction this early.

Background Reading for the VMware Earnings Call

In How VMware could beat Microsoft I talk about the need for VMware to expand their data center footprint, differentiate ESX and monetize unique attributes. This has been the most popular posting within the smack down theme, perhaps because VMware is perceived as an underdog, and readers are wondering what the company could possibly do to prevail.

In Microsoft vs. VMware: the New Battleground I talk about the early reactions to Hyper-V and the considerable new pressure that VMware will be facing as a result of Hyper-V and what that will mean for the virtualization category conversation. It was posted on June 25, just days after the Hyper-V shipping announcement.

For the blogger who said that I predicted a VMware victory I offer How Hyper-V could beat VMware. If VMware growth into the data center slows and they fail to differentiate, then Microsoft would have the closest thing possible to a welcoming party. Microsoft could have time to tackle enough technical limits to data center virtualization and accelerate the process that VMware kicked off.

Yet as I’ve blogged at Archimedius about cloud computing, Microsoft has a double-edged agenda. Its end game may be virtualization as an extension of its domain, not as an enabler of software industry disruption. For more on those implications you can read Google will unleash the Cannibals on Microsoft.

In a more recent post (Microsoft Unleashes the Cannibals) I talk about how larger and more established technology companies have used loss leader bundling in order to commoditize/cannibalize disruptive technologies. Clearly that was at least part of what Microsoft is doing with Hyper-V pricing, etc.

For a perspective on the recent CEO change at VMware you can read Maritz replaces Greene. Most certainly Microsoft’s entrance into the virtualization category had at least some role to play in Greene’s abrupt departure. It seems a stretch to see it as a rare coincidence.

For a little more perspective into the dynamics of data center virtualization and how they may play out you can check out Virtualization-Lite, which is about VMware’s surge into the data center and its quick establishment of beach head deployments in major accounts. Of course, I also suggest why VMware needs to continue its momentum beyond hypervisor VLAN deployments in order to prevail. That outlook may prove to be prescient in 2009. VMware needs to tackle the virtualization barrier in order to move customers beyond VLAN spaghetti deployments.

VMware’s earnings call is July 22. I hope the above selections from Archimedius give you a deeper perspective into the dynamics at play and how they may affect the outcome of the hypervisor smack down.

Disclosure: No positions
 

Comments

[rustybutt]

I find all this FUD regarding Microsoft vs. VMware to be a joke. Microsoft has never been successful when they've had to truly compete. They've only been successful when they've been able to leverage their monopoly position with Windows, and now that they've dumped XP and are attempting to needlessly force the world to Vista, their decline has become inevitable. As long as VMware continues to innovate at the pace they have been, they have little to worry about from Microsoft. Imagine you're a CIO and you have a choice to buy a virtualzation solution from the industry tech leader - VMware - or Microsoft, who has no history in virtualization, let alone a long track record of technical failure (see Vista's introduction, XP's introduction, NT's introduction, let alone ME, Win 98, and ta daaa... Windows 3.1 and 3.0). Which of you wants to put his career on the line as an early adopter of an unproven technology from Microsoft? Hmmm???