Volume 5, Number 20 -- May 20, 2008

VMware Tweaks Virtualization Stack, Boasts of Greenness and Sales

Published: May 20, 2008

by Timothy Prickett Morgan

Server and desktop virtualization juggernaut VMware, a subsidiary of disk array maker EMC, last week took the wraps off two more features in its Infrastructure 3 server virtualization software stack, this time focusing on disaster recovery and software staging. At the same time, VMware is coming off a pretty good quarter in sales and is boasting of the greenness of its products.

With Site Recovery Manager, VMware is taking a more open approach to disaster recovery than it originally took with VMware Infrastructure a few years ago, when the high availability and replication features of the hypervisor and related file systems all worked using VMware's own code. As Citrix Systems has done recently with its XenServer hypervisor and related tools, VMware is now, with Site Recovery Manager, making use of the data replication and high availability software built into many modern disk arrays. As has been VMware's modus operandi since it became clear that server hypervisors would become a commodity, the company is more concerned about selling an integrated and diverse stack of software products and related services than trying to retain control of its dominant position in server hypervisors. (This strategy maximizes profits.)

Site Recovery Manager is a module that plugs into VMware's Virtual Center command and control tool for virtualization, and allows that tool to create, update, and document disaster recovery plans for hypervisors and their server instances. It also allows the testing of those failover plans in an isolated test environment--something that is economically prohibitive in physical server environments. Finally, the tool allows a tested failover plan for a hypervisor's guests to be automated so system administrators do not even have to be around to do a failover in the event something goes awry.

VMware also last week announced the delivery of another module called Stage Manager, which is based on the Lab Manager software that the company got when it bought Akimbi Systems in late 2006. While Lab Manager was aimed at allowing developers to create and manage zillions of instances of software stacks for testing code, Stage Manager is the grown-up version intended for production IT environments and rolls applications and their related virtual machines through pre-production stages--such as integration, testing, staging, and end user acceptance--and then into actual production. Stage Manager has been in a public best test since January 2008.

Finally, because everything is a bundle these days, VMware announced yet more different packaging options for its Infrastructure 3 stack. The IT Service Delivery Bundle adds Life Cycle Manager--a module announced in March that allows hypervisors and guests to be provisioned, metered and charged back to their users, and decommissioned--to either Lab Manager (for developers) or Stage Manager (for administrators). The Management and Automation Bundle is for sites who are concerned with high availability and the delivery of services, and it includes Lifecycle Manager, Lab Manager, Stage Manager, and Site Recovery Manager. Pricing for these bundles and modules was not available as we went to press.

In a more interesting aside, VMware is telling customers and competitors alike that it has virtualized more than 6 million workloads on servers since 1998, and estimates that this virtualization has saved the companies of the world an estimated 39 billion kilowatt-hours of electricity at a cost of about $4.4 billion. This is apparently about the same amount of juice that Denmark consumes in a year. VMware's sales pitch is that it can save customers anywhere from 80 percent to 90 percent on electricity through consolidation and that it is seeing consolidation ratios as high as 60 to 1 on servers using its tools. This is probably not the typical compression ratio or savings.

But such benefits are clearly driving VMware's sales and profits. In the first quarter ended March 31, VMware reported software license sales of $294 million, up 73.4 percent, and services sales of $144.2 million, up 61.8 percent. Overall sales rose by 69.4 percent to $438.2 million. While revenue was up like an F15 (not quite as good as the triple-digit rocket growth VMware saw two years ago), profits didn't climb much, rising only 4.8 percent to just a hair over $43 million. Research, development, sales, and marketing costs have risen faster than revenue growth, and that is hurting profits. Competition from Citrix Systems, Microsoft, and Virtual Iron is hurting some, too. And the hurting that Microsoft is going to bring to bear on VMware has not even begun, really. This is why VMware is forecasting only 50 percent revenue growth in 2008.


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VMware Revs Desktop Virtualization Offerings

Wall Street Lets Some Air Out of VMware

VMware's Sales Up 90 Percent in the Third Quarter

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Editor: Timothy Prickett Morgan
Contributing Editors: Dan Burger, Joe Hertvik, Kevin Vandever,
Shannon O'Donnell, Victor Rozek, Hesh Wiener, Alex Woodie
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