Virtually Speaking: It's Good to Be King

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There’s no denying that it’s good to be VMware these days. Sure, Microsoft’s Hyper-V is coming ever closer to nipping its heels, but profits are up and partnerships are increasing.

Last week, the virtualization kingpin announced earnings. After a disappointing end to 2007, first-quarter 2008 had close to 70 percent revenue growth compared to the same time last year.

VMware anticipates the growth to continue, with an increase of 55 percent over 2Q07’s $297 million expected for the current quarter. It further forecasts full-year sales to increase 50 percent compared to 2007 revenue of $1.33 billion.

The reason for the increased revenue is most obviously attributable to new products and partnerships. During the first quarter, VMware shipped a host of new products designed to meet virtual whims ranging from desktop virtualization to data center virtualization, management and automation, as well as platform security. It also announced an OEM agreement with Lenovo for the vendor to sell, distribute and support the virtualization platform in server systems sold in China.

Back in February at its inaugural European show, VMware announced agreements it forged Dell, Fujitsu-Siemens, HP and IBM to embed VMware ESX 3i. Since then, Sun Microsystems has also hopped on the bandwagon and agreed to add VMware’s technology to its x64 servers and storage products.

Microsoft is a formidable foe and Hyper-V is a rapidly maturing beta product. Going straight to the OEMs is a smart strategy in any situation, and an even more deft one, given how tightly Microsoft has coupled Hyper-V to Windows Server 2008.

VMware isn’t the only virtual player gaining traction. Parallels last week announced that its desktop virtualization offering, Parallels Desktop for Mac, passed the 1 million copies sold mark.

Granted, the software — which enables Mac users to run Windows, Linux or any other operating system and its critical applications at the same time as Mac OS X on any Intel-powered Apple computer — probably isn’t aimed the same market as VMware. It does, however, speak volumes about the acceptance of the technology and the fact that users aren’t waiting around to see what’s coming out of Redmond. Though, admittedly, if you’re using Parallels to virtualize your desktop, you probably don’t care much about what’s coming out of Redmond.

For the most part, Virtual Iron lacks the splash and mindshare that VMware and Parallels have. The privately held company last week announced it had crossed the 2,000-deployment threshold, with customers in a variety of vertical industries including banking, construction, education, government and healthcare. Recently completed deployments include Emanuel County School District, Northway Bank, North Berkshire Health, University of Massachusetts Lowell and YuuZoo Pte.

Bear in mind, however, despite this ramped-up adoption, actual deployment percentages are skirting the double digits. These numbers will no doubt surge when Hyper-V goes gold. Even then, though, room for growth from other players will remain. This after all, is still a market that is largely untapped and complex.

Regardless of whether a behemoth like Microsoft is in the mix, endless year-over-year growth in double-digits is unsustainable in any market. VMware’s and other’s expanding footprints is an almost surefire way to ensure the mark they have made isn’t trampled.

This article was first published on ServerWatch.com.