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VMware vs. everyone

VMware vs. everyone

If VMware is the Patriots, who are the Giants?

VMware is synonymous with x86 server virtualization. It's the unquestioned market share leader with more than half or as many as 80 per cent of customers using its hypervisor, depending on who's counting.

But cracks in the armor are starting to appear. Competitive products are cropping up all over the place; the behemoth Microsoft is preparing an assault with the upcoming release of Hyper-V. Investors punished VMware for disappointing earnings growth in late January, when VMware stock dropped 34 per cent in a single day.

Uneasy lies the head that wears a crown. Just ask Bill Shakespeare - or Bill Belichick.

"VMware is the champion right now, but it's sort of like the [New England] Patriots," says Laura DiDio, a Yankee Group analyst. "When you go 18-0, you've got a bulls-eye on your back. Everyone's looking to take you down."

So if VMware is the Patriots, who are the Giants?

The obvious choice is Microsoft. But it could also be Citrix - or Sun, Oracle, Virtual Iron, Novell or Red Hat. VMware's biggest vulnerability is pricing, says DiDio, who just published a report on the virtualization price war.

Less expensive is not always better, but VMware's product retails for about US$3,000 per socket, while the other virtualization vendors typically charge US$700 to US$800, according to DiDio. Microsoft's Hyper-V will cost US$28 as a stand-alone product or come free as an add-on to Windows Server 2008. The EMC-controlled VMware hasn't indicated any possibility of lowering prices, but it does offer one free product called the VMware Server, intended to lure new customers.

A Yankee Group survey last year had 55 per cent of server virtualization customers planning to use VMware, 29 per cent opting for Microsoft, 14 per cent undecided and the rest buying from one of several other vendors. Some estimates have VMware holding 80 per cent of the market or more. (These numbers don't include Unix and mainframe virtualization, where IBM is a big player).

Microsoft is thought to have the most promising shot at overcoming VMware's huge market lead. But this is a rapidly growing market, and each player has a chance to carve out its own niche while luring customers away from VMware and its flagship ESX Server. Here's a detailed look at what several analysts say are the vendors that pose the biggest threats to VMware.

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