Virtualisation game heats up

The advent of virtualization technologies from the industry's software goliaths has raised questions about their impact on VMware's pricing and leadership position.

Earlier this month, Oracle launched its virtualisation hypervisor, VM, based on the Xen open source platform. The server software offers Linux OS support and integrates with the vendor's database, application software and Fusion middleware.

Microsoft has also dug its stake further into the ground, announcing its forthcoming hypervisor, Hyper-V, will be available as a stand-alone offering for $US28 per server. The virtualisation technology will also be bundled into all three versions of its Windows Server 2008 operating system, which should be released mid-next year.

IBRS analyst, Dr Kevin McIsaac, said Oracle and Microsoft's move into the virtualisation game will increase competition, resulting in lower costs and greater innovation in the long-term. But VMware's early market lead and robust technology would be hard to beat.

"Over the next 18 months, I see Oracle and Microsoft doodling in the margins," he said. "Realistically, Microsoft won't get a product out until the end of next year. Hypervisor is not a simple technology, and we all know from past experiences that Microsoft has not been able to get a robust and secure first software version out there.

"VMware will be strategic for most organizations through to 2011. It's only the SMBs, who are completely Microsoft driven and have only a dozen Windows boxes, that Microsoft will start [engaging] with."

Likewise, Oracle's greatest chance of success was with its existing customer base, McIsaac said. But the fact that two of the world's largest software players were getting into virtualisation at all highlighted the technology's importance. McIsaac likened virtualisation's popularity to "gold fever".

Resellers are also confident VMware's market share and proven technical capabilities will keep it ahead of the curve. Nevertheless, principal consultant at solutions integrator Oriel Technologies, Rodney Haywood, said added competition was already affecting VMware's marketing strategy and could push product pricing down.

"We're also seeing VMware add more features into the free products and drop pricing on current products," he said.

What was more significant than Microsoft and Oracle's virtualisation play, however, was VMware's extension from server consolidation to datacentre management, Haywood said. This was opening up new opportunities for channel partners.

"What VMware is doing today is investing in new products which encapsulate things like backup automation, site recovery for disaster recovery and patch management," he said. "This is a good thing for us because we have more solutions to sell, but it does add a technology burden as we have to get up to speed." Southern Cross Computer Systems has invested in VMware skills but is also a close partner of Microsoft.

Its CEO, Mark Kalmus, said it was unlikely to abandon VMware in favour of newly emerging technology from Microsoft but admitted the latter was hard to ignore.