Is VMware doomed?

Admittedly, things have not been going that well at VMware over the last few months.  The stock price is taking a beating, Diane was forced out (and Mendel followed), and the Microsoft machine has kicked into high gear with the full release of Hyper-V.

In talking to folks who still work at VMware it sounds like there is a general sense of optimism, at least in the field.  Having spent 3+ years of my career there, I still look on my time there fondly.  I had a great opportunity to evangelize some really cool technology and learn how enterprise IT was managed across a huge swath of verticals and geographies.  And our engineering and product teams made my job alot easier given that the product lived up to the promises made in the marketing materials.

But that was then, and this is now.  There are some major hurdles VMware will need to overcome in order to get back on track after this recent set of stumbles.

Here’s what I think VMware needs to do:

  • Play nice with Citrix – VMware and Citrix have been fiercely competing and it is very clear that both companies are trying to gain a beachhead into the core market of their competitor.  VMware is looking to extend into application virtualization while Citrix acquired XenSource for their hypervisor.  This competition will be great for customers, but not good for the shareholders of these two companies.  The virtualization market, broadly defined, is so large that these companies could both have very healthy growth rates in the coming years without stepping into one another’s turf.  Note that I don’t think that Citrix and VMware will actually play nice, but it’s nice to dream… :)
  • Keep innovating – VMware’s higher end functionality (VMotion, HA, Site Recovery Manager, etc) and the stuff they’re building for the future (power management across the infrastructure, hot failover of VMs, and whatever other cool stuff they announce next week at VMworld) is still years ahead of the competition.  The hypervisor is a commodity, but management of the hypervisors and everything on top of them is a high value activity – and an activity at which VMware continues to excel.
  • Engage more directly in the cloud computing market – The major clouds (Amazon, Google, etc) are built on Xen or Linux based technologies.  VMware is certainly used by hosting providers, but they need to find a way to get the technology into the big clouds.  Releasing ESXi (free hypervisor) is a start, but now they need to find a way to get cloud builders to use it in their infrastructures.  The cloud providers have their own management systems which I’m guessing they could fairly easily modify to manage ESXi hypervisors as well as Xen, and whatever else they want to run.  I have heard rumblings that VMware is planning to play in this space in a big way, but still haven’t seen what that play is going to be.

What do you think VMware needs to do to stay relevant (and dominant) in the coming years?


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