VMware: Leadership and a Changing Market

Let the announcement of the firing of Diane Green, VMware’s founder and CEO, serve as a warning to all companies large and small; adapt or die. Unfortunately, this is lesson that we have seen before with the likes of Kodak, Xerox, Netscape, AOL, Palm, Inktomi, Motorola, and more. However, VMware’s situation is unique as they may not only topple themselves but potentially could ruin another technology giant in EMC.

Whether you are a leader, follower, innovator, or disrupter, a company’s focus must remain on their customers, vision, and the market at large. Too often companies become enamored with their own technology, success, wealth, analyst reports, articles, speeches, etc. and lose focus, execution, desire, hunger, and more. While the highs are incredible, the lows determine the winners from the one-hit-wonders.

VMware did not pioneer virtualization technology, that honor belongs to IBM, but they were one of the first to recognize and develop it’s application within the x86 world of Intel and AMD. One can only surmise that VMware has poured thousand of development hours to perfect their vaunted hypervisor. The end-result is an enterprise class application that is well designed, stable, and widely deployed.

Energized with their acquisition by EMC, VMware continued perfecting their hypervisor, improving their server and workstation products, and watched their sales soar. Blinded by their success and market dominance, VMware lost sight of the market pulse while EMC hit the jackpot with their IPO spin-off. In the meantime the market began to shift as enterprises realized that the virtualization value proposition of server consolidation actually created new challenges of security, virtual machine sprawl, and management worries. Virtualization had an impact on the consolidation of servers, but overall sever sales and capacity continued to grow.

When the dust had settled, VMware awoke to a host of competitors on multiple fronts including; the hypervisor, management, desktop virtualization, P2V, Policy and Security, Virtual Desktops, and more. From IBM, Citrix, Sun, HP, and BMC to Parallels, Quaramet Qemu, Embotics, Veeam, Scalent, Cassatt, and more, VMware is under attack with no where to hide. To make matters worse, VMware awoke the sleeping giant in Microsoft and must now contend with a competitor with seemingly unlimited money, talent, R&D, and marketing power.

Faced with mounting competition, the rapid commoditization of the hypervisor, downward pricing pressure, and unrealistic expectations of both EMC and Wall Street, someone had to take the fall. To add insult to injury, Diane Green was replaced by ex-Microsoft executive Paul Maritz. The emperor has no clothes, the enemy has entered the building, and it is clear that EMC is firmly in charge of their public subsidiary.

VMware is to virtualization as Xerox is to copiers. Whether they can remain relevant is now in the hands of Mr. Maritz, EMC, and the rest of VMware’s leadership team. Will VMware disappear like Inktomi or Netscape, or will they re-invent themselves like BlueCoat or GE? Will other companies learn from their mistakes? Or, is history doomed to repeat itself?

Power, money, hyper-growth, or a fancy new HQ campus, does not guarantee success. Only innovation, humility, partnerships, people, strategy, vision, and a mindful eye on the market will create a lasting entity. In the end, it all comes down to leadership. The evidence is clear; Buffett, Gates, Coffin, Welch, Walton, Merck, Packard, and more inspired, served, and led their organizations to greatness. Be mindful of history, learn from the mistakes of others, and never be satisfied, innovate, and lead.

VMware: Say Hello to Number Two

It has been a great ride for VMware of Palo Alto California.  They stated out as an obscure project with deep roots in engineering and software development.  In fact, I’ll never forget the first time I saw Linux running inside a VM on Windows; it was spectacular.   Today, with the backing of EMC, VMware is the dominant player within an infantile x86 virtualization market. 

As with all disruptive and innovative technologies, it is time for the market to grow up.  When Xen was purchased by Citrix for $500 Million a tremor was felt across the industry.  Xen was busy developing an OSS hypervisor and creating a commercial software and OEM business.  With Microsoft’s release of Hyper-V and Microsoft System Center Virtual Machine Manager, the earthquake has begun.

While VMware is not going out of business anytime soon, they are in jeopardy of losing their dominant position to Microsoft.  Why?  It comes down to; Volume, Reach, Ecosystem, Strategy, Marketing, and Money.  Microsoft has the sales teams, channels, relationships, partners, marketing, and money to pull it all together.  To put it another way, what has taken VMware years to build, Microsoft already sustains.

I am the first to admit that Microsoft remains a polarizing figure within the technology community; either you love or hate them.  The VMware faithful point to themselves as the only “production ready” VM technology.  I think IBM, SUN, and HP may have something to say about this as they have been doing virtualizations for years.  The truth is that virtualization technology, aka the hypervisor, is a commodity.  It belongs buried within the operating system (Windows, Linux, Solaris, etc.) and processors (Intel, AMD, PowerPC, etc.); neither of which VMware controls.

Here’s how it will happen.  Hyper-V is buried within Windows 2008 Server.  Windows 2008 Server is an awesome operating system (How they got Windows Server so right and Windows Vista so wrong I’ll never know).  Microsoft maintains close relationships with both the chip manufacturers (Intel, AMD, etc.) and the computer manufacturers (Dell, HP, IBM, Lenovo, etc.) for distribution.  Microsoft continues their relationship with Citrix (or buys them) to improve Hyper-V.  Windows 2008 will pick up steam in the SMB and large enterprise.  This entices them to “try” Hyper-V.  Microsoft will release incremental service packs to slowly but steadily improve Hyper-V.  As it improves, Enterprises will begin to deploy Hyper-V instead of buying third party technology from VMware.  VMware will respond by dropping prices limiting their ability to conduct strong R&D and Marketing campaigns.  Finally, one day Microsoft overtakes VMware as the number 1 x86 virtualization technology and begins to push their agenda and controls the market.

Once the hypervisor war is over, the real battle over x86 virtualization will crystallize; Management.  Organizations have begun to realize that while virtualization solves many issues, it creates its own set of challenges.  In the end, Microsoft will remain the dominant OS and hypervisor vendor and VMware will morph into something different.  If not, there will be plenty of challengers who’d “settle” for number two.