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Is VMware More Like Novell or Oracle?

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David Cappuccio, in his blog for Gartner, Just a Thought; Will VMware become the next Novell?, draws several disconcerting parallels between VMware’s current virtualization industry dominance and a similar position enjoyed by Novell in the early 1990’s. Cappuccio wonders if VMware, like Novell, is going to get trounced by Microsoft.

The $60 billion Redmond behemoth is one of the greatest companies of all time and has displaced many industry leaders as viable players. Though it would be foolish to rule Microsoft out of any fight, differences in today’s technologies and between the VMware and Novell organizations mean that history is not doomed to repeat.

Virtualization as a Data Center/Cloud Computing Platform
Microsoft touts Hyper-V as an operating system feature and arguably views virtualization as a point solution. VMware, on the other hand, is all about virtualization as a platform. This broader perspective has enabled VMware to dominate the market with exceptionally reliable, robust and versatile solutions.
 
While perhaps taking some liberties with terminology, VMware’s declaration of vSphere as a cloud operating system does emphasize the importance of virtualization in enabling a shared resource-on-demand cloud model. As a data center approaches 100% virtualization, embracing cloud computing becomes easier. VMware’s vSphere delivers not only the performance required for 100% virtualization, but also the crucial storage, network, security and management components.
 
Data center virtualization has an exceptional and easily measurable ROI. Achieving the full savings and other benefits, though, requires a homogenized virtualization platform. IT staffs will likely be reluctant to permit pockets of Hyper-V, even if only for test/dev or non-mission critical servers, making it more difficult for Microsoft to establish beachheads against VMware as it did against Novell with NT.
 
VMware’s tight partnership with Cisco adds a further enterprise credibility that Novell lacked. Cisco’s Nexus 1000V switch is practically a given for any Cisco shop wanting to consolidate virtual and physical network management, and Cisco’s UCS optimizes the effectiveness and efficiency of virtual infrastructures. The 1000V only works with vSphere while UCS is tightly integrated with the VMware platform.
 
The Difference between VMware and Novell 
In 1994, I ran the 2nd largest Novell dealer in the San Francisco Bay area. Steve Ballmer invited me and a handful of other Novell partners to lunch in order to hear his pitch on why we should sell NT 3.5. I was particularly impressed by his response to a question about the impending Novell-Word Perfect merger. “We think it’s great!” he boomed. “WordPerfect has these huge budgets. Novell has tiny little budgets. The only thing those companies have in common is that they’re both headquartered in Provo, Utah. It will never work!”
 
Ballmer’s prescience quickly became apparent as Novell sold WordPerfect to Corel two years later. The acquisition was a casualty of Novell CEO Ray Noorda’s resolve to beat Microsoft at any cost – including purchases of Quatro Pro, DR DOS and even ATT UNIX. But by neglecting its core networking competency, Novell opened the door wide for NT to gain a foothold. 
 
Unlike Noorda’s Novell, VMware’s CEO, COO and Executive VP all come from high-level positions at Microsoft. They understand the Microsoft culture, strengths and threat. VMware is a company with a laser beam focus on virtualization that is undistracted by a personal vendetta.
 
Lack of Microsoft Invincibility
At the Microsoft MVP Meetings in the early 2000’s, Steve Ballmer commonly dismissed Oracle as a competitive threat, stating that SQL Server had already won. Yet Oracle now sits as one of the three largest software companies in the world with over $22 billion in revenues. Battling Oracle along with other exceptional competitors such as Google and Nintendo will prevent Microsoft from focusing its vast resources only on virtualization.
 
The ongoing improvement of Hyper-V and other hypervisors make a sustained 90% VMware market share unlikely. But VMware’s industry leadership need not diminish. The key will be its ability to continue innovating with virtualization solutions that increasingly obsolete the physical alternatives. As VMware drives the virtualization industry expansion, it will benefit in an absolute sense with continued rapid growth.
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