Home Applications VMware’s Woes – Is Microsoft Virtualization to Blame?

VMware’s Woes – Is Microsoft Virtualization to Blame?


Written by: Douglas A. Brown, MVP, CTP 

Yesterday, VMware announced it has fired (my words, not theirs) one of their founders and the current CEO, Diane Greene.  This came as a huge shock to me and most of us in the virtualization industry.   Diane Green has taken VMware from a small startup to the leading vendor in one of the biggest growth markets in IT today.  She took it through a very successful IPO and was responsible for it becoming a 21 billion-dollar market cap company, but that was then and this is now.

Two days ago, I released a short article that detailed five reasons why VMware was technically so much better than Microsoft’s Hyper-V.   So with today’s news, I thought I would write a short bit about why Microsoft has the ability to STILL destroy companies with the drop of a new product! 

First off, before the comments start flaming, I’m not saying VMware’s board’s decision to replace Diane Greene was due to Microsoft’s release of its Hyper-V virtualization solution even though it is being billed as a direct competitor to VMware’s flagship VI3 solution.  However, in many ways, I have to believe she is one of the first high level casualties of the virtualization war.  


Before I answer that question, I want to make sure I give proper respect to Diane Greene and the job she has done, and done very well.    As I said earlier, she did an amazing job taking a small Silicone Valley startup, a Stanford University research project, to the top of the game. VMware has seen unprecedented growth, year after year, since it first hit the market in the 2001/2002 timeframe.   She successfully steered VMware through one of the biggest IPOs in the tech industry, since the Google IPO, and helped make virtualization into one of the biggest growth markets in IT today.   But like in any war, there are ups and downs and Generals are fired and hired by people that might not always see things the same as we do in the trenches.  

So, why?  Why do I think VMware’s Board let Diane go? Why is VMware’s stock falling like a MythBusters project to determine the terminal velocity of a 21 billion dollar rock falling from the top of the Empire State Building, and why do I think this is mostly caused by Microsoft?  

About four years ago I worked for Citrix Systems and at that time a lot of my friends and co-workers were leaving to go to VMware.   At the time my girlfriend, out of all people, was telling me how VMware was the next big thing and that I should jump too.   My response was simple… NO!  

I told everyone who cared to ask me that I thought Microsoft would kill VMware in the end and this would be an exercise in stupidity to think things would be different.  Most people laughed at me as VMware was the golden child and Microsoft was getting beat up by Google and Apple and they had a very bad "reputation" as being "behind the times".  Microsoft was being marketed against as not being the "it" company and that they were anything but the "cool and hip" companies Google, Apple, or even VMware were.  But that does not mean the M$ we have all come to love and hate was or is dying.  Not at all, and in my view, anything but! Microsoft still has more power than almost anyone in the tech world and in reality is by far the most powerful! Heck, Microsoft has more money than most small countries and an install base bigger than the total amount of people in all those small countries.

That being said, what does Microsoft have to do with VMware’s recent troubles?

  1. VMware has announced it will not make its numbers for the Q2 and probably will be short the entire year of 2008 which I believe is a direct result of companies waiting for Microsoft’s Hyper-V.   

    Not only have IT shops been waiting to see if Hyper-V will be "good enough" but the VMware resellers, who for the past four to five years have been pushing VMware’s technologies like crazy, have started to sell Citrix’s XenServer solution and also Hyper-V.  This has cut into VMware’s numbers.  This is the classic way Microsoft eats away at a competitors market share and in the end destroys companies, the way they attacked and killed off Novell Netware.

    (For those of you antitrust bigots out there this has nothing to do with Microsoft’s predatory behavior.  It is just part of capitalism and as a good friend of mine likes to say, "In capitalism not everyone wins!"  So get over it already.)

  2. Hyper-V is free, well not really free as you still need to buy Windows Server 2008 but for the most part, it has been marketed as free and thus people are waiting for it.  This too is one of Microsoft’s old time favorite ways to destroy a competitor.   They make their product free or sell them for next to nothing so their competition has no way to compete and/or make a profit. Microsoft can do this as again, they have more money than God.  They can afford to give it away for nothing but VMware was not willing to do so or even cut their price to make it a "no brainer" to stop the waiting for Hyper-V.  Again anther Microsoft tactic they have successfully used to destroy competition, i.e. Novell and Netscape!
  3. Hyper-V is embedded in the OS and is very easy to use for anyone trained in Microsoft technologies, which is basically 99.9% of us.  There is no need for a company to send their IT guys and gals to expensive training classes to learn Linux commands as Hyper-V runs just like any other Windows application and can be managed by simply pointing and clicking.   

    This too is another Microsoft method.  Is this not one of the biggest reasons Novell died off?   It certainly was not because NT was technically better, was it?   As the amazing Gordon Bell once said about NT, "Microsoft NT…is going to be very far-reaching. It’s going to grab the rug out from under Unix." And now I say, Hyper-V is going to grab the rug out from under VMware and I’ve been saying it for years. Only when I get down and dirty with the technologies do I see VMware as better and as we have learned from Netscape, Novell, and even Unix, we know that this just does not matter that much and hence sales numbers fall. 

  4. Now for the biggie, VMware’s arrogance!  VMware has fallen prey to these tactics because they were drinking their own bath water. They believed that because they are technically better, the sales would just continue to come as they did when they were the only fish in the sea. 

For a while, I did not think VMware would be so blind as to let this happen, but they were. They did however hold off Microsoft’s previous attack on their virtualization leadership role by making their old VMware GSX, now called VMware Server, 100% free and in return VMware made Microsoft’s Virtual Server technology downright useless for anyone half educated in the market. I mean, who is going to use Microsoft’s Virtual Server when you have a much better VMware Server that basically requires the same skill set at the same price point? NOBODY!  Microsoft had to fight on an even playing field and could not win.  But I feel VMware’s lack of publically reducing the cost of their VI3 solution made many companies ask if Microsoft Hyper-V would be "good enough" to save their companies tons of cash in a very cash conscious economy.  I think VMware missing their numbers shows that a lot of companies waited and are going to go with a cheaper, "good enough" solution and/or at least give it a try before forking out the cash it takes to deploy VI3.  Is this not what happened to Novell?

I know this sounds like doom and gloom for VMware, but I don’t feel it has to be.  Microsoft has never been able to take on Google as they have not been able to compete in any other way than I’ve outlined above. Google is free and a pop culture sensation and VMware is NOT.     In my humble opinion, I think VMware’s new CEO needs to look very closely at the attack Microsoft is waging and take action as if the future of the company depends upon it, because it does!  The arrogance needs to stop as the 20 plus point drop we have seen so far today should stop any remaining arrogance in its tracks.  If not, then they deserve what they get. 

VMware has a better product, a better suite of product but as we have learned from the past, that does not always matter and if it is "good enough" then it is "good enough" and people are waiting to see if Microsoft Hyper-V is good enough and thus it is affecting VMware’s stock price, driving VMware to fire their CEO and change gears… Well, we will see how they "change gears" in the coming days, weeks, and months as I feel Diane Green was the first major human casualty in the "Virtualization Wars"!
Of course, these are my opinions and they are based on my watching Microsoft destroy companies since I was just a little boy.  So if you disagree, please feel free to explain how I have been misled or am just downright wrong!

Douglas Brown

Douglas Brown, DABCC Founder and President, CTP, Microsoft MVP, and VMware vExpert, has more than 17 years of experience in virtualization, cloud, and server based computing. Prior to DABCC, Doug worked at Citrix as a Senior Systems Engineer where he developed the leading Citrix deployment system, “Methodology in a Box,” which has more than a million users. Doug is a notable industry speaker and has also been an accomplished author for the past 17 years.
Douglas Brown, DABCC Founder and President, CTP, Microsoft MVP, and VMware vExpert, has more than 17 years of experience in virtualization, cloud, and server based computing. Prior to DABCC, Doug worked at Citrix as a Senior Systems Engineer where he developed the leading Citrix deployment system, “Methodology in a Box,” which has more than a million users. Doug is a notable industry speaker and has also been an accomplished author for the past 17 years.

Tell us what you think... Leave a comment below:

Be the First to Comment!


Featured Resources:

Related Articles:


White Papers

    Succeed with Workspace Analytics for IT – White Paper

    The role of IT has become increasingly complex. Workspace analytics helps IT achieve balance between people, business processes, and technologies for optimal workforce productivity. In this white paper, you’ll learn how to modernize your IT environment to ensure a positive end-user experience. Workspace analytics is a framework for making high-level IT decisions that provides meaningful […]


      Latest Videos

        AWS Startup Day Video: We’re in It Together

        We’re in it together. That community-driven sentiment was in full-effect as more than 200 entrepreneurs gathered at the AWS Loft in SoHo for New York’s first AWS Startup Day. Machine Learning? Check. How to tell your story? Covered. Cronuts? Inhaled. “Everyone wants to help everyone else to succeed,” said Future Lab’s Craig Wilson, one of […]

        Views All IT News on DABCC.com
        Views All IT Videos on DABCC.com
        Register Today for Disrupt End User Computing Forum 2018

        Visit Our Sponsors