VMware treated Wall Street to better than expected earnings for the first quarter or 2010, handily beating estimates. Revenue jumped 35% year over year to $633.5 million, and profits increased 12% to $78.4 million. The company also raised guidance for the coming year by $180 million to between $2.63 billion and $2.73 billion. But investments the company has made outside of its core vSphere and vCenter business have yet to bear fruit.
The good news came from multiple fronts: “pent-up demand” from enterprises, carry-over from the previous quarter, strong results from Europe and Asia including a windfall $8 million dollar enterprise license agreement (ELA), and a successful promotion for the its vSphere Essentials and Essentials Plus bundles, said VMware executives on an earnings call yesterday.
Investors were particularly interested in the questions of ELA renewals and average selling price (ASP).
VMware first started offering ELAs in 2007, and the first of those have started to come up for renewal. In 2007, VMware was the only game in town, but the competition has improved since then. While not providing specific numbers, CEO Paul Maritz said that the company was “gratified by the response for renewing ELAs,” and that “almost without exception ELAs that have come up have renewed.” Furthermore, the renewed ELAs tend to be for larger deployments.
Being able to maintain ASPs, meanwhile, signals to investors that the company is not excessively discounting prices and facing strong competition. And balancing ASPs will be harder for VMware as it deepens its reach in small-to-medium businesses. This quarter, investors were gratified by the fact that ASPs were flat, depsite its Essentials promo. At the same time, since the company does not break out revenue by product category, it is hard to know for certain how much of a material impact low-end SKUs actually had on VMware’s quarter.
However, VMware’s bread and butter remains vSphere and the vCenter family, and not investments in SpringSource, Zimbra, or desktop virtualization, the company admitted. With respects to desktop virtualization, “there’s a lot interest from customers,” said VMware COO Tod Nielsen as they prepare to move to refresh an aging desktop fleet and move to Windows 7. “They want to virtualize at the same time.” At the same time, “when the market is going to tip, we don’t know. Our eyes are on the ball and are making sure we will be there [when it does.]”
Feedback from my recent article on server virtualization in branch offices suggests that virtualization still has a long way to go in those settings.
FBL Insurance in West Des Moines, Iowa has a single VMware ESX host at each of nine branch offices throughout the state but isn’t particularly satisfied with the level of availability that brings them, said Kent Altena, technical engineer for the firm.
“VMware ESX 3.5 is the source of a lot of angst at the state offices, because the single box is a point of risk,” Altena said.
At the same time, “we knew we had to give them something,” Altena said. “We couldn’t just let them sit there.” Altena said.
In the spirit of St. Patrick’s Day, we asked our loyal readers to submit limericks about virtualization. And two lucky readers found a pot of gold at the end of their poetry rainbow: vSphere training videos from TrainSignal.
One hundred-plus servers were lax
While resource utilization was max
So IT got wise
And said, “Virtualize!”
Now just 10 hosts remain in the racks!
By Eric Stephenson:
Virtualization was once dev and test
Now has become a production best
Legacy OSes have come and gone
Virtualize everything, you can’t go wrong
And physical servers are laid to rest
And here’s a limerick by Michael Caplan, who will receive a TrainSignal T-shirt:
There once was an organization
That ne’er heard of virtualization
But then they converted
Old equipment deserted
Saving money and time and frustration
It seems like every virtualization insider I talk to these days — vendor, analyst, admin, you name it — says the same thing.
“The hypervisor is commoditized.” “The cloud is the future.” “I’m on a horse.”
OK, they don’t say that last one (even though it’s hilarious). But they do make those first two comments a lot. And as the editor of a virtualization site, I was starting to find it disconcerting.
“But virtualization’s the greatest thing since sliced bread!” I’d think. “What about the clear ROI for virtualization projects? And all the other benefits of virtualization? How can you commoditize that? How can that not be the future? How many more rhetorical questions can I ask myself?”
Last week I attended the IDC Directions conference in Boston, which allayed most of my fears. It apparently is true that they hypervisor is commoditized and that cloud computing is the future. But virtualization, in the words of Cypress Hill, ain’t goin’ out like that.
St. Patrick’s Day is coming up, and to celebrate, I thought I’d take this opportunity to encourage all of our readers to dye their servers green.
No dice? How about this instead: Write a virtualization-themed limerick, and you could win a vSphere training video.
- Write an original limerick about virtualization. If you don’t know what a limerick is, click here.
- Make sure it’s clean, because we’re going to publish them.
- Email it to me at firstname.lastname@example.org, along with your full name and mailing address (in case you win), by Friday, March 12.
On St. Patrick’s Day we’ll publish the best limericks and choose two winners at random.
“VMware vSphere Pro Series Vol. 1” features 18 lessons from VMware vExperts David Davis, Rick Scherer and Hal Rottenberg. Topics covered include VMware View, the Cisco Nexus 1000V and PowerCLI. “VMware vSphere Training” offers 19 videos on all aspects of vSphere.
When you’re trying to figure out if virtualization is right for your business, or which platform to choose, it’s crucial to understand virtualization costs.
There are the obvious costs, which include software, hardware and labor. Then there’s the hidden costs: network and storage hardware upgrades, security, management and training.
In its unending pursuit to discredit all things Microsoft, VMware has brought up another important cost to consider: support.
Oracle is, as we say here in Boston, wicked fah behind in the virtualization market. Building a strong, integrated virtualization portfolio is the best way — and maybe the only way — for the company to catch up.
The Sun acquisition brought lots of hype about the future of Oracle-Sun virtualization. Now, after months of talk, we’re starting to see some actual work.
Novell is jumping on the KVM bandwagon.
The company is developing a KVM hypervisor called AlacrityVM, as virtualization.info points out. The move follows in the footsteps of Red Hat, Novell’s open source rival, which moved from Xen to KVM with its latest release, Red Hat Enterprise Linux 5.4.
KVM is still a relatively unproven enterprise technology with a very small user base. Its biggest advantage over Xen, the leader in Linux virtualization, is that it is built into the Linux kernel. And that’s just not enough of a reason to switch for most people.
The proprietary virtualization platforms, VMware and Hyper-V, are far and away the market leaders. Behind them are the Xen platforms, led by Citrix XenServer but also including Oracle VM and others.
Red Hat and Novell are even further behind. They really have nothing to lose, so they both can afford to take a shot on KVM. If the technology catches on, they can ride the wave and prosper. If not, they won’t be much worse off.
For more on Linux virtualization trends, check out this Xen vs. KVM face-off between experts Andi Mann and Sander van Vugt.
Our colleagues at SearchOracle.com have some in-depth analysis of the converged hardware/software trend that is sweeping IT. Oracle got into the fray with its Sun acquisition, and now the company’s hardware and software portfolio has the potential to really shake things up.
So what does it all mean for virtualization?
This Q&A was supposed to be part of our This Week in Virtualization podcast on Oracle’s Sun acquisition and future virtualization plans, but we ran into some technical difficulties and weren’t able to include it.
Our guest was Jack Kaiser, vice president of strategic technologies for GreenPages Technology Solutions, a virtualization solutions provider in Kittery, Maine. He’s also a member of our Server Virtualization Advisory Board.
Q: Do you see a lot of Oracle or Sun virtualization products currently in your customers’ environments?