Will VMware eventually lose it’s market leadership position among hypervisor vendors? Several articles I have read recently speculate that, with offerings from Microsoft, Citrix and a handful of others, VMware’s days at the top are limited. Many reason that competition will ultimately force VMware to lower prices because so many options mean that the hypervisor will no longer be specialized technology, but instead become a commoditized offering companies can get from anyone and everyone. Another argument is that VMware’s current pricing is unattractive to small to medium sized business (SMB). The consensus among analysts is that the virtualization opportunity is still relatively untapped for SMBs, and the competition has the advantage due to price.
Maybe it’s because I just spent a week at the VMware Partner Exchange in San Diego and I am full of the VMware “Kool Aid”, but it appears to me that VMware has a pretty good strategy, focus and direction for staying ahead of the competition. While other vendors are still perfecting and marketing their hypervisor, VMware is talking about automation and management of the virtual data center with products like Site Recovery Manager, Lab Manager, Stage Manager, and Lifecycle Manager. Secondly, VMware is “winding up” it’s partners by providing incentives in the form of margins, programs, and intellectual collateral. You did not have to attend the Partner Exchange to realize this. VMware’s recent acquisitions, new product betas and announcements, and public communications have have shown this for some time now.
If hypervisor competition is really just about the hypervisor, or more specifically consolidating multiple physical servers on to a single virtualization host, then I have to agree that VMware will has some legit challengers. VMware ESXi (previously ESX3i) and the free VMware Server, however, continue to be the products well positioned to compete for the “I just want to squeeze as many guests as possible on a host” business. Let’s face it, VMware established this several years ago with the ESX 2.x product, and this is where most of the competition is entering the market today.
As far as the untapped market, if the hypervisor is truly all that SMBs want or can afford then VMware has it covered. Dell appears to have set the market pricing for the embedded hypervisor offerings just last week, and surprise, ESXi is the cheapest option! For $99 extra you can order new hardware pre-installed with the VMware hypervisor. Assuming all hardware manufacturers follow with similar competitive pricing, don’t be surprised if ESXi quickly becomes the most frequently used virtualization host in the data center – SMB or Enterprise.