Channel Marker

Oct 22 2008   2:08PM GMT

Bad economy good for VMware? And Microsoft?

Bcournoyer Brendan Cournoyer Profile: Bcournoyer

VMware posted strong financial results yesterday, despite the weak economy and increased competition from Microsoft.

The virtualization market leader took in $472 million in its third quarter — a 32% increase over last year and more than Wall Street expected. Ashlee Vance of The New York Times says VMware has a leg up when the economy is down, because virtualization helps customers cut their hardware and energy costs. But could that also be good news for Microsoft and its competing hypervisor, Hyper-V?

virtualizationVMware CEO Paul Maritz says no. He told investors yesterday that Microsoft is still far behind VMware, and customers that compare the two overwhelmingly choose VMware, according to eWeek.

The numbers, however, tell a different story. IDC recently reported that Microsoft took 23% of the market for new virtualization licenses in Hyper-V’s first quarter of general availability. And interest in VMware’s enterprise license agreements, which let customers deploy unlimited VMware licenses, is plummeting, according to our sister blog at

Clearly the overall financial picture at VMware is still positive. But Maritz’s dismissal of Microsoft is premature. In this economy, it appears there’s enough room for at least two vendors — and their channel partners — to make good money in virtualization.

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