Open Source and the Fall of VMware
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Open Source and the Fall of VMware
by Sam Dean - Jul. 08, 2008Comments (5)
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The Net is abuzz today with the news of VMware's president and CEO Diane Greene leaving which has also caused a huge plunge in VMware's stock. Our sister site has a good story on the possible reasons, which may be attributable to politics within the company. VMware, of course, built a huge market capitalization on the back of its virtualization technology. As ZDNet has suggested, I think the problems at VMware may have to do with increased competition from open source virtualization offerings--and also from operating systems, especially Windows.VMware is not a one-product company, but its huge market capitalization was largely built on efforts in one arena: virtualization. Unfortunately, that red hot technology is increasingly being encroached on by open source offerings, and it is always a precarious proposition for tech companies to depend on one product category as heavily as VMware has. Just ask the former employees of Netscape or Lotus about that.As we've covered, Red Hat is a new entrant to the virtualization space, Sun is offering free virtualization and bundling it with its OS, and Microsoft is adding virtualization to Windows Server, That's not even mentioning XenSource and Xen--focused on open source virtualization.It's the nature of software utilities for them to become free, and often wrapped into operating systems. Countless purveyors of software utilities have learned that lesson, going back to the beginning of the personal computer industry. Central Point Software and countless other early players in the utility space watched Windows wrap in utilities similar to theirs, decimating their businesses. Even Symantec's Norton line has had to step very nimbly to stay alive because of this phenomenon. The primary competition for Norton Utilities, over the years, has come from Microsoft Windows. Virtualization, is, at its core, headed for software utility status, and will likely be wrapped into operating systems, and increasingly adopted in open source form for free. With fast multi-core processors, historically unprecedented low costs for memory and storage, and other favorable trends, running multiple operating systems on single systems makes lots of sense and is an under-the-hood necessity in today's operating systems. That spells big trouble for VMware--with many historical precedents causing one to wonder about the company's business.As ZDNet noted in its story (see the link above), Paul Maritz is being tapped to replace Diane Greene. Maritz is a former long-time Microsoft executive. He would understand the threat of virtualization appearing in Windows Server and Solaris. He would understand the general path that software utilities take over time. I think open source has much to do with this executive replacement and adjustment in stock price.  
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5 Comments
 
by Sunny Gabriel on Jul. 08, 2008Well, Microsoft has never been a good foe to have, and it is quite clear that they too were breathing down VMware's neck.
0 Votes
by Robin Wauters on Jul. 08, 2008There was something in the air before the US even woke up:
http://virtualization.com/news/2008/07/08/emc-vmware-spinout/
Our take on Diane Greene’s departure:
http://virtualization.com/news/2008/07/08/diane-greene-vmware-paul-marit...
0 Votes
by Saurabh Kaushik on Jul. 09, 2008As a layman, my understanding of VMWare’s triumph is just opposite to today’s cloud computing. Their core concept was to simulate a given hardware into multiple computing units. But here, cloud computing is more about integrating all given hardware to one giant computing unit. What is Martiz planning to do? VMnoWhere!!! ;-p
[Saurabh Kaushik]
http://saurabhkaushik.wordpress.com/
0 Votes
by friarminor on Jul. 09, 2008So its war for VM with a long-time MSFT at the reins coming.
I thought evolution might be the better alternative as you can't clearly beat the open source at this point.
Best.
alain
0 Votes
by Bipin Shah on Jul. 09, 2008I think we're giving Open Source more credit than it deserves. Yes, it works and is probably superior in a many cases but the whole "FOSS will take over the world" hype is exactly that....hype.... A company to lose $5 B of "Value" in a single day and attributing that to Open Source competition that has been around for a while is, IMO, absurd...
0 Votes
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