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VMware's new hybrid strategy

Posted by: Steve Hamm on June 8, 2006

VMware is still on a tear, and right now, the competition looks pretty weak. But company President Diane Greene isn’t getting complacent. She’s turning VMware, an independent subsidiary of EMC Corp., into a new kind of software company—a hybrid of the open source and proprietary software worlds. Diane filled me in on what she’s up to after EMC’s annual analysts’ day briefing in New York on June 7.

VMware technology makes it possible to run several operating systems and several applications on a single server computer. It also allows IT managers to set it up so they can shift an application from one server to another on the fly. The new product, VMware Infrastructure 3, adds tools for scheduling, pooling resources, and backing up data at any time. Already, VMware has 20,000 customers running its software on one million servers.

Though VMware is in most ways a traditional software company, Greene is mixing things up in an effort to keep her lead on Microsoft and XenSource. Last February, the company began giving away for free its entry-level server virtualization product. (Though, if customers want support, they have to pay an annual fee.) The idea was to put it out there for people to try with the expectation that many of them will like it and decide to buy the higher-end product. Then, on April 3, the company announced that its specification for defining and formatting virtual machines would be available for anybody to use free of charge. If widely adopted, it would mean that any virtual machine technology could be plugged into it, assuring compatibility between different software packages. Greene says she’s open to the idea of a standards body governing the format. “We want to compete on functionality and price,” she says. “We’re not trying to build one product, get lock-in, and collect revenues for the rest of time.” (Just in case you miss the point, she’s talking about Microsoft.) Greene believes other companies will do similar things. She predicts: “This is the way the software industry is going to go."

Reader Comments

Al-Noor Ramji

June 10, 2006 7:46 AM

Diane is on to something especially when it comes to virtualisation which by definition will involve several different suppliers. So a mix of open source and proprietary is a good start. Companies should also think of providing tools to allow extensions which can also be fed into the public domain encouraging a full ecosystem to grow. Exposing web services through open APIs and allowing extensions is the way forward.

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Bloomberg Businessweek writers Peter Burrows, Cliff Edwards, Olga Kharif, Aaron Ricadela, and Douglas MacMillan, dig behind the headlines to analyze what’s really happening throughout the world of technology. Tech Beat covers everything from tech bellwethers like Apple, Google, and Intel and emerging new leaders such as Facebook to new technologies, trends, and controversies.



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