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Microsoft Tells Investors Why VMware Will Lose

Microsoft's Brad Anderson on Tuesday talked about the company's management product strategies, while downplaying those of VMware, at investment banker-sponsored event.

Anderson is corporate vice president for Microsoft's Management and Services Division. He was recently promoted and now oversees Microsoft's profitable System Center line of products worldwide, along with Windows client and server management components.

The lead question at the Pacific Crest Technology Leadership Forum, held in Vail, Colo., was not about Microsoft's business per se, but about VMware's acquisition bid for SpringSource, which was announced on Monday. SpringSource is a provider of a Java-based open source application framework that also works with .NET technologies. VMware currently is the leading vendor of virtualization solutions.

VMware and SpringSource have indicated that they will combine their technologies to enter the datacenter and cloud computing markets, which are being contested by Microsoft with its Windows Azure platform. VMware already has its own cloud "operating system" called vSphere, with version 4 rolled out in late April.

Anderson suggested that the VMware-SpringSource deal would fall short of the mark. He said that VMware is basically acquiring a development platform for J2EE applications, but he dismissed the potential competition with Microsoft's Windows Azure cloud computing platform.

"I look at that [VMware-SpringSource deal] as a response to what Microsoft has been communicating in the market about the application architecture," Anderson said in a Webinar. "But I think they're moving into a space that really is away from what their core competency is, and moving into a space where, if you look at what Microsoft has with Visual Studio, I think Microsoft has a lot of strength there."

Windows Azure continues Microsoft's .NET Framework into the cloud, and Visual Studio will provide .NET developers with a hook into that cloud computing environment.

"As you think about virtualization and cloud computing, the architecture of the application really becomes a critical component of the cloud," Anderson said. "And as you think about what we're doing with Windows Azure, a big part of the Azure platform is an architecture of the application that allows that application to understand what a cloud is, and understand the concept of the cloud."

VMware, which is Microsoft's principal rival in the x86 virtualization market, stands to gain a large pool of developers if the acquisition goes through. Rod Johnson, founder of SpringSource, cited a Gartner estimate in his blog that about two million developers use the SpringSource framework.

Anderson admitted that Microsoft has been "coming from behind" on the virtualization front with its Hyper-V hypervisor, compared with VMware. However, he cited progress based on Microsoft's revenue in the last 12 months. He said that Microsoft's management revenue in the datacenter "grew at a rate north of 50 percent." In contrast, VMware reported a 13 percent license revenue decline in its third quarter and a 20 percent license revenue decline in its last quarter, Anderson said. He claimed that Microsoft's growth of management revenue was "staggering" compared with VMware's results.

Anderson also cited Microsoft's familiar estimate that Hyper-V, which ships with Windows Server 2008, costs one sixth that of VMware's virtualization solutions. He claimed that Hyper-V costs $9,000 to license vs. $59,000 for VMware's solutions.

VMware's acquisition bid for SpringSource may pull developers toward the vSphere platform, but Anderson argued for Microsoft's approach. He claimed that Microsoft's hypervisor is an "integrated component" of the OS.

"If you know understand Windows, then you understand virtualization on Windows," he claimed.

VMware just manages their stack, whereas Microsoft is the "heterogeneous provider," according to Anderson.

"Not only do we do the physical and the virtual in one breath, we understand what's happening in the application," Anderson said. "Where VMware looks at the operatives of VM as a black box, it has no idea of what is happening with the application."

While much of the Q&A was absorbed with such VMware discussions, Anderson did note a few other details about Microsoft's Management and Services Division. For instance, System Center has turned out to be the fastest growing business inside Microsoft, with "more than 30 percent growth year over year" in the last 12 months, according to Anderson.

He described the Microsoft Desktop Optimization Pack (MDOP), which comes with Microsoft's Software Assurance licensing option, as the fastest selling product in Microsoft's history, with revenues growing "north of 100 percent" in the last year. MDOP is priced at $10 per year per PC on a subscription basis, Anderson said.

MDOP contains Microsoft's application virtualization technology called App-V, which was just released this month as a new beta. It also includes Microsoft Enterprise Desktop Virtualization, or MED-V, which lets Vista or Windows 7 users run older applications.

About the Author

Kurt Mackie is online news editor for the 1105 Enterprise Computing Group.

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Fri, Aug 28, 2009

Hyper-V Server 2008 R2 is free. Includes Server Core + full functionality of Hyper-V R2 (biz continuity, disaster recovery, live migration, etc). Almost feature parity with vSphere for $0...

Fri, Aug 28, 2009

FYI: Novell NetWare had > 90% marketshare, too :-)

Mon, Aug 17, 2009

Anderson, what about MS Windows and other licensing issues? Is Windows Server 2008 free?

Fri, Aug 14, 2009 Rick

It's hard to believe MS has enough resources to compete head-to-head with VMware. MS will compete well in smaller enterprises where price is most important. Larger datacenters will spend extra for capabilities and performance. As for training, there are many more VCP's out there than trained Hyper-V engineers. It's not true that if you know Windows, you know Hyper-V. So many disciplines are required in server hardware, storage, networking, and performance to architect, design and implement a virtualization solution in the enterprise.

Fri, Aug 14, 2009

As a small business, Hyper-V has streamlined our IT infrastructure big time - at no cost. We're running 8 virtualized Win Server 2008 and 2003 instances, Exchange etc... from one physical server with 8 cores and 24 GB RAM. The VMware hypervisor would have cost us thousands of dollars, whereas the Hyper-V license comes bundle with our existing windows server licenses. And whoever's ranting about Hyper-V's performance obviously hasn't used it since beta. As far as I'm concerned, it's never been an issue since we installed SP1. Super-easy to manage from my Vista desktop, I love this product. It really has dramatically reduced our IT headaches. We were able to retire 3 physical servers, and cancelled out IT outsourcing. Deploying new instances and maintaining our one physical box keeps me busy for 2-3 hours a week, and frees up lots of time and cash to focus on our our core business. Add the fact that ou 8 win server licenses are free for 3 years thx to MS' BizSpark program - it's an unbeatable offering.

Fri, Aug 14, 2009 David W Chicago, IL

I don't understand the great interest in Hyper-V. Given the patching, OS overhead, and limited funtionality I would not support an Entiprise deployment of this type of app. We all know how MS software works and cryptic and closed the error information can be in the evvent of an issue. Just because it's easy to manage does not make a good product.

Wed, Aug 12, 2009 Mel K Philly, PA

Considering that Hyper-V is new, why is it surprising that 90% of some group was running VMWare? The comment about that shows lack of thought. It’s obvious that the rate of adoption will take some time to grow. VMWare has been around for years and any company that’s put all that money into it isn’t going to just switch to some another VM overnight. See how much of that “90%” is still VMWare in a year or two. Hyper-V will definitely chip away at that, no doubt. The learning curve for Hyper-V is much smaller, which is great for small companies that don’t have dedicated VM experts. And Hyper-V will run on more types of hardware. Yeah, it’s great that VMWare has a ton of features, but 1.) It’s more picky with hardware, 2.) It’s got a bigger learning curve, and 3.) It costs more. I don’t know why people keep bashing Hyper-V. It’s a new product and MS is doing a good job adding features to it. Look at what’s in R2.

Wed, Aug 12, 2009

I think it says a lot that at MMS 2009, in the Managing heterogeneous VMWare and Hyper-V environment, 90% of the room was running VMWare.

Wed, Aug 12, 2009 Alan Y

Why recently is every talk by Microsoft a rant against VMware? Seriously Muglia, Turner, Anderson - all their talks are more on VMware and other competitors than on MSFT. MSFT focus on your own products! Funny though that the first question by analysts wasn't on MSFT's strategy but on VMware's acquisition. Brad must have loved that.

Wed, Aug 12, 2009 Tony

Well, those people at Microsoft sure knows everything, don't they? ;)

Wed, Aug 12, 2009 Jon Hawk

Shouldn't this article be titled something like " Microsoft tells Investors why it thinks VMWare will lose " . I mean , surely you're not just regurgitating anything a company spokesman says without questioning it , are you ?

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