Executive Summary: Perhaps no other company has impacted the IT industry in the last decade as much as VMware. Windows IT Pro speaks with VMware President and CEO Diane Greene to learn what the future holds for virtualization and business IT, as well as to find out how virtualization is providing real cost-saving benefits to IT administrators.

Editor's note: Shortly after the interview with Diane Greene was written and posted, VMware announced that it had replaced Greene with Paul Maritz as president and CEO. For more information about the change and a list of related articles, see "VMware: Diane Greene Out as President and CEO; Replaced by Former Microsoft Executive."

Perhaps no other company has had as big an impact on the IT industry in the past decade as VMware. From its humble beginnings in 1998, VMware has grown into a multibillion-dollar global enterprise that has fundamentally altered the landscape of business computing, even taking a lead in reducing power consumption by businesses. (For information about VMware’s work in green computing, see the sidebar “Need to Save Money? Build Green and Virtualize,” page 36.) Fresh from its tenth anniversary (and the ninth anniversary of its first product, VMware Workstation 1.0), the company looks poised for a future of continued growth.

Looming on the horizon, however, are dark clouds imprinted with a Microsoft logo and shaped like a Windows-Server-2008–with–Hyper-V product box. Can VMware fend off Microsoft’s delayed entry into the virtualization arena and retain its dominant, well-earned leadership position in the market? I spoke with VMware President and CEO Diane Greene to ask about VMware’s strategy for the future and how it intends to keep a step ahead of Microsoft.

James: In 1998, virtualization was about creating an abstraction layer between hardware and software, then it quickly grew into server consolidation and testing. Now we’re seeing many different types of virtualization in the market. From your perspective, what areas of virtualization are experiencing a lot of growth right now?

Greene: We recently took a hard look at that and realized that a good way to give a context to [the different types of virtualization] was to compare them with the phases customers go through when they deploy virtualization.

The first thing people realized—and this happened when we launched Workstation 1.0—was that “Now I can separate my software from the hardware. I can have multiple copies of a working software configuration that I can clone and maintain libraries of.” It also was a very valuable way to run Windows with Linux on the same machine; it was also a very valuable way to do test and development for any possible configuration.

The next thing that happened was people realized “Oh, OK; I don’t have to run just one application per server anymore, because the software is now separate from the server and isolated and I can tax that server up to 80 to 85 percent utilization with these virtual machines, instead of running at 5 to 15 percent utilization in the one-application-per-server model.” That was the server consolidation phase.

The next thing was, now that software is separated and can run with other software in these virtual machines, VMware invented VMotion to move software around dynamically across physical boundaries. Now all of a sudden you may say “OK, now I can actually take my hardware resources—my CPUs, my memory, my disks, and my network—and I can aggregate them all to get even better utilization. I can do it dynamically so I can service things when they’re broken without any interruption, I can dynamically allocate and add capacity when I need it to maintain response time, and I can also do much better high availability because I have pooled resources to take advantage of.” That was the aggregation phase.

Then, all of a sudden you’d look at this and you’d say, “Any application I put in this virtual machine inherits all of these wonderful properties, and I get all the properties in one uniform, consistent way.” You then realize that you can manage and automate how this software runs. I can, for instance, group software together and treat it as a unit for testing and development. I can manage the images and the disks and the process by which I go through testing and into staging and production. I can do a whole automation of software lifecycle management. Or a completely different example is you can now automate how an application or a set of applications go through disaster recovery. You can automate the scripting of that so the configuration of your DR process, instead of being in some old crusty playbook, can be encapsulated in an automated process that takes advantage of VMs. So then you can test it in production and you can let it run. That’s the automation and management phase.

We see a fifth phase that has to do with cloud computing, what we call the liberate phase. That’s where you can, within your data centers, have multiple data centers and treat them like a cloud because the VMs can move around. You can also have external data centers, hosting providers, and cloud providers that you can use. You can also secure and monitor your VMs both on-premise and offpremise.

James: Some statistics show that only 10 percent or so of servers are being virtualized. Do you have a timeframe for when you think the 100-percent-virtualized IT infrastructure will become a reality?

Greene: It’s always hard to predict how quickly humans move to do something. We were overly optimistic that they would see immediately how valuable this was and move to it. Even though we have more than a hundred thousand customers using this software—all of the fortune 100—there’s still a measured pace to which they roll it out, even though they are reducing the number of administrators it takes to run their software, getting better resource utilization—all the advantages of doing more with less. We’re in a cycle now where there’s increased pressure to do more with less, so that may push people to move more quickly. There’s also much wider awareness of it. Someone recently pointed me to an incredible James Fallows piece on using our Mac Fusion product and how it just worked—he waxed eloquent on the value of it. When you get the mainstream [press] talking about virtualization, it’s clear that [virtualization has become] widely accepted.

We’re also embedding a small-footprint virtualization platform hypervisor [VMware ESXi] that’s coming with servers, so that will also further accelerate the [move to virtualization]. To make a long story short, it’s hard to predict. For a crisp answer to your question it could be anywhere from the next couple years to the next 8 to 10 years.

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James: Microsoft executives we’ve spoken to have said that “virtualization should be a feature of the OS” and that “Windows is an OS that’s adding a virtualization feature, while VMware is a feature trying to become an OS.” How would you respond to those comments?

Greene: Virtualization is really revolutionizing IT. It’s really changing how we do everything. One of the ways it’s doing that is because we now have completely separated the software from the hardware. The way you do that is that you run the OS and the application in a VM that you can move around and that can be managed completely separately. The traditional OS as we know it is tied to the hardware in a static fashion—it’s a highly constrained environment. To extend an OS to include virtualization would be to take one of the most powerful aspects of virtualization and throw it away. Virtualization is something that lets you separate the hardware and the software, so when you have a hypervisor embedded in the hardware, you now have that power of separation and ability to aggregate things and automate things that you would not have if you had the static tie to the hardware.

You mentioned that Microsoft wants the OS to have virtualization as a feature. A huge advantage of having a thin hypervisor—ESXi is under 32MB—is that it is very reliable and very secure. When you make it a feature of the OS, your virtualization is only as reliable and secure as your OS is. VMware has brought out a new model—and brought it mainstream— that lets people do things in a way that dramatically improves how we manage, access, and deliver our software.

James: I’ve heard from a number of readers and colleagues who believe that VMware is clearly ahead of Microsoft when it comes to virtualization technology. Historically, Microsoft might enter a new market with an inferior product, but over time it continually updates that product. Microsoft also leverages its existing products to pressure competitors. VMware is in a much stronger position than companies such as Netscape, Novell, and Digital Research were, but Microsoft might eventually be where VMware is now.

Greene: VMware’s strategy and vision is to partner with the industry to deliver increasingly more valuable ways to manage and deliver your compute environment—I think we’ve been delivering on that phenomenally well. What our customers are able to do with our software just is amazing.

It’s not just that we’re ahead; it’s the value that we’re delivering to customers. And how much they love that value—they get software that just works. On a very regular basis they get [upgrades] that provide new functionality and get even more value out of this revolutionary way of doing things called virtualization. They’re now getting management and automation. What do people want to do? They want to build and quickly deploy applications that are always available and always responsive [and] that drive their business. They don’t care where it comes from—if it comes from a cloud, if it comes from a service, if it comes from their internal data center— they just want to drive their business.

What we’ve set out to do is to make that very, very simple and let people do it the way they intuitively want to without having to worry whether they’re optimizing their resources. They’re not worrying about failures; they’re not worrying about not having enough capacity when server load goes up.

VMware has continually delivered on that promise with regular new products— every year, every few months—and we’re doing that with a very extensive ecosystem of partners—we now have over 14,000 partners and over 700 technology partners—and our customers trust us. We’re giving them very credible, useful, valuable products time and time again. That’s why we have all the Fortune 100 [as customers] and have 92 percent of the fortune 1000. We did a recent survey—13,600 customers responded—and 98 percent told us they were happy with their VMware deployment and had gotten the ROI they needed.

I don’t know why someone would want to wait and see when there’s a [virtualization] solution that has some customers realizing a positive ROI within a few months. As far as where VMware is going in the future, we’ll continue to work with our partners, build out our ecosystem, and deliver an increasing value to our customers. That strategy has been working well.

James: On the systems management side, Microsoft seems to be trying to leverage its management capability on the physical side with Microsoft System Center to go to customers and say that it has a solution that manages both physical and virtual systems. VMware VirtualCenter does a lot with VMs that Microsoft System Center Virtual Machine Manager doesn’t. Given Microsoft’s approach, would VMware ever consider upgrading its products to include management of physical machines? Or do you see combining physical- and virtual-machine management as a stopgap solution until we get to a fully virtualized IT infrastructure?

Greene: A lot of our partners have very excellent, well-tested, time-tested ways to manage physical machines. VMware has decided to take our 6,000-plus employees and focus on virtualization management. We don’t see a need for us to take into account legacy management software, other than working with partners to have very clean APIs to integrate with their management and consoles. That has worked very successfully for our customers, and we don’t see a reason for reinventing something that is already there and works well, especially when we can offer increasing functionally in an area of future growth. So VMware will increasingly offer management and automation that exploits the power of virtualization, and we’ll do that in conjunction with our system vendor partners that manage hardware.

James: Hyper-V isn’t out yet, but what features do you believe VMware offers that competitive products don’t?

Greene: VMware has a very broad portfolio of products from the desktop to the data center, all integrated, that simplify and automate management of the desktop and data center. Other companies are just coming out with an entry level, 1.0 product that is just basic virtualization. VMware gives our customers a complete portfolio to manage, to [help them] deploy their data center, while integrating the desktop and server.

In terms of specific qualities of VMware, [I think we offer] unbelievable quality. Our products just work, and the quality is there. We have customers telling us over and over again about the quality of the product. That quality is a very core focus of the company. We already have a very broad portfolio to simplify running and managing your data center, a very rich roadmap, and an extremely rich ecosystem of partners that we interoperate with seamlessly.