Virtualization was a hot topic again this week, with a number of significant virtualization-related news items hitting the wire. Microsoft announced pricing and a branding strategy for their virtualization offerings, while VMware unveiled the significantly upgraded VMware Server 2. Now Oracle has announced that it is developing its own server virtualization technology, dubbed Oracle VM. These developments point to a continued and growing interest in virtualization, both from enterprises adopting the technology to investors pouring money into companies providing virtualization solutions.

Out With Viridian, in With Hyper-V
Microsoft announced a new branding strategy for its virtualization products earlier this week at the TechEd IT Forum 2007 trade show in Barcelona, Spain. Microsoft's approach to virtualization has been to make the technology a ubiquitous component of the operating system, and the new virtualization branding strategy attempts to reflect that.

Microsoft's Corporate Vice president of Infrastructure Server Marketing, Bob Kelly, used the forum to announce that the server virtualization technology known as "Viridian" will be marketed under the Hyper-V moniker. Kelly also announced the availability of Microsoft Hyper-V Server, a stand-alone virtualization server that will be available in late 2008 and be priced at $28 per license.

Hyper-V technology will be included in three versions of Windows Server 2008: Windows Server 2008 Standard, Windows Server 2008 Enterprise, and Windows Server 2008 Datacenter. All other versions of Windows Server 2008 will ship without Hyper-V virtualization technology, each branded with a "without Hyper-V" tagline. Microsoft executives have publicly stated that virtualization should be a key feature of the OS, which makes the decision to offer a variety of Windows Server 2008 products without Hyper-V a curious one. If virtualization should be a key feature of the OS, why are less than half of Windows Server 2008 products shipping with it?

According to Patrick O'Rourke, group product manager for Microsoft's server and tools business, market realities and customer preferences led Microsoft to produce Server 2008 offerings without Hyper-V technology.

"Microsoft believes that most customers now expect virtualization capabilities in their server operating system and anticipate that they will see this value and buy Windows Server 2008," says O'Rourke." However, based on customer demands, we also decided to create the Microsoft Hyper-V Server, a stand-alone server virtualization product. To accommodate all of our customer's needs, we felt it was beneficial offer both Windows Server and Windows Server without Hyper-V."

VMware Server 2.0 Released
While Microsoft was busy rolling out additional details of their virtualization products, VMware announced the release of VMware Server 2.0, an update to VMware's free server virtualization offering. This new version adds improved usability and manageability, doubles memory support from 4GB to 8GB, offers broader OS support (including support for Windows Server 2008) and features improved overall performance.

Charles King, principal analyst for IT industry analysis firm Pund-IT, believes that this latest release of VMWare server is aimed at three broad groups of users: people who are new to virtualization; small businesses with modest IT infrastructures who can't afford more costly solutions; and IT managers who need to deploy and utilize test environments quickly.

"VMware has shown a willingness to take the money earned from their more expensive enterprise virtualization products and invest that in the lower end of the market," says King. "They're willing to offer no-cost products to help spread the gospel of virtualization to more people."

Ben Matheson, VMware's director of small and medium business, says that VMware is building upon their previous success with this latest release. "VMware Server is a product used by many customers," says Matheson. "The software has been downloaded by more than 3 million users, and 70% of those downloads have been on Windows machines."

Matheson believes that the ability to access the management console over the web--and related improvements to the UI--are two of the most significant new features of the product. "The previous version required users to rely on a rich client management console, but the new version features a web-based user interface that allows you to access VMware from any PC in your environment." The revised interface also closely resembles the one found in VMware's more expensive virtualization offerings, a development that points to VMware's efforts to get their products on as many servers as possible before more competitive products--namely Microsoft's Hyper-V technology--hit the market.

"\[The release of VMware Server 2.0\] is definitely a way for VMware to shore up their market before more competitors arrive," says King. "This should help VMware maintain their market leadership in the face of new competitors."

Server Virtualization From Oracle
One of those new competitors is Oracle, which announced last Tuesday that it would be developing its own server virtualization technology--called Oracle VM--and offer it free of charge. Oracle claims that the new software will offer "scalable, low-cost server virtualization that is up to three times more efficient than existing products from other vendors."

Users will be able to download Oracle VM for free from www.oracle.com/virtualization beginning November 14th. While the software is free, Oracle will be offering paid support options for enterprise customers, priced on a per-system basis. Twenty-four hour support for PCs with one or two CPUs will be priced at $499 per year per system, while support for systems with more CPUs will be priced at $999 per year per system. In a statement announcing the release of Oracle VM, Oracle Chief Corporate Architect, Edward Screven, said that "Oracle VM brings enterprise-class support and backing to server virtualization, giving customers the confidence to deploy virtualized solutions."

While Oracle's entry into the server virtualization market may come as a surprise to many, the company is undoubtedly trying to hedge its bets, making sure that they won't eventually become beholden to virtualization offerings from hostile competitors.


A Competitive Market While many analysts agree that VMware has a commanding lead in the market for enterprise server virtualization, could all of these competitors spell trouble for VMware? "It's tough for a company of any size to knock off a market leader," says King. "Virtualization offerings from the competition aren't as sophisticated yet, and this updated server software should make VMware's enterprise products even easier to market."

VMware executives will undoubtedly prefer King's analysis of their outlook over the fate of other leading companies that have found Microsoft expressing an interest in their market segment. Will market forces conspire to see VMware follow in the footsteps of Wordperfect and Netscape, or will the virtualization provider remain a potent Microsoft competitor--like Google--for years to come? Let us know what you think by commenting on this blog post.