VMware To Give Away Hypervisor
VMware has launched its first counter-attack to Microsoft's pricing
structure for its virtualization products, announcing that ESXi, its
lightweight hypervisor, is going to be given away for free.
The announcement came from new president and CEO Paul Maritz, who took
the reigns from dismissed
co-founder Diane Greene on July 8. Maritz made the remarks during
VMware's second quarter earnings call on Tuesday afternoon.
VMware CFO Mark Peek delivered the bulk of the ba
d news, stating that VMware will make substantially less money than
expected this year. The company originally expected a year-over-year growth
rate of 50 percent; that number was revised down sharply, to between 42 - 45
percent.
Peek chalked most of that poor performance up to a tanking of revenue
generated by enterprise licensing agreements (ELA). He said that many
customers are "forgoing discounts [gained through ELAs] to meet shorter-term
needs." He also said that Microsoft's entry into the enterprise
virtualization market is likely having an effect, as potential customers are
slowing down their rush to buy VMware products, and considering Microsoft's
new offerings, like the free Hyper-V.
Maritz gave a brief nod to Greene's leadership of the company, then
launched into his take on where VMware is headed. He said it's in its "third
stage" of growth. The first was the introduction of the hypervisor. The
second was the introduction of virtual infrastructure products and expansion
of their use in business.
"Stage three", Maritz continued, "is about dramatically extending the
virtual infrastructure and products for more uses and to more users."
One way to do that is to give away the hypervisor, which other vendors
already do. Currently, ESXi costs $500, and ESX, the primary hypervisor, is
substantially more than that, depending on the configuration. ESXi's small
size (32MB) makes it embeddable, and VMware has a number of deals in place
with OEMs like Dell, HP, IBM and others to ship it on servers. Starting July
28, ESXi will cost nothing.
The other way to increase profits is to cut costs. To that end, Maritz
said a hiring freeze will go into effect, "except for strategic positions."
He didn't elaborate on those statements, or mention if layoffs might be
coming.
Senior Director of Product Marketing Bogomil Balkansky said that the
price for ESX will not be reduced, but that it shouldn't matter to
customers, because ESXi is the future. "We've made it clear that our future
architectural direction is ESXi," Balkansky said, adding that both products
are "completely functionally equivalent." The price of VI, VMware's suite of
infrastructure products, will not change, he said.
Balkansky denied that making ESXi free was a direct response to
Microsoft. "There's an inclination to interpret it that way, but I think
this is a very logical move for us, given that we have a tried and true
record" of making products free after a time. For instance, GSX Server
(renamed VMware Server) was made free in 2006. "The timing has more to do
with product release schedules and priorities, rather than what a competitor
may be doing," he said.
Still, Balkansky added, there is "no question that making it free gives
us an advantage and levels the playing field."
Maritz also mentioned several other new areas in which VMware will be
aggressive, including extending its reach more strongly into the Asia
Pacific region, and becoming more active in "the cloud", which means
accessing resources over the Internet. That, perhaps, isn't surprising,
since Maritz' former company, Pi Computing, was cloud-focused. Pi was bought
by VMware last February. VMware, Maritz said, will "have a lot of relevance
in the cloud, and as an on-ramp into the clouds."
About the Author
Keith Ward is online news editor for the Redmond Media Group. You can contact him at [email protected].