Cloud-computing leader VMware shifts focus ‘private clouds’ for companies

March 30, 2012 Off By David
Object Storage
Grazed from Peninsula Press.  Author: Liu He.

Palo Alto-based VMware, a market leader in virtualization technology, is shifting strategic focus to private cloud and IT consumerization, developing different solutions for enterprises to manage their virtual environments and delivering services to end users, Chief Financial Officer Mark Peek said on Feb. 15 at a Goldman Sachs investment conference in San Francisco.

About 50 percent of corporate computing workload has now been virtualized. This is a first step by many companies towards cloud computing, allowing companies to store data and workload virtually rather than on a physical computer. Experts say that although the industry may continue to see a virtualization focus in 2012, cloud computing will be built on top of that as the next big trend in the coming years…


Cloud Market Expanding

Gartner, a leading IT research firm, said the overall virtualization software market reached 2.7 billion in 2011 and expects to grow to $6.3 billion by 2014. The global cloud computing market is projected to reach $176.8 billion in 2015 from current $89.4 billion in 2011.

 

“Through 2015, virtualization for large enterprises will be about serving as the basis for private cloud computing.” Gartner said in its latest report.

Echoing Gartner’s view, Peek said at the Goldman Sachs Investor Conference that he sees three trends unfolding in the next 3-5 years: the concept of a “private cloud,” development of modern management tools for the whole virtual environment and consumerization of IT services.

A private cloud exists when a company wants added security with cloud computing, yet they still want their people to have access to their databases from any device anywhere.

Peek said companies have become more aware of how to manage and monitor their virtual environment, as they realize the need to build private clouds to store data more securely.

To capture the opportunities, Peek said VMware’s strategy has shifted to not only improving existing virtualization operating systems, but also developing different solutions for enterprises to manage virtual environments, including disaster recovery, infrastructure automation and operational efficiency.

Competitors Gaining Ground
Derric Wood, Senior Analyst at Susquehanna Financial Group, said during an interview that VMware remains the dominant virtualization software vendor with close to 70 percent market share, although Microsoft with Hyper-V and Citrix with Xen are also gaining ground.

Some analysts, however, question whether the company can sustain its rapid growth in the virtualization market, given both demand and new competitors.

Peek said the company can benefit from both increasing demand from existing clients and growth of new corporate workload.
He believed the company can add about 10 percent of additional virtualization penetration per year going forward. The implication is that around five or six years from now, at the current pace, all of the workloads VMware can practically get on its hypervisors will be moved to its virtualization manager.

The workloads on its servers are also growing, and growing fast, Peek said. He cited IDC data that suggests the workloads on the company’s x64 servers are growing at around 15-20 percent per year, and the analysts at Gartner suggest it is more like 30 percent per year.

“VMware has done a good job in maintaining market share in virtualization,” Wood said.

However, other market players are catching up with VMware’s virtualization technology.

Gartner has listed Citrix and Microsoft as VMware’s major competitors in virtualization market in a 2011 report. Oracle, Parallels and Red Hat are called niche players in the Gartner ranking.

“Microsoft has increased its market share (especially among midmarket customers new to virtualization), and Citrix is leveraging its desktop virtualization strengths and its free XenServer offering to expand its server virtualization share,” Gartner analyst Thomas Bittman and colleagues wrote.

New Opportunities Lying Ahead
As VMware’s market position in virtualization has been challenged, Wood said it’s not surprising to see VMware repositioning old technology and introducing new technology with a cloud computing focus.

For most companies today, the closest thing to a private cloud is their VMware ESX server farm. By adding cloud style management and services to these clouds, VMware could be the first vendor to enable widely-deployed private infrastructure clouds, he explained.

On Feb. 14, VMware released several new channel programs and solution competencies at a Las Vegas trade show, VMware Partner Exchange 2012. Company executives said at the show that the new products will help customers better manage the virtual environment.

Besides, Peek said the company sees new opportunities in consumer computing fueled by the cloud. For the first time, consumers can enjoy a better computing experience at home than in a corporate environment, because the cloud is able to deliver content faster and more easily through mobile devices.

He said businesses increasingly will allow employees to use any device they want to bring to work, rather than relying on company-issued technology. And VMware is partnering with companies to address that demand in addition to supporting its enterprise clients.

In 2011, VMware released Project Horizon, a user-centric management service that facilitates accessing cloud applications from any device.

But VMware certainly is not going to be unchallenged in this arena. Citrix announced its new Cloud infrastructure platform called Olympus in 2011 as well, which was part of its strategy to tackle the market created by IT consumerization. Together with Olympus, Citrix announced a group of products designed to deliver device-agnostic services to end users.

Gartner also pointed out that in the past year Microsoft has begun to lay out a broader virtualization roadmap for cloud computing, including Hyper-V Cloud, which includes some technology, white papers, consulting services and partnerships.
However, Wood pointed out VMware still has an established presence in the enterprise data center and remains the biggest player in the private cloud sector.

In addition, the company has launched an ambitious global strategy.

“We are doubling down on expansion in emerging markets,” Peek said, “as we have seen excellent growth in South America and China.”

The global cloud computing market will grow to $214 billion in 2020, according to a 2011 report by Forrester Research.