VMWare Lines Up ISV Allies As Microsoft Preps Virtual Server Beta For November

On Tuesday, VMware said it has signed those key ISVs--as well as BMC Software, Computer Associates International, IBM Software, Novell and Veritas Software--to its partner ecosystem. The support ensures that those ISV applications will run in VMware virtual machines.

Open-source vendors Red Hat and SUSE have provided additional integration that will allow their Linux distributions to run well with VMware's server virtualization software--a key differentiator from Microsoft's forthcoming offering, observers say.

Palo Alto, Calif.-based VMware has OEM hardware agreements with Dell, Hewlett-Packard, IBM, NEC, Unisys and Fujitsu. VMware is expanding its partnership with ISVs--and channel partners--as Microsoft gets ready to make a splash into the market, observers note.

ISVs and solution providers said the broad ISV support signals the beginning of a new mainstream software market.

"We're going from niche to mainstream," said David Crosbie, CEO and founder of Leostream, Burlington, Mass., whose namesake management platform supports VMware and Microsoft's forthcoming software. "Microsoft's entry is validating the idea of using virtual technology, so deployments within the Fortune 500 are becoming widespread."

VMware also recently launched a three-tiered channel program and is shipping a major upgrade of its flagship ESX server.

ESX Server 2, which shipped in July, boosts the number of virtual machines that can be run simultaneously on one physical system from the earlier maximum of 64 to a new top end of 80.

In addition, the company's Virtual SMP add-on, released at the same time, allows consolidations of even more servers on a single box, including those based on physical two-CPU systems.

Sources close to Microsoft acknowledge that the company had planned to ship its virtual server by year's end but has delayed the release of the software until early 2004--most likely February--while it goes through rigorous security testing.

Microsoft put out a customer preview of Virtual Server in early May, just months after acquiring the technology and assets from Connectix. At the time, executives said the server software would continue to support other platforms including Linux and Unix.

While Microsoft's offering is expected to be targeted at consolidating Windows NT, 2000 and 2003 servers, sources expect Microsoft's software cost to be roughly half that of VMware.

Server virtualization software is becoming more widely used across large corporations and SMB customers because it allows server consolidation and reduced operational and hardware costs.

For instance, Microsoft's Virtual Server is expected to allow customers to consolidate as many as 50 NT 4.0 servers onto a single four-way Intel server and run the system at 25 percent of the original cost. The capital savings on hardware and reduction in operational costs are driving many Fortune 500 companies to explore both VMware's and Microsoft's forthcoming technology, observers add.

"One of the selling points of products like VMware and MS Virtual Server is that you can use existing hardware to consolidate operations. Where previously, a company might have one server running nothing but an SQL-based accounting application, another server running e-mail and other servers running other things--all of which are running way under capacity--with server virtualization, you can consolidate those and run them on fewer boxes," said Jeffrey Sherman, president of Warever Computing, Los Angeles. "Those excess boxes can now be reallocated to other uses, such as branch offices."

The entry of Microsoft into this niche market will add credibility to the virtualization approach and offer many profit-making opportunities for the channel, several partners say.

For instance, while both VMware and Microsoft offerings will produce margins in the 10 percent to 15 percent range, the VM platforms offer many value-added opportunities for systems integrators and solution providers, such as integration opportunities with the Windows Server Active Directory and with backup and SAN solutions, observers say.

Leostream, for its part, has channel partners in Europe but is hunting for channel prospects in North America to deploy its software on this side of the pond. The company's key executive said the deployment of Leostream can reduce, if not eliminate, the need for consulting expertise customers need in order to deploy virtual machine technology.

"The channel needs to know about this technology because it's changing the way people are buying hardware," said Leostream's Crosbie. "From the channel perspective, virtualization is a similar opportunity to Citrix. Those VARs that embraced the technology early on sold entire systems-- software, hardware, and integration support to large players."