VMware Rallies Partners On Server, Desktop Virtualization

VMware on Tuesday opened the formal portion of its VMware Partner Exchange with new product promotions, hints of upcoming products, a review of its cloud strategy, and attacks on competitors Microsoft and Citrix

The company this week is in Las Vegas holding its annual VMware Partner Exchange.

After a couple of days of partner breakout sessions, VMware formally opened the conference with a keynote presentation by Carl Eschenbach, executive vice president of worldwide field operations, who told the 2,800 attendees at the conference that attendance was up about 50 percent over last year.

Eschenbach said the increased attendance at the conference shows partners know the importance of working with VMware, despite the fact that rival Microsoft includes for free its Hyper-V virtualization technology, which is included as part of the Windows 2008 operating system. "I say to Microsoft, partners know they can't make money on something that's free," he said.

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While early 2009 saw VMware executives wondering what the economic downturn might mean to the industry and the company, Eschenbach said VMware decided to continue to invest in product and channel development, including its vSphere virtualization platform for cloud computing, a new VMware Partner Network channel program, and $5 million on new partner tools including MDFs and lead generation via Salesforce.com.

In the end, 2009 revenue actually grew 8 percent over 2008, and VMware expects 2010 revenue to grow between 21 percent and 26 percent over 2009, Eschenbach said.

The drivers are CIOs who, according to a recent Goldman Sachs survey, rate server virtualization as their number one priority, followed by desktop PC virtualization, he said.

But while server virtualization is the top CIO priority, VMware is thinking about what comes next, particularly in terms of cloud computing, Eschenbach said. "We are not a server virtualization company any more," he said. "We are a platform company."

Another major focus for VMware is virtual desktops, which Eschenbach called a much, much larger opportunity than server virtualization.

Eschenbach said that there are over 650 million PCs in the market today, only 1 percent of which are virtualized. That is at a time when 85 percent of CIOs in a Goldman Sachs survey earlier this year said they will be starting to deploy virtual desktops, up from 40 percent in a similar survey last year.

"That's why we see this year as the tipping point in desktop virtualization," he said.

Currently, about 80 percent of virtual desktops are on the VMware platform, a situation Eschenbach said represents a potential danger for rival Citrix.

Citrix, Eschenbach said, is in a fight for its life because, if it loses the race to virtualize desktop PCs, the loss would be significant. "We're going after (Citrix)," he said. "With the next version of VMware View, they're in trouble."

Next: VMware Plans To Help Partners Push The Virtual Desktop Message

One way VMware is helping itself and its partners push the virtual desktop message is with VMware Express, which is an executive briefing center inside an 18-wheeled semi-tractor trailer.

VMware Express is likely to show up anywhere to push the VMware virtual desktop message, Eschenbach said. "We may even show up in front of a Citrix or a Microsoft event," he said. "You'll never know where. Unless you're a partner, and then you'll know through our partner portal."

VMware is also helping partners spread the word with a promotion running from March 1 to June 15 in which customers who purchase VMware's vSphere Acceleration Kit get a 10-pack of VMware View licenses at no additional charge, which Eschenbach said is essentially an additional 36 percent margin for partners.

The vSphere Acceleration Kit bundles a vSphere edition with VMware vCenter Server at a price which is up to 30 percent off the cost of the individual components.

VMware is also spreading the word about the importance of management of virtual infrastructures with its VMware vCenter management application. Eschenbach said the company on Wednesday will unveil details about increasing the flexibility of vCenter to enable the management of both public and private clouds as well as to create a hybrid cloud.

VMware is not ignoring the SMB market, Eschenbach said. About one-third of SMBs have already started virtualizing part of their environments, and VMware expects about 50 percent of SMBs to be implementing virtualization within the next 12 to 24 months, he said.

To push that virtualization, VMware plans to spend several million dollars over the next three quarters to accelerate virtualization in the SMB market, Eschenbach said. "And our route to market is you," he said. "If we team with you, the SMB market is ours to capture."

To help push the SMB market, VMware is offering a 50 percent discount on its VMware Essentials bundle of SMB-focused products, which means partners can help customers virtualize three servers for a price of only $495.

However, he said, that does not mean VMware is competing on price. "Microsoft will compete in the SMB market from the bottom-up," he said. "But we will not compete on price. That's a race to the bottom."

VMware is also making a new push on getting partners to work with ISVs, and Eschenbach said there are already over 1,000 applications supported on its virtualization platform.

VMware's favorite ISV just happens to be its primary competitor, Microsoft, Eschenbach said.

"Microsoft apps work much better on our infrastructure than on physical platforms," he said. "Folks, we love Microsoft."

At the same time, VMware will be doing more to support developers thanks to its acquisition last year of SpringSource, an enterprise application and Java developer.

Eschenbach said that 89 percent of customers today have custom applications, and that 76 percent of developers work with Java compared to 61 percent working with Microsoft's .NET. Not only is SpringSource the number one development platform for Java, it is also the key contributor to the Apache Tomcat Java application server environment in use by more than 60 percent of all Java application server users.