Is Microsoft Hyper-V Keeping VMware Up At Night?

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Microsoft has been hammering away at VMware with the message that Hyper-V gives customers much bigger bang for their buck, and the software giant has come up with creative promotions to get companies to switch.

How's that been working out? According to one industry pundit, not so well. In a research note earlier this month, Wells Fargo Securities analyst Jason Maynard called out Hyper-V as an area of Microsoft's Server and Tools Business that hasn't been gaining ground as quickly as Microsoft would like. He even suggested that this may have contributed to Microsoft's decision earlier this month to replace Bob Muglia as head of the company's Server and Tools Business.

"The Hyper-V virtualization product to date has not yet seemed to put a dent into VMWare's business," Maynard wrote in the research note.

Hyper-V versus VMware has become a religious debate at this point, and many solution providers tend to carry one flavor to the exclusion of the other. However, according to one large VAR that works with both VMware and Microsoft, Hyper-V has made strides in the midmarket and SMB but still doesn't quite meet the needs of enterprise customers.

"Hyper-V is simply not ready for prime time in production environments," said the source, who was granted anonymity. "It seems that only true blue Hyper-V only VARs are doing anything with the product. Truly agnostic players like us never put it into our customers' environments."

Of course, Microsoft has a different view of how things are playing out. A Microsoft spokesperson pointed CRN to the latest IDC figures on Hyper-V adoption, from November 2010, which show Microsoft's virtualization market share having gained 6.1 percentage points over the past two years while VMware's share dropped 3.7 points during the period. Microsoft also cited November 2010 Gartner data that shows Hyper-V as the hypervisor of choice for "significant number" of virtual machines deployed last year.

Unlike VMware, Microsoft sees virtualization as an operating system feature as opposed to a standalone product and it often wields this as a competitive advantage.

Microsoft's virtualization technology is certainly cheaper than VMware's -- Microsoft estimates that Hyper-V is one-sixth the cost of VMware -- and the recession has helped push customers toward Hyper-V. But according to one East coast virtualization solution provider, Microsoft has also been sweetening the pot in other ways.

"We're rolling out a new desktop virtualization initiative and are showing our customers a number or different technologies. Microsoft is paying us good money to put Hyper-V on our list of products instead of VMware," said the source, how asked not to be named.


Next: Has The Microsoft-VMware Thing Been Overplayed?

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