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It's quickly become a major player in the business software space, with tools designed to let companies reduce their computer server needs and get a better handle on software management.
Now VMware is in the sights of larger rivals Oracle and Microsoft, who want a slice of the market dominated by the fast-growing virtualisation software maker which debuted on the New York Stock Exchange in August.
Last month, its market capitalisation topped US$40 billion ($52.2 billion), 80 per cent of the value of its majority owner EMC, which makes computer storage equipment and software. Oracle used its annual OpenWorld conference in San Francisco this week to unveil Oracle VM, which is based on the Xen open-source hypervisor code and allows both Oracle and third-party software applications to run in virtual environments.
Virtualisation has become a hot topic in the IT industry as companies face increased costs associated with running the servers that host their software applications. Virtualisation allows numerous operating systems and applications to be hosted on the same servers, reducing hardware costs, and legacy systems to be shifted to newer, more efficient servers.
Oracle VM will support x86 and 64-bit x86 servers which are in common use and while the software is free to download, Oracle will offer support contracts priced from US$499 ($652) for server systems with one or two processors to US$999 for a system with unlimited processors.
Oracle's hardware partners such as HP, Dell and chip makers AMD and Intel this week weighed in with support for the platform as Microsoft revealed details of its Hyper-V virtualisation software scheduled for release next year.
Oracle executives were keen to talk up the ease with which the software could be introduced into a company's IT environment.
"Users keep doing what they're doing, whether they are running a database or running an application, they don't see any change at all. Their job just moves from one machine to another," said Oracle's Chuck Rowzat.
As Oracle kicked off its annual talkfest VMware's shares began to sink, closing on Monday 8 per cent down. But by Tuesday, the shares had regained the lost ground as analyst reports suggested Oracle VM's impact on VMware would be limited.
"We believe a product likely to add de minimis revenue to Oracle's deal size is unlikely to attract significant attention from Oracle's sales force, and thus is unlikely to be featured in significant numbers of deals," Brent Williams, a software analyst at research firm Benchmark, wrote.
Sharing many customers with Oracle, VMware was quick in making its displeasure at Oracle VM's arrival known. "Oracle's introduction of yet another variant of Xen is clearly a response to the significant virtualisation industry that VMware has established," said Parag Patel, the company's vice-president of alliances.
"The offering does not address the capabilities required to achieve the cost savings and IT simplification that customers are realising every day from VMware's Virtual Infrastructure."
Presenting to a room packed with IT managers at Oracle OpenWorld yesterday, VMware's vice-president Brian Byun did his best to remain diplomatic. He said numerous VMware customers were running Oracle, which supported VMware in its "software stack" and stressed the savings that virtualisation in general can provide for companies suffering from "server sprawl".
"It's not uncommon to find 10 to 15 per cent peak utilisation for 90 per cent of their server infrastructure. It's sitting there using up power," said Byun. "Within two to three years, we see a lot of companies 60 to 70 per cent virtualised. This is how fast it happens and evolves."
VMware has had offices in New Zealand for about two years.
Local Oracle specialists are optimistic it will aid companies that run Oracle software gain more efficient IT shops. "We see more and more New Zealand companies looking at virtualisation in a big way," said Phil Nesbitt of Hamilton-based insurance software maker Insoft. "We now have a policy of recommending virtualisation on any shared server resource." *
* Peter Griffin attended Oracle OpenWorld as a guest of Oracle
