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Analyst to EMC: If You Love VMware, Set it Free

Sometimes bold words call for bold actions to make the words stick.

An industry analyst has done just that, proclaiming that VMware could represent a more dangerous threat to Microsoft  than even Google . He also called for VMware owner EMC  to either sell off the virtualization vendor in order to let it grow more quickly, or integrate it across its product lines in order to become a more formidable opponent.

Gartner analyst Tom Bittman made these statements and calls to action during the Gartner Infrastructure, Management and Operations show in Florida earlier this month. The inaugural show drew nearly 1,000 attendees to hear about virtualization, IT operations management, power and cooling and other critical issues.

The analyst delved into his comments in a briefing with internetnews.com after the speech, exploring pros and cons for both rivals in the market for server virtualization, where multiple operating systems are run on fewer machines to create hardware efficiencies.

"I believe VMware could represent a very serious challenge to Microsoft's hegemony. VMware creates the ability to manage below the operating system, which turns the operating system into a commodity. Citrix wasn't a threat. Netscape wasn't a threat. These were replaceable technologies. VMware has an opportunity to become irreplaceable."

Irreplaceable? Strong words about a market Microsoft and plenty of others play in; the company has systematically managed to take over and lead almost every market it set its sights on. But that's Bittman's belief and he's sticking to it until Microsoft can prove it is a viable rival in the virtualization market. There are no guarantees, of course.

"It is unbelievable how much time Microsoft has allowed VMware to grow," Bittman remarked. "I also believe if Microsoft does things right, they can eliminate the challenge," Bittman said.

Microsoft has to execute first, Bittman said, noting that the software giant has already seen some delays to the Viridian hypervisor  and some features, including the vital live migration utility for moving servers from one machine to another on the fly.

Bittman said he believes VMware not only needs to quadruple the amount of virtualization licenses it sells this year, but that the virtualization vendor needs to "move very, very rapidly" in creating new features none of the competition -- Microsoft, Xen, Virtual Iron and SWSoft -- yet possess.

Moreover, Bittman feels EMC's ownership and current positioning of VMware -- as a separately run company -- may not help the virtualization power defend against the impending Microsoft juggernaut.

The analyst thinks EMC is enamored of VMware's $1 billion annual run-rate on revenues but still thinks EMC must sell off VMware if VMware is to successfully weather Microsoft's challenge and grow it to its potential.

"As a part of EMC, they cannot make any acquisition that they choose to make," Bittman said. "They are running independently but [VMware President] Diane Green can't decide today to merge with Opsware; while VMware might have aspirations to acquire or merge with Opsware or BladeLogic, so does EMC and they have different goals. I believe EMC should make the money on VMware now and invest it somewhere else -- before VMware gets too big.

The other option?

"Bring them more into the fold," Bittman said. "Make VMware the center of a server infrastructure management business and add the pieces around it, build this up. They would acquire Bladelogic, and other smaller players, or maybe BMC . This is a major strategy change."

When asked if buying a server startup on which to pre-install VMware software products might be a route VMware could take, Bittman said it's one of the scenarios that may be worth pursuing.

Next page: Reaction to Bittman's points.