Virtually as Big as Microsoft?

The fever pitch over virtualization -- something we've been writing about in Redmond Report all this week in connection with VMware's VMworld 2007 conference in San Francisco -- may have reached a peak yesterday. Swept up by the recent and lavishly successful IPO offering of VMware, and the development support being pledged to the technology by the largest of industry giants, some analysts yesterday predicted VMware's future is so promising it could become as strategically important to the overall industry as Microsoft.

Whoa. Someone needs to switch to decaf.

True, VMware's IPO raised $1.1 billion and was one of Wall Street's hottest offerings of the year. In fact, it was the best showing since Google's IPO over three years ago. The company's market worth, now approaching $30 billion by some estimates, is worth more than Microsoft, Oracle and SAP combined, a couple of analyst firms point out.

True, in recent estimates IDC predicted that spending on virtualization software and services will spill over the $15 billion barrier worldwide in 2011, up from $6.5 billion in 2006.

True, leading industry executive Hector Ruiz, CEO of chip maker AMD, was quoted in published reports this week saying, "Virtualization has reached a tipping point." Other executives and analysts also said this week that virtualization's technology curve has now reached a point where it's cost-effective for everyone and its productivity benefits should be obvious to any and all skeptics.

VMware President Diane Greene told VMworld 2007 attendees this week: "A year ago, we were talking about virtualization becoming mainstream...now, we are talking about a virtualization industry."

Yep, some pretty heady stuff going on here. But VMware becoming as important to the industry as Microsoft?

First, Microsoft will do its damndest over the next few years to make sure that the next Microsoft of the software industry is Microsoft. The company has already made it clear that it plans to play hard in the virtualization market, and that the technology will be integral to future releases of its core operating systems and applications.

Along with Microsoft, there's an impressive list of top-tier vendors -- including IBM, Hewlett-Packard, Intel and Cisco -- who also plan to claim a piece of the virtualization market over the next few years.

There's little doubt that VMware's future is shinning bright. But whether this moment is just a day in the sun, we'll have to wait and see.

Posted by Ed Scannell on September 13, 2007 at 11:57 AM