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VMware's Aggressive Cloud Strategy is Fraught Both With Risk and Opportunity, According to New Report from GigaOM Pro

VMworld 2010 kicks off in San Francisco, Calif. next week, and industry watchers are expecting major cloud computing announcements from the virtualization market leader. According to a new report published today by GigaOM Pro, the anticipated new products advance VMware’s already-aggressive strategy to transition its dominant virtualization market share position into a full-scale takeover of the cloud computing market. Whether it can capitalize on its large footprint, however, remains to be seen.

A recent Spiceworks survey indicates that the company has an 83 percent share of the market for virtualized servers: an incredibly strong beachhead for aggressive transition into cloud computing. But VMware’s strategy is fraught with potential risk due to strong competition and consumer reluctance to embrace a broader cloud computing offering.

According to Derrick Harris, Senior Curator of Infrastructure at GigaOM Pro and author of the report, "While in today's environment VMware is a strong favorite against any single vendor, given its broad solution set and dominance in virtualization, the hypervisor eventually will become a commodity, leaving management software and cloud platforms as the ultimate competition spaces."

Over the past few years, VMware has girded for battle to grow beyond the virtualization market, with a goal of becoming a force — if not the force — in the cloud computing market. Through a strategy of acquisition, partnership and development, the company has created a solution set that offers something along every layer of the cloud stack.

However, while virtualization is growing extremely quickly — going from 44 percent today to an estimated 70 percent by year’s end — cloud computing is not seeing the same swift buy-in among IT users. According to a recent survey of Spiceworks users, 62 percent of IT respondents have no plans to deploy cloud computing services in the next 12 months. This means VMware's strategy of leveraging its strong market share among hypervisors may be tempered somewhat by slower cloud adoption among IT organizations concerned about security, performance and the unproven nature of cloud models.

"Over time, more and more organizations will embrace cloud computing, but the embryonic state of today's market and conservative nature of IT decision makers relative to cloud offerings could give VMware's competitors, such as Microsoft and Oracle, time to make up the distance afforded by the company's strong lead in virtualization market,” says Harris. “That lead is the company's primary competitive leverage in the broader transition to cloud computing.”

The report, entitled “VMware’s Cloudy Ambitions: Can It Repeat Hypervisor Success?" examines the details of VMware’s cloud computing strategy, including the company's virtualization and hypervisor product suite, its offerings in the broader private and public cloud markets across the IaaS, PaaS and SaaS space, and the broader competitive market for cloud computing services. The report utilized data from GigaOM Pro partner Spiceworks, which taps into a million-plus-member community of IT pros and 150,000 IT service providers to extract rich and meaningful real-time usage data of key technology products.

Published Tuesday, August 24, 2010 6:15 AM by David Marshall
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