Microsoft launches assault at VMware conference

The Seattle giant has begun a multi-million dollar international marketing blitz designed to sell its newly launched Hyper-V software which directly challenges VMware’s dominant ESX offering.

Both sides admit the stakes are huge as increasing numbers of organisations look to virtualisation as a way to reduce costs and improve the efficiency of their IT infrastructures.

According to research from Goldman Sachs, the compound annual growth rate for the virtualisation market is estimated to be 44 per cent for the next four years with the total potential market for server virtualisation tipped to have already reached $7.5 billion.

Until now, VMware has essentially owned the market, having developed products that virtualise everything from servers and storage to desktops. But now Microsoft has decided it wants a piece of the action.

Senior analyst at research firm Ovum, Timothy Stammers, says Microsoft is determined to use its massive marketing machine and budgets to gain control of what has become a critical market.

“Microsoft will initially position itself in the low end of the market,” he says. “Its assault on the server virtualisation market will begin at the low end, initially presenting VMware with much less competition at the high end. But following Microsoft’s usual pattern, it will close the functionality gap.”

Despite the threat, VMware chief executive Paul Maritz says he remains confident his firm can maintain its leading position. Maritz spent much of his early career at Microsoft and he says this has given him the advantage of knowing how the company works.

“I have a full appreciation and understanding of Microsoft,” he told iTnews. “On the one hand I know it is a formidable challenge to compete with them, but I also know it’s not impossible.

“If you establish a clear direction and it makes sense to customers and you execute well on that path, you can be very successful. When you have Microsoft as a competitor you can’t afford to make any execution mistakes as they have more money than you and can afford to make mistakes.”

This week VMware has been extolling the virtues of its virtualisation approach, talking up a new concept the company has named the Virtual Data Centre Operating System at its annual customer event in Las Vegas.

Meanwhile Microsoft has been employing guerrilla marketing tactics at the event by employing people to hand out fake one dollar gambling chips to the 14,000 conference attendees. On each chip it says 'Looking for your best bet? You won’t find it with VMware'.

Moritz says he is actually flattered by the effort and that these tactics 'are only ever used by followers in a category, not the leaders'.

“MS has locked on to our taillights and is duplicating many of our features,” he says. “They have endorsed all the features that we have and they’ve said they will offer them at a lower cost, but not until two years from now.”

Ian Grayson travelled to Las Vegas as a guest of VMware.

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