VMWare 1, server vendors 0

VMWare 1, server vendors 0

Summary: Following EMC's strong fourth quarter results it's safe to say that buying VMware was the best move the company has made. After all, VMware is driving EMC's growth and that's bad news for server vendors.


Following EMC's strong fourth quarter results it's safe to say that buying VMware was the best move the company has made. After all, VMware is driving EMC's growth and that's bad news for server vendors.

Few things in the technology industry are truly zero sum games--except for popularity of virtualization and server sales. There should be an inverse relationship between virtualization, which allows you to run multiple applications on one server, and server sales. IBM's hardware results gave one data point showing the inverse relationship of server sales and virtualization. EMC's financials now offer another. 

EMC reported fourth quarter revenue of $3.21 billion, up 19 percent from the same period a year ago. Net income was $389 million, or 18 cents a share. Backing out charges, net income was 17 cents a share, a penny ahead of estimates. What the results show is a storage giant increasingly turbo charging growth with software acquisitions (VMware, Documentum, RSA etc.)

Meanwhile, VMware appears to be the crown jewel. VMware had fourth quarter revenue of $232 million, up 101 percent from a year ago. In addition, VMware's growth is accelerating. For 2006, VMware had revenue of $709 million. "Our field work suggests VMware will continue to be a driver of EMC's growth, as enterprises rely on the application of this technology to reduce costs," said Daniel Renouard, an analyst at Robert Baird, in a research note. 

Watch those server results closely. If VMware's success is any indication, server makers may have tough sledding ahead.

Topic: VMware

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  • How about server vendors .01 ??

    VMs may live on storage but they RUN on servers .... Granted servers will never sell in the quantity they used to. VMWare simply changes the equation from lots of little cheap commodity servers to big, robust, Highly-Available servers.

    So long Dell, hello HP and IBM. Maybe hello Sun if alternative VM technologies like Solaris containers or Xen ever take off. They sure missed the boat on showing love to VMWare when they had the chance.
    • Nah...

      Cuz server vendors include SUNW...and they also apparently had a good quarter. But this does bring doubt to their recent Intel announcement, if as you say, small servers are going passe' in favor of larger VM'd ones. Intel may not get much outta that deal. AMD is still better for larger servers, and that's where they will still be positioned. Intel would have taken over more of the low end x86 products.
      • A "good quarter" for Sun is Relative

        Like another one they didn't go under. Sun has no VMWare market at all. They better bet that Xen gets its act together, but until they can pull off tricks like clustering and VMotion, don't look for the big enterprises to jump ship from VMWAre.

        Sun's share of the X86 world whether Intel or AMD is not even material.
  • Trends

    Business is good for EMC and VMware.
    The home market is interesting as well--users I know are casting off and either going with Apple or machines with Linux and running some sort of VM to have WinXP on their desktop.

    Just recently VMware released a beta of their Apple equivalent--Fusion.

    Rumors have it that VMware enables OSX to run on non-Apple hardware.

    I am definitely siding with VMware and the VMware Server (free) is a solid stable product.

    Set yourself up a vm instance and suspend it--and iconify it on your desktop and spin up WinXP in 3 seconds---babaabammmmmmmmm!

    It's a whole new ballgame folks and savvy users are all over VM like flies on cow chips! ;)

    OK thanks.
    D T Schmitz
    • Parallels

      Some people are going Mac, and then using VMs...

      Really, if Solaris containers do a good enough job, I may ditch the Linux kernel... However, I LOVE how Kubuntu has simplified it all, so, that would be a huge leap for me.

      if Parallels didn't cost much, I'd be using it on my Kubuntu installs, and be out of windows.

      Yes, there is Parallels for Linux. Check out their website. You can run Parallels on any of the 3 OSes, if you buy the right version.
  • In the longer term, however ...

    I just read an article saying Yankee Group is saying TiVo will fade away in five years, because other DVRs from cable companies and satellite companies. In other words, the first to market company now faces a market which is increasingly commodities.

    One has to wonder the value VMware provides to Xen enabled Linux distributions. If virtualization is a feature of Linux, why pay again for the same feature? It did not work for Veritas trying to sell volume managers and file systems on Linux.

    It won't happen overnight. But over the longer term, the impact on VMware is inevitable.