Headline Feeds
After a five-month beta program that saw more than 700,000 downloads, VMware this week said it would offer VMware (NYSE: VMW) Server, its virtualization software, for free.
Virtualization is a technique for deploying technologies that allows multiple virtual operating systems to run on a single physical machine while maintaining distinct hardware profiles. In effect, the host operating system executes several guest operating systems.
Setting the Tone
Microsoft (Nasdaq: MSFT) earlier this week announced it would make its VirtualPC software available for free in conjunction with new licensing plans for the upcoming Windows Vista Enterprise operating system.
While it may appear that VMware is attempting to keep up with Microsoft, its parent company, EMC (NYSE: EMC), has been planning the free software launch for months.
Optimizing the use of physical IT assets is becoming imperative as data centers increasingly are reaching their power and space capacities. The problem intensifies for companies with servers that run at very low levels of utilization. Server utilization rates of less than 5 percent are not uncommon, and many customers' usage rates fall into the 10 to 15 percent range, by Microsoft's estimates.
Virtualization technology is used to consolidate multiple physical machines onto a smaller number of physical machines. Virtualization can also be used to rehost legacy environments, which is especially important as older generation hardware becomes more difficult and costly to maintain. Because software is abstracted from the hardware, virtualization is a good solution for disaster recovery needs as well.
VMware has played profitably in the expanding virtualization market, despite competition from Red Hat (NYSE: RHT), XenSource and, more recently, Microsoft. VMware's 2005 revenue was 77 percent higher than the previous year. That compares to a 17 percent gain for EMC as a whole; yet VMware still accounted for only 4 percent of EMC's US$9.6 billion gross sales 
in 2005.
Room to Grow
That leaves plenty of room to grow in a market that promises to expand in the coming years. While VMware's latest move will slash revenues from its virtualization line, the company hopes to recoup some of those losses by charging for support. VMware will also continue to charge license fees for its Workstation product line and its higher-end virtualization products.
"The x86 market is the great unknown right now. VMware, to its credit, was the first company to recognize that there will eventually be a great demand for virtualization on lower-end x86 platforms," Pund-IT analyst Charles King told TechNewsWorld.
"This is a competitive market that is quickly getting crowded," King added. "VMware and Microsoft are reaching out to lower-end customers who have read about virtualization and the benefits but are wondering if they can really be successful with it. What better way to do that than with a free product?"
VMware hopes users of its free software will progress to its for-fee VMware Infrastructure 3, the third generation of the infrastructure virtualization software suite that allows entire server farms to be managed as a shared utility and dynamically allocated to different business units or projects.
Talkback: 
