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VMworld a Mixed Bag so far for Attendees; VMware Plans to Reach out to ESXi Users

VMworld 2009 is now well under way and considering that it is sponsored by a company (VMWare) that sells virtualization software, I have to compliment it for keeping its focus on the new business problems that its technology can solve. However my concern is that anytime a provider starts doing that, customers end up buying promises as opposed to software that can solve their day-to-day tactical problems.

So to try to discern fact from fiction, I am alternating between taking in sessions that are targeted at press and analysts and those more specifically focused on end-users. This combination is giving me the opportunity to hear the high-level messaging as well as interact with end-users to get their feedback on how close VMware is to delivering on this reality. So far, it is somewhat of a mixed bag.

As I write this, I am sitting in on a session being exclusively presented to press and analysts that is being hosted by VMware’s CEO Paul Maritz. On stage with him are executives from Savvis, Verizon, Terremark and VMware’s latest acquisition SpringSource. The focus on this one is how these different companies are leveraging VMware’s vSphere software to deliver cloud platforms for internal and/or external clouds and better manage it.

Terremark probably had the most compelling case of the three service providers on stage as it explained how it has grown its revenue from about $130 milllion for its year ending March 2006 to over $250 million for its latest year ending in March 2009. This growth might also explain why VMware invested $20 million in this company earlier this year (June 2009 as I recall) and was named 2009 VMware Provider of the year.

The feedback I am getting from some end-users in attendance is that VMworld has been anything but a pleasurable experience – at least for those looking to use its labs. One user I spoke to last night said he came in last Friday so he could attend some labs on Sunday and Monday. Unfortunately when he showed up on Sunday morning at 8:30 am, nothing was working and it took VMware nearly 6 hours to get the lab configured so it would work.

Then on Monday when he showed up to take advantage of some other hands-on labs, he was put off until 2:00 pm again before it was open and the problems were fixed. These problems were obviously acute enough that VMware’s COO, Tod Nielsen, felt obligated to comment on them during his opening comments prior to his introduction of VMware’s Paul Maritz for Tuesday’s morning 8:00 am keynote.

In terms of what VMware hopes to help users accomplish in the cloud with its vSphere platform, its intentions are definitely ambitious. Maritz during his keynote used the term ‘software mainframe” which I think is an appropriate description of what organizations of all sizes want from a cloud platform – the availability, flexibility and reliability that mainframes deliver without the associated hardware costs and lock-in that are simply unavailable on today’s mainframes.

An equally important message that Maritz accurately hit upon was that organizations want incremental, risk-averse steps that are cost-justifiable. It seems that in the past 10 years, virtualization providers would promise incredible savings and benefits but only if customers virtualized their infrastructure (storage or server or both) using their technology. These providers simply failed to recognize that no reputable, responsible organization will move that dramatically into virtualization over night. They need a logical, step-by-step game plan which VMware appears to be doing a better job of delivering and articualting than virtualization providers of even a few years ago provided.

One factoid that he shared that surprised me a bit was that a 1/2 million downloads of its free ESXi server software occur annually . However to date VMware has not really reached out to these users to try to sell them other VMware services. While he did not elaborate on what these other services might be, I get the sense that the first thing VMware needs to do is understand who these individuals are and how they are using ESXi server in their environments.

Another compelling statistic Maritz made at the outset of his presentation was that organizations now spend 70% of their IT budgets on maintaining the status quo and only 30% on innovation. He believes (and I agree with him) that IT has to turn those numbers on their head so they spend 70% on innovation and only 30% on maintenance. It is only as IT does this will IT invigorate and excite the business. Obviously (and logically), virtualization is the mechanism it sees as the way to do this.

Some interesting feedback I got after hearing this when discussing his presentation with another show participant was that virtualization is not delivering the stupendous ROIs some may claim it does. While it does deliver an ROI of about 50%, it is the hidden costs associated with VMware (additional management costs, new licensing fees, etc.) that can quickly eat into those savings.

My feeling is that if companies only look at VMware and virtualization as a cost-cutting measure, they are viewing it as all wrong. There may be some initial cost savings but they really need to view it as a business enabler and unless they manage and treat it as such, they will ultimately be disappointed with their decision to virtualize their infrastructure.

That’s it for now. I need to run to some sessions and grab some lunch. Stay tuned for more updates from my stay at VMworld.

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