July 23, 2008 8:30 AM PDT

VMware's (second) free hypervisor

Posted by Gordon Haff

[UPDATE: Corrected date.]

VMware made some headlines yesterday when its new CEO, Paul Maritz, announced during a financial analysts conference call that it would be giving its "embedded" (which, is to say, standalone) hypervisor away for free starting on July 28.

This move is wholly consistent with VMware's past strategy, so I don't view this as a new-found aggressiveness under Paul Maritz. If Paul mentioned Microsoft more frequently during the call than VMware founder and ex-CEO Diane Greene was wont to do, that reflects a different public emphasis rather than a change in direction. As anyone who has spoken to Diane in private can attest, she was never one to step gingerly around that particular ostensible partner.

And, in fact, we've seen essentially this same game plan previously. When Microsoft brought out Virtual Server at a price that undercut VMware's GSX server (its "hosted" hypervisor product), VMware then, too, cut the price of its competing product to free. I wrote at the time that:

Releasing VMware Server as a free product is a brilliant move. With Xen still pre-production and Microsoft's Virtual Server 2005 just getting going, there is a window for VMware to insert itself as not only the best premium x86 virtualization product, but the best free/cheap one as well. By augmenting its hosted GSX Server product with SMP and x64 guests, renaming it VMware Server, and releasing it for free, VMware's just made life very difficult for Microsoft and likely even reduced the rate at which Xen will be deployed on Linux servers.

And, indeed, this is pretty much how things played out. Virtual Server found some uptake in Microsoft shops but has had limited impact on the broader market.

Today, the market for virtualization products is further along and Microsoft is assembling a broader virtualization strategy. That said, there are many similarities between then and now.

Hyper-V, Microsoft's native hypervisor, is still in its early days and, therefore, can't compete with VMware on function or maturity. It can compete on level of integration with Windows and it can compete on the basis of its $28 price, which Microsoft has been aggressively highlighting.

There's nothing that VMware can do directly about Hyper-V's integration with Windows--besides making the reasonable argument that this can be as much of a disadvantage as an advantage in an environment that blends Windows and other operating systems. But it can deal with the price point.

And it has. VMware has taken entry-level price off the table as an issue. It's also put into play a counter to Microsoft's "just comes with Windows" virtualization pitch with an alternative which, if not quite as integrated, is even cheaper.

The real price of a production virtualization deployment using either company's products is both higher and more complicated to figure, of course. There are management products, add-on software services to take advantage of virtualization, and hardware upgrades--to say nothing of possible training and services engagements. But, especially for midmarket customers focused on the up-front, kick-the-tires figure, FREE is a very attractive number.