Is VMware dead? VMWorld 2008 opens with 14,000 participants : VMW stock continues to tank

VMWare target of many competitors - is it the end for VMW ?

Well, I’ve been following VMware for about 5 years now, since its early days as a start-up and the immensely impressive desktop / workstation VMware suite of virtualisation products. It was a tool that I’ve spec’ed out on a few occasions for both enterprise server consolidation using the ESX Server range of tools not just for server consolidation but indeed for IT infrastructure consolidation and virtualisation; creating an abstraction between the physical and virtual elements of just about all of the classic 7 layers of the OSI model.

So, now that full disclosure is there: the future of VMware (err, EMC VMware) seems truly in disarray. The technology that they currently dominate (by at least 2 years ahead of all other players) is quickly becoming a commodity. There are so many players in the field now (most notably the boys from Redmond, with Hyper-V being in RTM on Windows Server 2008) that virtualisation has *already*, for all intents and purposes, become a commodity product.

 

So as Paul Maritz, the newest CEO of VMWorld opened the 5th annual VMWorld conference today with 14,000 participants, the VMW stock tanked another 5%. The stock has followed that eerily familiar path of ultra-hot IPO followed by huge gains to high P/E multiples followed by a quick deflation of shareholder value – over 40% in the last year.

Why?

Some blame EMC acquiring a 90% majority stake in VMware and the subsequent pissing matches of EMC vs. VMWare execs, some blame overly aggressive hiring (VMware was outhiring Google at one point last year)… some blame the competition.

Ultimately, it is that soon virtualisation will be a part of the OS (Microsoft already has this in Windows Server 2008 with hyper-v, and many other open source alternatives exist in 2nd or 3rd generation iterations) or even at the chip level and again: a commodity product that the end user (or sysadmin, or IT architect) will come to rely on much like PPG paint is a commodity for the auto industry.

When that happens, it’s quite possible that opting for an add-on product (such as VMware, ESX Server or ESXi) may be a redundant offering with less and less of a value proposition.