HP Winning the VMware-Microsoft Virtualization Battle

It seems about time — after a week that included the release of yet another beta of Microsoft’s Hyper-V, Citrix’ release of sometimes-free desktop virtualization, a raft of VMware announcements about desktop virtualization and announcements from too many other companies to mention —to announce the winner in the David/Goliath pissing match that is the fight for dominance in the virtualization market.

Despite the claims and counterclaims of superiority by Microsoft and VMware —and now Citrix and VMware—it’s becoming increasingly clear who’s going to be the winner in the rapidly growing market for server virtualization: Hewlett-Packard.

Sure, Microsoft and VMware and Citrix are the ones on the front lines, lobbing FUD, lining up industry partners, spending marketing money to convince customers their way is the only way, even though the core of “their way” is a technology so commoditized that even non-virtualization companies can customize a version for their own customers and give it away free (Hi, Oracle.).

That’s a great business proposition, eh? Charging for stuff people can get for free? Of course Red Hat’s doing it with Linux and half the computer industry is doing it with the Xen hypervisor.

None of those companies is going to get rich selling just virtualization, however.

VMware is certainly making it work right now, of course, if you consider $400 million a quarter and growth rate of 69 percent “good.”

And, realizing its core technology will soon be available at every convenience store and bait shop, VMware is improving its array of high-end data-center management products for disaster recovery of VMs, automated staging and launch of applications, and lifecycle management — all of which will help it expand and protect its market.

And parent company EMC will undoubtedly help, having demonstrated its own ability to squeeze the occasional dollar out of a market (storage) that’s dirt-cheap commodity at the low end, rocket-science at the high end and black art throughout (when connected with backup at least).

Microsoft, of course has frustrated all attempts to bet against it or write it off, even when its technology is late to a market other companies created and built. Right now Microsoft’s just hoping to hang onto its operating-system hegemony in the face of competition from not only traditional vendors, but also the entire Internet.

(It’s possible, though unlikely, that Microsoft will become the next decade’s IBM — immensely rich and powerful, but completely irrelevant in determining the direction of development in the computer industry itself. )

I have no doubt that both companies will do well enough financially as virtualization becomes as common and commonly used a function as dual-core chips and networked storage. Analyst predictions of the incredible growth of the virtualization market will undoubtedly peter out, in fact, as virtualization as a function stops being a discrete function and the “virtualization market” focuses on advanced management products rather than hypervisors.

All that will pose major challenges for both VMware and Microsoft, and lesser dilemmas for Citrix and more peripheral players.

It will pose few challenges for HP, however or, to a lesser extent, IBM, Dell, Sun and other companies able to take advantage of a shooting war by selling weapons to both sides.

HP, owning as it does a set of hardware and software products that touch nearly every part of the virtualization market, including desktop, server and VM management, and the consulting, integrationand support services required to spec, fund and finalize a major virtualization project.

HP even sells a line of thin clients that cost about the same as PC and look for all the world like them except for the lack of a hard drive. (Here’s an idea: take a product, remove one of the costliest components, and sell it under a new name for the same price as the old one! Excellent business proposition.)

It has key alliances with both Citrix and VMware, as well as its longstanding open marriage to Microsoft and recently picked itself up a bit more capacity for the consulting and services that will form a big chunk of the big-company virtualization market.

True, it will have to tread a fine line between VMware and Microsoft on the hypervisor front; but whichever wins the customer in a particular engagement, HP is well placed to supply the hardware, services and even reseller-partner support to nail its part of the deal.

And, of course, it doesn’t have to expend its energy or advertising in a pitches us-or-them battle with Microsoft over a major part of a business it developed in the first place as VMware has had to do (not to mention NetScape and Lotus and IBM and Novell and WordPerfect and half the other companies whose rusted hulks clutter the rear view on the information superhighway).

HP may not get a blue ribbon in this particular contest, but its part in the game will be written with a lot more black ink than most of the other players — no matter for which team they currently play.

Veteran journalist Kevin Fogarty has covered the technology and business worlds for more than 18 years. Fogarty is a former editor or analyst at Computerworld, Baseline, eWeek, and Illuminata. Fogarty won an ASBPE (American Society of Business Publication Editors) award for column-writing during his stint at Computerworld.