Win, win, win. That is the mission in a market-driven society. No one really believes that it’s “not winning or losing, but how you play the game” that matters. Microsoft didn’t become the behemoth it is today by following the golden rule. That is certainly true of Oracle as well. They won because they were aggressive, opportunistic and didn’t play nice.

(This blog is also available as a podcast)

In this society, we value leadership—and even dominance. But we also reject monopolies because there is no competition—no checks and balances—which typically leads to inferior products at inflated prices. I don’t think anyone can argue that VMware is fundamentally a monopoly in the virtualization space. Some estimate that Microsoft has 20-25% market share, but does it really count if you give your product away for free? For all intents and purposes, VMware owns nearly 100% of the market—if you use revenue as your measure.

VMware will continue to become bigger and bigger. It will seek to deliver new capabilities and products. It will look for new market opportunities. VMware doesn’t have modest goals—it will be aggressive, opportunistic and won’t play nice to achieve greatness. In fact, VMware wants to eclipse Microsoft and all that it has achieved. And VMware is well-positioned to make this happen.

VMware sits beneath the operating system and as such, it trumps it and is now first in line. And since it sits beneath the operating system, it automatically achieves what Microsoft never can: heterogeneity. Operating systems by their very nature are homogeneous (it’s like saying sugar is sweet) and therefore, you will always have a dividing line between Windows and Linux. But VMware is OS independent. It has been embraced by both Windows and Linux constituents. Right out of the gate, VMware has a bigger potential market than Microsoft by virtue of its universality.

All of the ecosystem partners will continue to help further VMware’s success because it is a symbiotic relationship—right now, everyone is making money. But in so doing, there is a big risk that over time, VMware will marginalize most, if not all, of its ecosystem partners.

VMware is in a position to deliver more and more functionality that will increasingly impact the very ecosystem that is complicit in making it successful. Since VMware today is fundamentally an infrastructure company, it will build concentric circles of capability from that point outward. That is why its proprietary file system is so important—it enables VMware to manage and control data. It gives VMware the keys to the kingdom and they know it. Microsoft never quite got this and still doesn’t today. In the meantime, VMware is in a position to create more software that will impact storage, backup and replication.

Many of the ecosystem partners – the server, storage, backup, data protection and operating system vendors – realize this to some degree. But what can they do? They have to play nice. Especially since they are making a boatload of money. So they go about their business and hedge their bets by supporting Microsoft and Citrix to create a balance of power. Microsoft gets a thumbs up because it’s– well – Microsoft. It doesn’t matter if its product isn’t available and will have major limitations for one, two, or maybe even three years. Citrix is invited to the party because it bought XenSource and even though it doesn’t have a fully functional product, it gets a pass because it is a big company and everyone assumes that it will get there. VMware is fully supportive of this, telling the world that it wants healthy competition. But everyone knows—even though they won’t say it out loud—that VMware wins in this scenario.

Where does Virtual Iron fit into this picture? Right now, we are the little guy in a land of giants. Virtual Iron has a really good product. We have thousands of production implementations (and rapidly growing) and a healthy and increasingly strong channel. However, in spite of this, we are inconsequential to the ecosystem I’ve been talking about. But guess what? It really doesn’t matter.

Where we win – where we matter – is with small and medium enterprises (SME). They have no loyalty to VMware. They are looking for a server virtualization solution that has all of the advanced capabilities and features they need to protect and manage their environments; they want an easy to use solution; and it has to be cost effective so that it doesn’t consume the lion’s share of their IT budget. That is what we bring to the table and it is really a no-brainer for them once they get their hands on it. We also matter to the channel. Many of our channel partners feel that VMware is oversaturated. Since everyone is selling it, they can’t make any money. And their SME customers can’t afford VMware, so they are looking for an alternative. We are that alternative.

Our mission is clear to us. Virtual Iron is driving as hard (and hopefully as smart) as we can to build leadership in server virtualization for the SME market. The writer Voltaire said that, “common sense is not so common” and this is very true in the server virtualization market. We will watch the giants, but our core focus is on building our business through the real customers that don’t give a damn about anything but getting their jobs done. Common sense.

There is some confusion regarding the roles of the Xen project, XenSource and the growing number of Xen virtualization vendors in the market. This confusion slows us and our customers down - this blog will hopefully provide some clarity.

(This blog is also available as a podcast.)

The Xen project provides hypervisor source code to anyone that wants it. Virtual Iron, among many others, decided to take advantage of this and built a solution around the Xen open source.

It is important to note that I said Virtual Iron built a "solution" around the Xen open source hypervisor. Xen is a piece of technology—a component, if you will. While valuable, it is ultimately just a piece of an overall solution. We take the Xen code, build on it, scrub it, enhance it, make it bulletproof, and then we give back to the community. Additionally, we developed layers of control and management that are solely our own and unique to Virtual Iron—creating a complete solution. And it is the solution you build around Xen that is more important than any single component.

This last point is important. We've had customers that implemented other Xen variants and hated it—they initially judged us with a critical eye because they had been jaded by previous experiences. Just getting in the door was an uphill battle. After they evaluated our solution, they realized that Virtual Iron was not the same as the others. So don't get confused by all the different players leveraging Xen.

Where do all the other Xen players fit in? A number of these vendors are operating system guys—including Novell, Red Hat and Sun—which is interesting since Xen virtual infrastructure actually works beneath the operating system. Will Microsoft customers really want to embrace a virtualization solution from Linux and Unix OS guys? Conversely, will SME customers with mixed Linux and Microsoft environments want to use Microsoft virtualization? It isn't just an emotional issue, but rather one of culture, understanding the requirements, appreciating the nuances of the environments, etc.

Many Xen vendors face the same challenges. They are relatively new to the virtualization game AND it is not a core competency. The OS guys may disagree, saying that virtualization solutions are operating systems. This is not true. While there may be similarities between the two, they are not interchangeable.

For the most part these vendors are building solutions from the ground up. This is not a one or even a two year process. Yes, they have or will have basic hypervisor technology. However, that is just the tip of the iceberg. The challenge is to provide the mobility and management capabilities necessary to support a true server virtualization environment—and make sure their solutions are bulletproof. In the complex world of infrastructure within vast ecosystems, this is much easier said than done.

Citrix is one of the Xen providers that I didn't discuss. Unlike the others, Citrix is not an operating system vendor. In fact, Citrix bought XenSource, the company that created the open source Xen community. Of course, Citrix leverages the Xen open source hypervisor, but with no additional advantages. Citrix is treated the same as any other vendor in the Xen open source project.

How does Citrix fit into the virtualization landscape? The company has a lot on its plate and is running in a million different directions at once. Keep in mind that Citrix has the unenviable task of going head-to-head with VMware. There are high expectations and the industry is banking on Citrix being the contender that stands up to VMware. Good luck with that.

The market is all a buzz about the new Citrix pricing. On the face of it they reduced their pricing and people are asking how we intend to respond. First, we aren't even sure what the details are because they haven't been clearly articulated. But more importantly we NEVER see Citrix in our channel or with end user accounts. Right now it's just sound and fury signifying nothing.

Virtual Iron is in a different position from all of the above. Obviously - like everyone else - we have challenges in front of us. But there are also important things we need to bang the drum about more loudly and more often. These include the following: Server virtualization is our core competency. We are OS agnostic. We have all of the core control and management functionality for true server virtualization. We are field proven. We are focused on a specific market segment and as such, we are far more targeted. It is important to understand that Virtual Iron provides much more value above and beyond the open source Xen hypervisor. In fact, we transcend Xen. Pun intended.