VMware comes of age in IPO

VMware launched its IPOIn what must have been one of the most closely watched events involving a technological company this year, VMware launched its IPO on the NYSE (New York Stock Exchange) just yesterday.

The initial sale price of $29 per share for 33 million shares is expected to raise more than $900 million in capital. According to eWeek, VMware's estimated worth now stands at more than $10 billion, with juggernaut EMC controlling about 90 percent of the stock.

By the end of the trading day, the stock price has risen and stood at $51 per share.

If you recall, VMware was founded in 1998, catching on first with hobbyists, then system administrators and CIOs who saw the potential in the then non-existence niche of x86 virtualization. For those who literally "grew up" with using VMware's products, a touch of nostalgia here is inevitable.

While virtualization in general has been around for ages, especially in mainframes, VMware was the one who brought it into the mainstream. VMware of today is hardly the fledging start-up with a product in search of a problem. The market has matured significantly since, and the opportunities are simply staggering.

Still, as a direct result of VMware's own success, the competition has finally awoken. Top league players flush with billions in their pockets have joined in the fray -- and they are playing for keeps, not just a mere slice of the pie.

Also, the continual incorporation of virtualization into both hardware in the form of microprocessors, and software, in the form of the free Linux kernel, is threatening to make the need for a separate virtualization product irrelevant. To thrive, VMware must continue to lead the industry, and if at all possible, even speed up the pace of its innovation even further.

This is echoed by Greene, who oversaw the IPO as president and CEO of VMware:

We have very consistently explained to everyone that we will continue to invest quite heavily in [R&D] because we do have such a rich road map...

We also will continue to increase the reach of our products... [to] further unlock all the value in the virtualization platform... There is still a lot to be done there to fill that out and strength how we make things highly available, disaster recovery-tolerant and secure.

Adding on, Tom Bittman, a vice president and chief of research at Gartner said that VMware would be wise to invest some of the money gained through the IPO in a new consulting force as well as look for key acquisition to bolster its business.

At the moment, the biggest challenge to VMware is believed to be from Microsoft Windows Server 2008 with its own "Viridian" hypervisor, which is expected to debut as a beta before the end of this year.

And of course, Citrix is making its move as well in Citrix to acquire XenSource in deal worth $500 million. (TechRepublic Blogs)

Someone once said that all x86 virtulization paths lead to VMware, just as all roads lead to Rome. Yet Rome, for all its military clout, eventually fell. What will the future bring for VMware?


Paul Mah is a writer and blogger who lives in Singapore, where he has worked for a number of years in various capacities within the IT industry. Paul enjoys tinkering with tech gadgets, smartphones, and networking devices.


Iomega version Next??? Expensive, proprietary, and first to market. Lots of hype, and a broken business model. With both open source and Microsoft building this technology directly into the operating system, it leaves VMware out in the cold... As they don't have an operating system and don't specialize in Kernel dev like their competition. I don't know who is going to win in this space (I'm biased toward M$,) but I guarantee it won't be VMware and EMC. Even Gartner says that Hypervisor technology will be free, across the board, in the next two years, and warns the virtualization fight will devolve into the same management fight that is going on now. The issue isn???t how or when you virtualize, it???s how you manage your virtualization when you do it. In this space VMWare has an edge (first to market,) but they only manage Virtual servers. Any real IT shop isn???t looking for management solutions which only manages a fraction of their install base. I predict. MS will own most of the Enterprise Market with a lot of completion from the Xen based crowd (and now Citrix). And all of the managing players you already know, will be deep in this fight by the end of next year. VMWare is yesterday???s news, and, as usual, Wall Street will be a year or so behind.


What will the future bring for VMware?

Big Ole Jack
Big Ole Jack

Just like they did with Visio, Frontpage, and whatever else they reverse engineer and slap their logo on.


Microsoft bought Connectix which was a company that has software similar to VMWare's Workstation and were working on a server product. Of course M$ has the money to drive the market in their direction, but from what I have seen my interest still favors VMWare or Citrix as the companies that are less concerned into roping their product into the MS world. Call it nostalgia, or just the fact that VMWare currently has a mature product. As long as these guys are competing fairly, then we come out with better products. If one is in the business to undermine their competitor instead of innovative products we all lose.

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