VMware unveils software, plans IPO

The company has confidence in its products and business plan, but it may face a challenge from a Microsoft-owned rival.

Stephen Shankland principal writer
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Stephen Shankland
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VMware, whose software lets an Intel server run several operating systems simultaneously, is expanding both its software capabilities and business ambitions.

VMware, which is based in Palo Alto, Calif., announced its new Control Center software on Monday. Among other things, it lets customers move operating system instances, or "virtual machines," from one server to another while that virtual machine is still operating. And in an interview Wednesday, Chief Executive Diane Greene said the company is planning an initial public offering.

"Things are going extraordinarily well for us. We're marching toward our IPO right now," Greene said. Revenue growth for its server software product "was over 100 percent last year. We've got all our metrics in place."

Virtualization is an established computing concept involving a separation of software from the hardware it's running on. It is experiencing a new surge of attention from companies such as IBM, Hewlett-Packard, Microsoft, EMC and Sun Microsystems that are working on ways to link multiple servers and storage systems into pools of computing power.

Virtualization is one key component of that vision. By allowing administrators or even automated management software to move computing jobs easily from one hardware system to another, virtualization makes it easier to upgrade hardware, allocate more computing horsepower to a given job, adjust to equipment failure, or make other changes.

VMware has partnerships with IBM, Dell Computer, NEC, Hewlett-Packard and others to sell and support its software on their Intel servers. While the company got its start selling virtual machine software for workstations, Greene said server products now account for more of its revenue.

"VMware is, quite simply, the most important player in Intel-based virtual partitioning," said RedMonk analyst James Governor. He speculated that IBM might be interested in acquiring the company because its software dovetails so well with IBM's on-demand and self-healing server initiatives.

"VMWare may not be cheap but it's heavily strategic," Governor said. "If IBM doesn't acquire them, someone else might."

Greene responded that the company is doing fine on its own.

Microsoft had once shown interest in acquiring the company, though it ended up buying a competitor called Connectix in February. Greene acknowledged that Microsoft had sought to buy VMware, but she declined to share details.

Microsoft's competition with VMware will be dampened by the need to run virtual machines on Linux as well as Windows, and by the time it will take to integrate Connectix's technology, Governor said. In addition, "VMware has a major development lead."

But, he added, "any Microsoft offering is a serious threat in the long term."

VMware's VMotion component of its Control Center software lets customers move virtual machines from one server to another. Other components of the remote management software let administrators monitor the performance of different virtual machines, set up or "provision" new servers based on a template virtual machine, change resources such as memory assigned to a virtual machine, and delegate authority over some virtual machines to particular administrators.

Control Center is in beta testing now and is scheduled for release later in 2003, VMware said.