TechAlpha Report Shows VMware Is Changing Course to Disrupt Large IT Markets

While Success is Uncertain, Large Profit Pools Are up for Grabs
SAN FRANCISCO--(Business Wire)--
A new report from industry research firm TechAlpha illustrates how server
virtualization will disrupt the storage, database, and middleware markets while
creating large new opportunities in business continuity and cloud computing
which VMware is well positioned to exploit.

Based on feedback by 200 IT customers on vendors VMware, Citrix, Microsoft,
Oracle, IBM, Symantec, CA, BMC, NetApp, EMC, DELL, and HP, the report concludes:

Private cloud computing is the largest new profit pool in the virtualized data
center.

Virtualization will transform IT investment from a fixed capital expenditure to
a variable operating expense, delivering 10x greater IT staff productivity in
the process. Cloud technologies in the enterprise, growing out of virtualization
and service-oriented management, transform disparate applications and
infrastructure into services that are delivered on-demand. VMware will face
greater than expected competition from Microsoft and is turning towards systems
management vendors such as BMC and CA for partnerships.

Virtualization enables business continuity for the mass-market.

Virtualization creates a new platform for delivering high availability (HA) and
disaster recovery (DR) at much lower cost and complexity than that delivered by
legacy solutions such as server operating systems (e.g., Windows, Linux, Unix)
or applications (e.g., Oracle, Exchange). VMware, Citrix, and systems management
vendors are trying to deliver HA/DR as part of a broader data center automation
offering that guarantees end-to-end performance of multi-tier applications. "Our
primary research shows that HA/DR penetration will triple by 2010," says George
Gilbert, TechAlpha co-founder. "Half of new x86 servers deployed in 2010 will be
virtualized, allowing VMware to defend its leading share with enterprise
customers."

VMware is repositioning itself away from Microsoft`s line of fire.

VMware`s lead in server virtualization gives it time to prepare for the battle
with Citrix over the desktop. "That strategy shift is necessary since VMware
faces several challenges in delivering on the virtual datacenter operating
system vision," says Gilbert. "Moreover, we expect Microsoft to turn up the heat
by shifting enterprise-class virtualization features to a lower, nominal price
point later in 2009. Microsoft appears more likely to be conflicted to drive
innovation in desktop virtualization, which is why VMware is shifting more
resources to that market."

Virtualization is cracking open the storage industry.

The storage industry is at the cusp of big adverse structural changes which are
obscured by current enthusiasm over virtualization. "Efficiency gains due to
increasing adoption of de-duplication on primary and secondary storage may
permanently halve the rate of storage capacity growth in spite of the boost from
virtualization," says Juergen Urbanski, TechAlpha co-founder. "Moreover, thin
provisioning in conjunction with the recession will lead to a 2-year slow-down
in storage purchases. To make matters worse, functionality emerging in the
virtualization layer will make obsolete a good part of what is today
differentiating functionality in storage. Finally, customers are benchmarking
storage vendors on hardware cost, driving down margins. VMware can commoditize
EMC`s core business or become its ultimate salvation."

Virtualization pressures databases and middleware.

Server virtualization will enable customers to buy and deploy databases and
middleware just in time instead of just in case. "This may put an end to the
wasteful spending common today, where average database server utilization is
5-20%. Buying minutes of capacity that can float across different physical
machines fits the current economic constraints a lot better than buying
perpetual capacity tied to a specific physical box. Oracle has the most to lose
in this transition."

Report summary: http://reports.techalpha.com/ExecutiveSummary.html

Report download: http://store02.prostores.com/servlet/techalpha/StoreFront

TechAlpha is a management consulting and industry research firm focused on the
technology industry.

TechAlpha is a registered trademark in the United States and other
jurisdictions. All other marks and names mentioned herein may be trademarks of
their respective companies.

TechAlpha
Juergen Urbanski, 415-448-7639
info@techalpha.com

Copyright Business Wire 2009