Year: 2008

The storm that is currently investing VMware, started with the sack of its CEO Diane Greene, may be not finished yet.

virtualization.info has just learned that VMware is about to increase the price of all its products and support subscriptions in Europe by 10% starting Sep 2, 2008.

On July 7, just one day before the Greene’s removal was formally announced, VMware communicated the news to its distributors through an online webcast.
Subsequently, the distributors announced the upcoming price increase to the whole sales channel with dedicated emails.

The last term to buy any VMware product at the current price is September 1st.

The official motivation for this notable change is the high currency volatility in Europe.
Anyway it’s worth to note that VMware always required its worldwide distributors to pay all prices in US Dollars.

One of the biggest critics that VMware always received is about the high prices, often unaffordable for SMBs. And this is why cheaper alternatives like the ones offered by Virtual Iron and now by Microsoft get remarkable attention despite a not comparable feature-set.
This move may further push the European customers towards these competitors.

The early feedbacks that virtualization.info collected so far about this move are not positive (also because the partners price discount didn’t change accordingly).

The question is if the price increase is really dictated by the high currency volatility in Europe or if it is an attempt to alleviate the bad financial performance that VMware is suffering right now.

What’s sure is that the European sales channel will have a hard time explaining the departure of VMware CEO and the price increase to all those customers that are already courted by Microsoft.

Update: virtualization.info has just learned that the 10% price increase is confirmed also in Australia and New Zealand.
At the moment we can’t confirm when the new prices will be applied.

It seems that the high currency volatility is not just a European problem.

Second update: VMware is not the only one increasing its prices. Oracle did the same one month ago (15-18% increase) and Forrester predicts that even more companies will follow shortly.

With an astonishing move yesterday the VMware’s board of directors fired the company’s co-founder and CEO Diane Greene.
Greene was immediately replaced with a Microsoft veteran, Paul Maritz, just arrived at EMC after the acquisition of his startup: Pi.
The stock market punished the move with a 25% negative performance.
Additionally, Cisco, which invested $150 million in VMware last year, just retired $78 million.

virtualization.info continues to update a detailed chronology of the events.

So far the company didn’t provide any additional information about the story.
The employees were told to not talk with the press. But the shock and the frustration derived from this unexpected change lead the desire to give a voice to the passionate workforce behind VMware.

virtualization.info received an exclusive document from the a VMware employee, revealing some critical details and sentiments that are animating the company right now.
Additionally, the document exposes two letters sent to all employees from Joe Tucci, EMC CEO, and Paul Maritz, VMware new CEO.

– The employee insight:

No exact details have been given, but it seems like the general idea is that she was fighting to get the company spun off fully. This might have worked for us in a better way as EMC in some ways was a millstone in our progress. I don’t know the exact details but it seems like Joe Tucci was not ready to let go yet. BUT a large number of VMware employees are not happy. And it seems that soon people could start leaving in a mass exodus if they do not get straight answers from management. Having an ex-MS employee in a company full of engineers who are pro-FOSS is just a bad idea and sends A LOT of the wrong messages.

The general consensus is that layoffs at the management level will be happening and it will trickle down. Restructuring was a repeated phrase in the company all-hands as well as the departmental meeting I attended. The general impression is that a number of people will be going.

The all hands meeting (referenced in the below Official Announcements) pretty much dodged those questions which raised the mood and anger level quite a bit. Paul used plead the 5th and SOX on 2 occasions during the all-hands Q&A session, which further raised everyone’s suspicions that things were going to go south.

The impression is that the culture at the company is going to change as well when new management comes in to take over. The analysts around the web speculating on this are not too far off. People internally seem to agree with the sentiments. Considering that Paul was involved with Windows development, a lot of people are not too impressed internally seeing what Microsoft has produced in terms of software quality over the years he was there. Marketing and market circumstance were their big drivers which they no longer have.

This message basically confirms a couple of points which virtualization.info speculated on in its coverage so far:

• Diane Green was working to sell VMware and finally unchain it from EMC
• Her departure will eventually lead to a mass-exodus, possibly starting from her husband: Mendel Rosenblum, Chief Scientist at VMware

– The Joe Tucci, EMC CEO, email to the company:

As you may have heard by now, the VMware Board has decided to change the leadership of the company, effective this morning.

We are all thankful to Diane for her tireless efforts in building VMware into a world-class software company with a market leadership position. The Board is disappointed that after exploring different opportunities for Diane to continue to play a significant role in the company, we were not able to reach an agreement, and we all wish her success in her future endeavors.

Transitions are never easy, but I ask each of you to embrace this change. Our incoming CEO, Paul Maritz, has the leadership skills and experience to enable VMware to extend its technology and market leading positions. VMware is one of the few companies in technology that has been able to create a new industry. To take advantage of this opportunity and to continue to lead as a new industry evolves into a more mature market will require tremendous leadership and operational experience, especially in today’s tough market conditions. Without a doubt, the competition is increasing and the economy in some of our major markets is uncertain. But equally without a doubt, the market for VMware virtualization is expanding. These factors require the experience our new CEO brings to VMware.

Effective immediately, Paul Maritz is the new CEO of VMware. A leader in the software industry, Paul has decades of experience building one of the greatest franchises in software history, Microsoft Windows. In fact, Paul was instrumental as part of the core executive leadership team in building much of Microsoft’s success.

The Board and I believe Paul is the right CEO at the right time to take VMware to the next level of innovation and success and to achieve the vision for the company that Diane had from the beginning.

Please join me in welcoming Paul to his new role. I know I can count on all of you to give him your complete support through this transition and into VMware’s next era of growth.

– The Paul Maritz, new VMware CEO, email to the company:

First off, I want to thank Diane Greene for her leadership and the legacy she has built at VMware. I am honored by the opportunity to continue to grow the leadership position that VMware has in the industry.

As you may know from Joe Tucci’s email this morning, I have been in the software industry a long time – by now I am sure you all have Googled me so I won’t bore you with my resume, but would like to say that I am excited about the challenges & opportunities that a competitive environment brings.

My passions in life are building great software products and helping build great teams. My operational style will be different than that in a founder-led company. As such, I will call upon our leadership team to be more empowered in decision making, as well as drive down accountability and decision making at all levels in the company. I will be conducting a variety of technical and operational reviews with many of you to make sure I understand and fully appreciate things. I know these are time consuming and require preparation, so I ask for your patience, and promise to keep reviews to the minimum necessary.

Finally, it will take me far longer than I want to get to know all of you. So do not be shy in emailing me or saying hi in the halls as I get to know the VMware family. I don’t believe in formality of position – so please don’t hesitate to reach out if you have concerns or suggestions.

Obviously the two letters fail in addressing the immense number of questions around the Diane Green sack, and less than ever the emails fail in calming down the employees and avoid the massive departure expected by virtualization.info and confirmed by the employee email above.

Expect another remarkable loss today for VMW.

With a very short news just published by several press agencies VMware announces that its popular (and honestly beloved) CEO, Diane Greene, has been replaced by Paul Maritz.

Paul Maritz is the President and General Manager of Cloud Computing division at EMC, with a 14 years old career in Microsoft where he was Vice President of the Platforms Strategy and Developer Group.

It’s clear that VMware is working to enter the cloud computing space, but replacing a highly successful CEO like Diane Greene doesn’t seem the best way to do that.
Additionally, it’s odd that Maritz’s wikipedia entry is already updated with the new position while the official announcement didn’t provide any detail about the reasons behind such a sudden replacement or which kind of involvement Greene will have in the company in future.

It’s worth to highlight that the VMware’s Chief Scientist, Mendel Rosenblum, is also her husband.
This replacement, if imposed by the parent company EMC, may have a huge domino effect on the whole VMware management team.

Update: Some sources are reporting that Diane Greene was fired by the board and immediately replaced.
virtualization.info is unable to confirm this news, but we can speculate on the reason: the attempt to unchain VMware from EMC control, selling to another, more interesting partner like Intel.

It’s well know in fact that Diane Greene and Joe Tucci, EMC’s CEO, had a hard time working together since the early beginning.

Second update: Multiple news magazine are confirming that Diane Greene didn’t resign but was replaced.

The key question is not just why the board fired the VMware CEO, but most of all why it replaced the CEO with somebody totally unrelated with the company.

In normal conditions, the safest thing to do would be appointing the next charismatic person from the original executive team that led VMware before the EMC acquisition in 2003.
This would have avoided the panic and confusion among the employees, which are already reacting in a negative way. But EMC CEO preferred to pick a just arrived executive (Maritz arrived in EMC just in February 2008, after the acquisition of its company Pi) with a lengthy career at the VMware’s worst enemy.

A possible explanation is that Tucci couldn’t trust anybody in the VMware team and was obliged to appoints somebody totally outside the Greene’s influence.
And this makes sense only if the whole VMware’s management team was cooperating in something that implied the CEO’s removal.

Now it’s critical to understand what Mendel Rosenblum and the others will do. On their moves depend the confidence that VMware can maintain the market leadership against Microsoft.

 

Third update: At the end of the day the VMW performance suffered a –24.44%, translating in billion of dollars in losses:

 

Almost every news magazine reported that the Greene removal depended on the negative financial performance expected for the Q2 2008, lower than the forecast.
This is simply impossible: some slightly lower results would never be enough to justify the departure of a successful and popular CEO like Diane Greene.

EMC will have to provide extensive and credible explanations on what happened today to recover the investors’ trust and avoid an even lower result tomorrow.

Fourth update: The Diane Greene profile as VMware CEO has been already replaced.
Meanwhile ValleyWag published a small insight about Paul Maritz.

Fifth update: BusinessWeek reveals that the Board of Directors offered to Diane another position in the company and she refused. Obviously the magazine can’t tell what conditions she’d agree on.

Sixth update: NetworkWorld reveals some critical details about what happened at the Board level.
Two members of eight, the only two that are not employed at EMC, were against the decision to remove Diane Greene: Dennis Powell, representing Cisco, and Reene James, representing Intel.

Cisco and Intel are exactly the two key firms that were rumored to be interested in the VMware take over during the last months, even if just few days ago Cisco CEO officially dismissed any interest in buying the company.

Cisco is not happy with the decision to remove Greene and as direct result just retired $78 million from its $150 million investment made before the last year VMware’s IPO.

The domino effect has just started.

Seventh update: virtualization.info published an exclusive document submitted by a VMware employee, revealing some critical details and exposing the confidential emails sent to the company by Joe Tucci and Paul Maritz.

Eighth update: Two days after the announcement (July 10) VMware filed a form 8-K to formalize the replacement of Diane Greene.
The document clarifies that the departure would be treated as a Termination without Cause.

Nineth update: In the sixth update above we reported that Cisco retired $78 million from its investment in VMware, trusting NetworkWorld source.
This is incorrect. Cisco lost that amount because of the stock performance but didn’t operate any modification on the amount of shares it owns.

The need for security the virtualization hosts is growing.
In the last year several key entities released a series of guides and tools to help the customers in hardening the virtual infrastructures. Here some examples:

• In February 2007 VMware released a 19-pages security guide for VI 3.x
• In October 2007 the Center for Information Security (CIS) released a 70-pages security guide for ESX 3.x hosts
• In June 2008 Tripwire released a free configuration manager tool for ESX hosts, developed in collaboration with VMware

Since April 2008 the US Department of Defense can be added to this list, with a new 100-pages security guide which covers almost every aspect of VI 3.5 implementation.

Thanks to DABCC for the news.

For over one year Microsoft suggested to use its encryption technology BitLocker to secure virtual machines on Virtual PC or Virtual Server 2005 hosts.

Now the company releases an official 17-pages document to explain how to adopt the same technique with the new Hyper-V 1.0.

While the need to secure a virtual machine content exists, it’s not said that the Microsoft recommended approach is the best one.

While enforcing encryption in fact BitLocker, which uses hardware and firmware capabilities (like TPM), hinders the mobility of any secured virtual hard disk.
Any attempt to migrate the VM from one host would translate in an unreadable guest OS, negating one of the fundamental property of virtualization: the mobility.

In some environments customers may want exactly this, avoiding any movement of any virtual machine, but a different approach where the encryption layer follows the VM.

Microsoft obtained the tools to achieve such goal in March with the acquisition of Kidaro.
Now it’s a matter of applying the technology to Hyper-V.

Few days ago VMware published a precious FAQ about its virtual SMP technology which answers some key questions about the use of multiple CPUs inside ESX virtual machines:

• When do I decide to configure multiple vCPUs for a VM?
• What are the overheads of using multiprocessor VMs? What would I lose by over provisioning vCPUs for VMs?
• Does the ESX scheduler (co-schedule) all of the vCPUs belonging to a VM together?
• Why is co-scheduling necessary and important?
• How does ESX scheduler deal with certain vCPUs belonging to a VM idling while others actively perform work? Do the idle vCPUs unnecessarily burn CPU?

About this topic VMware also published a technical article which describes in details the resource management approach, called co-scheduling, used for vSMP in ESX Server 2.x and ESX 3.x.

Highly recommended.

As you may know, this year virtualization.info hosts its first international conference.
The event is held in London, one month after the VMworld US (in Las Vegas): 14-16 October, 2008.

Covering the virtualization market evolution since 2003, we have a pretty good idea of how fast the industry is changing.
Our Virtualization Industry Radar currently tracks almost 70 companies, with almost 90 products:

What company has the time to explore, evaluate and test all these solutions?

Each month a new startup emerges from the shadows of R&D.
Some of them really deserve to be considered but don’t have the financial muscles to emerge from the crowd and reach all the customers that may need them.

For this reason we arranged a contest called Call for Startups: virtualization.info is happy to grant the keynote stage to a couple of new virtualization firms which accept to launch during the Virtualization Congress.

These startups will have the attention from the media (which includes an extensive coverage on virtualization.info), the analysts, the venture capital world (the event is supported by Sierra Ventures), and obviously from the audience.

The audience will have an opportunity to see the latest cutting edge technologies from the industry without having to dive into tons (and sometimes meaningless) of press announcements , and without having to invest in a lab environment just to understand how the new product works.

We have already had several submissions in these past few months and it’s hard to decide which one is the most interesting. We are pretty sure that the Virtualization Congress will reserve some surprises.

The clock is ticking: we accept new submissions for just another 60 days: until 31 August, 2008.

Enroll for the contest here: http://www.virtualizationcongress.com/startups.htm

The almost unknown capacity planning tool that Microsoft offers since February 2008, Microsoft Assessment and Planning (MAP), just reached version 3.1 and now includes support for the new hypervisor Hyper-V 1.0.

The product comes free of charge and offers some valuable features like:

• agentless discovery of the assets (up to 100,000 machines)
• support for Hyper-V 1.0, Virtual Server 2005 and Application Virtualization (formerly SoftGrid) 4.5
• support for 32bit and 64bit platforms

Download it here.

The second release of VMware free virtualization platform, Server (known as GSX Server when it still was a commercial product), is finally approaching.

The company releases today the Release Candidate 1 build (101586) introducing a key feature that virtualization.info is advocating since the GSX server time: the support for Microsoft Volume Shadow Service (VSS).

This feature allows to take live snapshots of any Windows guest OS without provoking the unexpected shut down of the virtual machine (which can lead to corrupted data inside the virtual hard disk).
This capability greatly raise the overall value of this release, which, along with its price, suddenly becomes a very interesting platform for many SMBs.

The new beta also introduces some other interesting features like:

• the new Virtual Machine Communication Interface (VMCI) already seen in Workstation 6.5 beta 2
• the support for SCSI pass-through devices (e.g.: tapes)
• the capability to add new virtual hard drives to a running virtual machine

Enroll for the beta program here.
VMware is expected to release the RTM of Server 2.0 during the Q3 2008.

Just two days ago Brian Madden published a very provocative analysis of the Citrix positioning in the virtualization industry, claiming that the current market share for XenServer is near zero and predicting that the company will eventually drop the open source engine in use, Xen, in favor of the just released Microsoft Hyper-V. And this would imply a shift of the community from Xen to KVM.

(virtualization.info covered the Madden analysis and many others in a very long article titled Microsoft Hyper-V: the day after)

Obviously, this prediction created a wide reaction and so far virtualization.info collected some feedbacks from readers believing that the scenario is perfectly possible.

Simon Crosby, CTO of Virtualization & Management Division at Citrix, spent a long post to answer to Brian Madden on all the points.

On the Citrix market share:

We have somewhere approaching 4,000 enterprise customers, and about 3000 trained channel partners. VMware claims 100,000 customers.  Citrix has about 220,000 customers and about a hundred million users.  The XenServer market share is small, and growing as rapidly as any such product can given the current VMware brand status, and the fact that we started well behind them.  We had a few key blockers for enterprise adoption, four fifths of which are addressed in our forthcoming XenServer 4.2 release.

On the drop of Xen:

It is important to state yet again that we are not in a competition for server sockets with Microsoft.   If that were the case, why would we have helped Microsoft to make Hyper-V a better hypervisor, by developing the shims and drivers that will allow Linux to run with optimal performance on Hyper-V?   The founding thesis of XenSource, and the continued strategy at Citrix, is to promote fast, free, compatible and ubiquitous hypervisor based virtualization.  If the hypervisor is free, why worry about who delivers it?

On the community shift to KVM:

It’s just a VT/AMDV driver added to Linux to allow it to host additional VMs.  Great if your usage model is “first install Linux, then use your Linux skills to install VMs”.  Unfortunately it doesn’t address any of the other key requirements for virtual infrastructure (virtualization-aware shared storage, snapshotting, cloning, thin provisioning, HA, and much more) it is just another way to do basic CPU and memory virtualization … at a time when Xen already offers Linux a typical overhead of under 1% (SPECJBB), and a rich set of value-added features.