To Virtualization and Beyond

VMware's Diane Greene is on a quest to make server virtualization ubiquitous.

You can't burn much hotter than VMware Inc. is right now.

Fresh off one of Wall Street's hottest IPOs of 2007, VMware has risen from an obscure startup evangelizing the relatively novel idea of virtualization on x86-based systems back in 1998 to a top-tier software powerhouse that has made virtualization very much a mainstream technology.

The woman largely responsible for putting VMware in the spotlight is Diane Greene, a co-founder of the company and its president and CEO since its inception. Greene has grown VMware's revenues to $709 million in 2006, a jump of 83 percent over the previous year, largely on the strength of its Infrastructure 2 suite of software, which offers tools to mange several different brands of virtual machines, as well as its ESX Server and Virtual Server offerings.

While Greene's company has dominated the x86-based virtualization market, it no longer has that space to itself. Microsoft over the past couple of years has made it clear it very much wants to play and play hard in the virtualization space. Redmond is putting a lot of marketing and technology muscle behind its Virtual Server 2005 release, trying to buy market share with a free version of its Virtual PC 2007 product, and will include a hypervisor technology, called Viridian, in its upcoming release of Windows Server 2008. Greene figures to increasingly fight the virtualization war on two fronts, as VMware continues to get growing competition from the open source community, most notably from XenSource Inc. (recently acquired by Citrix Systems Inc.).

Prior to co-founding VMware, Greene, 52, held technical leadership titles at Silicon Graphics Inc., Tandem Computers and Sybase Inc., and was the CEO of VXtreme. Greene holds degrees in mechanical engineering, naval architecture and computer science from the University of Vermont, Massachusetts Institute of Technology and the University of California, Berkeley, respectively.

Greene sat down with Redmond magazine Editor Ed Scannell to talk about some of the reasons for the growing industry acceptance of virtualization technologies, being one of the few companies to successfully fend of Microsoft in a strategically important market, and the prospect of a thriving third-party market for virtualization.

Redmond: How would you characterize the era we're now entering with virtualization technology?
Greene: I would say virtualization has become very much mainstream. In the late 1960s and early 1970s IBM developed it for mainframes but it kind of died out. The problem with the x86-based processors has been they were not designed with virtualization in mind whatsoever. There was research done at Stanford by some of VMware's founders around the idea that virtualization could gain isolation for mainstream applications. That's why we founded VMware, really, to bring that to industry-standard systems. I think we invented some important modernizations that allowed virtualization to work on industry-standard systems by taking advantage of the extensive support for distributed computing. When we introduced it, we did so as a way to run Linux on Windows in order to get a lot of people to start using it on the desktop. Then, as we started partnering with the server vendors, IBM in particular, they had some large servers where the partitioning aspect of virtualization allowed them to deliver compelling solutions to customers and so server consolidation took off. It has now moved well beyond that to where people see the power of virtualization to the degree it's causing an entire industry refresh. You can do all sorts of systems infrastructure functionality in a new and more powerful way.

How soon before we get to the point where we have virtualization for everyone?
Virtualization is definitely headed toward ubiquity. At VMworld [in September] we announced our embedded hypervisor, the ESX3i, and many of the major x86-based hardware vendors announced they will ship servers with an embedded ESX server in them. Anything that's virtualized has more flexibility, better utilization, and stronger reliability and security properties. I'd say there's still some hardware-assist work to be done. We estimate that about 90 percent of applications today belong in virtual machines. Once the final hardware assist is there from the processor and peripheral vendors, all applications will run in virtual machines. What it gives you is this single way to manage your software and manage it completely separately from your hardware.

There's some industry talk about the eventual emergence of a complete virtualization system. What's your vision for that?
Once you have a comprehensive virtual infrastructure in place where you buy servers already virtualization-enabled, where you're running a VMware infrastructure, then you can have hot-pluggable machines. So if you're running out of capacity you can add servers and through VMware-or some virtual infrastructure-the system will automatically detect that you just added new resources and bring them all online and make them available for applications. With things like our VMotion technology you can automatically move running applications around. Or if you want to take something out of the system to service it, the systems will automatically move the applications off with no interruptions because you have a fully distributed system infrastructure running. A virtual infrastructure really takes all your hardware, server storage and network resources and pulls it all together so you can run it as a single system.

So this idea of hot-pluggable virtualization, how far away are we from seeing it on a wider-spread basis?
Well it works today and we have many customers running over 50 percent of their servers with VMware infrastructure. We have some that run it on 100 percent. You're asking how far away we are from everyone running that sort of virtualized infrastructure? Well, I tend to be always optimistic about adoption but it always happens more slowly than you'd expect. It'll be sooner rather than later. I get nervous about making predictions these days because now they call it 'forward-looking statements.'

Do you envision a virtualization software stack emerging around a set of industry standards?
Absolutely. In fact, I think we're making progress there. We announced right around VMworld the Open Virtual Machine Format [OVF] that's backed by many hardware vendors and all the virtualization [software] vendors including Microsoft and XenSource. So right there is a virtual machine that can be self-describing, managed and manipulated, and that contains an operating system and applications. I think this is a big step forward. We work actively with the DMTF [Distributed Management Task Force Inc.], which is a standards group for APIs, formats and protocols for virtual-machine management. So in terms of what there will be for a stack, there's the core virtualization where the hardware will just come virtualization-enabled. Then you have a full virtual infrastructure that takes that virtualization layer and exposes it to the software in a way that increases the reliability, availability, security, capacity and utilization. Then, on top of that, you'll see vertical solutions like solutions around desktop posting, virtual desktop infrastructure, or a solution around how to manage, test and develop through virtualization. What virtualization is making possible is an ability to truly automate the management of the software.

What's the biggest obstacle to establishing meaningful standards in the virtualization market?
There, too, we're starting to make some really good progress. Any standards process I've ever seen has a slower pace than the pace of technology innovation just because it's bringing together a number of different companies all moving at a different pace with different priorities.

I'll be more direct: How big an obstacle is Microsoft going to be in terms of setting meaningful standards?
Coming out and backing the OVF standard, I thought, was a big step for them. We hope to do more and more with Microsoft because it's what our mutual customers want.

History tells us that Microsoft's inclination will be to bundle as much virtualization technology into its operating system as it can. In the past this sort of strategy has served to wipe out whole categories of competitors. What is to prevent this from happening with virtualization software?
There are a number of reasons why we don't see that happening. First, the last thing you want to do is bundle virtualization with the operating system. That just undermines a lot of the value. With virtualization you are virtualizing the hardware so you want your hardware to come virtualization-enabled. That hardware will run any virtual machine, and that virtual machine can have any version of any operating system in it. The application can then choose the optimal operating system, and you don't have to choose the application based on what operating system the hardware supports. The other thing is, you don't want to include an operating system with a hypervisor because the smaller you can make a piece of code, the more performance, security, scalability and reliability it will have. If you can make it reliable and secure you don't have patching issues to deal with.

VMware is one of a handful of companies able to fend Microsoft off in a strategically important market. How have you been able to do this?
I think it has to do with focusing hard on customer value, working well with our partners and producing compelling products. We also focused on making sure everything works very well with Microsoft's software stack. So as well as adding value to our customers, we add value to the Microsoft stack. The other thing we've done well is executed. We've consistently brought out major new innovations year in and year out. So the more of our functionality customers use, the more money and time they save.

Is coopetition with Microsoft getting easier or more difficult the last three or four years?
There are parts of Microsoft where I think we have pretty good communication. Certainly I think there's room for us to improve our relationship.

In what areas?
I think in the areas of mutually giving our customers what they want around licensing, and customer support, there's more we can do together. I think working jointly more on open standards, APIs, protocols and formats. I think we could work more with them around things we could do with the hypervisors and the operating systems, how we support their applications like Exchange or SQL Server. We have large numbers of customers running these major Microsoft workloads in our virtual machines. There's a lot more we can do to help these customers and to the extent we can do these things together with Microsoft would be great.

In some cases in the past Microsoft hasn't been as forthcoming as it could have been about things like APIs with ISVs. What's your experience there?
Customers understand what's going on and have become very articulate with Microsoft that they [Microsoft] need to be more open, and understand that they can't use arbitrary mechanisms to control the market. I think customers speaking up are starting to cause some change in how Microsoft approaches working with ISVs.

What has been your strategic approach to open source, and to competitors like XenSource?
We've always worked extremely well with the Linux community. We developed a paravirtualization interface for how an operating system could run on a hypervisor, and the same binary could run both on the raw hardware as well as on the hypervisor. We contributed that to the open source community. In fact, that's pretty much what Ubuntu Linux is now shipping with. We were pleased with the open source hypervisor community in that we were able to work with them and get the OVF standard adopted. I think once software has been around for years and years and isn't on a steep innovation curve, that's the place for open source.

What's the next big market opportunity for VMware in virtualization?
We have a huge vision of how we can further automate and basically improve how software is delivered, managed and maintained. That's a pretty broad statement but we have a number of initiatives around increasing the reliability, the security and the automation of managing your software.

We're working with ISVs around the virtual appliances area and that's very exciting. It's a very rich roadmap and it's a roadmap where there's so much opportunity for all the companies in the tech industry. It's a big opportunity because it's not often you get this sort of refresh cycle where people are upgrading their hardware and software; changing the way they manage their software, changing how they organize their IT because they can now treat the software in such a uniform way.

How do you see a larger, vibrant, third-party application market for virtualization evolving?
There will be explosive growth as all the hardware starts becoming virtualized with virtualized infrastructure. Then, there will be lots of solutions getting built. I believe at VMworld we had almost 200 people exhibiting their products, so there obviously is a lot of different ways people are supporting virtualization. There's a lot of it in the infrastructure space but there are also solutions around training, hosting and around software lifecycles. There are the virtual appliances and software being distributed in a virtual appliance, too.

How do you find great young talent for what you're doing there? Is it easier to attract people now that virtualization technology is well-known?
Certainly, as we have become more visible, it has been easier to find high-caliber people. As the impact of virtualization grows, really talented people are more and more interested. We've always been able to attract good people, but the number of good people we're able to attract has really gone up, which is a wonderful thing for the company.

Do you prefer to recruit more experienced talent or develop it yourself?
We do both. We have a really strong college intern program and so we work very closely with the universities. It's great to bring people in as interns and then they come to enjoy working at VMware and the people here and so we can bring back the most talented people.

What influence do you think virtualization will have on IT shops more aggressively adopting green technologies?
Well, power companies like PG&E [Pacific Gas & Electric Co.] were the first to launch a program -- and now there are about 20 other power companies in the U.S. -- that actually offers rebates if you virtualize because of the huge power savings. I was recently talking to one of our partners who told me that they have a major green program and they said the most leveraged way to go green in your data center is to virtualize. We've estimated that, accumulatively, something like 7 billion kilowatt hours of power have been saved with our virtualization software. We estimate that's enough to produce all of New England's power, heating and cooling for a year. It's very significant and it's something we here feel really good about.

Any ideas that have come to market from your competitors that you wish you had thought of first?
There are things people are doing out there that I wish we had. We have so many more ideas than we can execute on, but we share them with our partners now because we can't get to them all. We're so immersed in this that we see all kinds of things to be done. I can't say I've been surprised by anything anybody has done, but some people are doing really good things, that's for sure.

What's your acquisition strategy for the next few years?
In the case where we're building something and we don't have all the technology pieces and there's a little startup that has that technology, we'd look into acquiring them. Where there are solutions being built around VMware infrastructure that have strong compatibility with what we're doing and that our customers are asking us to give them, we'd look into the possibilities of acquisition.


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