VMware is acquiring Zimbra, an open source messaging and collaboration suite from Yahoo. This appears to be an extension of the same thinking that lead to the acquisition of SpringSource – specifically a desire on the part of senior VMware management to (with SpringSource) move into enabling virtualization aware custom applications, and apparently now with Zimbra providing a common horizontal application suite (messaging and collaboration) in a virtualization aware manner.
This move gives us a great insight into the strategic thinking at VMware. Consider the diagram below. If this is what VMware is up to, then it is clearly in response to a belief in the following market dynamics:
- The hypervisor layer, which is today a source of significant and relevant differentiation relative to VMware’s competitors will become less so over time. As the level of differentiation is narrowed, particularly on the part of Microsoft and Red Hat who will bundle their hypervisors into their OS’s for free, the hypervisor layer will become commoditized and will cease to become a place where VMware can charge much of a premium for its offering.
- Note that since Microsoft has already made a version of Hyper-V with a bundled Windows Server R2 OS core available for free. You can download the entire underlying version of Windows Server Core and Hyper-V for free at this link. Therefore in the eyes of Microsoft, the commoditization of the hypervisor is a done deal as you can get the entire product from Microsoft via a free download that does not even require an underlying Windows license (you of course do need Windows licenses for the copies of Windows running in the guests).
- The intended evolution of VMware as a company with a Virtualization Management stack has been much discussed. VMware made it pretty clear to just about every vendor with a software based product that exhibited at VMworld last year what its roadmap was in the Virtualization Management space. VMware fully intends to build out a complete stack of management offerings. Hyperic (which came with the SpringSource acquisition) will be leveraged to build out resource monitoring and management functionality. AppSpeed will continue to evolve as an applications response time tool. Lifecyle Manager, Lab Manager and the forthcoming ConfigControl product will become the foundation of a new management stack, to which will be added a service catalog.
- The SpringSource acquisition started VMware down the path of allowing developers to “build, deploy, run” virtualization aware applications in a much easier fashion than is now possible. It also gives VMware a Java run time layer which puts VMware into direct competition with Oracle/BEA (WebLogic), IBM (WebSphere), Red Hat (JBoss), TomCat and the .Net layer from Microsoft.
- Finally, the Zimbra acquisition will again borrow a page from the Microsoft playbook. Microsoft helped make Windows successful on the desktop with the Office Suite (Word, Excel, PowerPoint). Microsoft helped make Windows successful as a server operating system with the Back Office Suite (Exchange, SQL Server, SharePoint, IIS, etc.). The Zimbra acquisition would be a modern version of a horizontal applications play. Modernized in the same way that SpringSource was a modernized application platform play – by adding open source as source of differentiation and commoditization.
In summary, this is now a nuclear hand grenade throwing contest between Microsoft and VMware. Microsoft is trying to commoditize the layer of software where VMware makes all of its money – the hypervisor. VMware is returning the favor by using open source initiatives like SpringSource and Zimbra to commoditize the layers where Microsoft makes all of its money – applications and applications platforms.
The interesting question that arises out of this is for what layers of the stack will customers end up paying license fees as this all plays out. If the top of the stack and the bottom of the stack both get commoditized, then what is left is the middle. The middle is the management layer, which may end up being the place where the economic war in virtualization will be fought. This will be an extremely interesting fight, as not only do Microsoft and VMware both have management software offerings, but EMC (VMware’s parent) is rapidly evolving its own suite as well (Ionix). Of course there are numerous independent software companies in the VMware ecosystem who are cheering Microsoft on in the hope that a cross-platform management opportunity that does not play well into the hands of either Microsoft or VMware will emerge.
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