Comment : VMWare proving the doubters wrong. For now

VMWare have released their figures for the first quarter of 2008 and don’t things just look mighty rosy, eh?

$438 million revenue, up 69% on Q1 last year, and $48 million income, up a couple of million on 2007.

The stock price has shot up again and it looks like the next chapter is now being written in what is surely the most volatile share price rollercoaster ride in recent high-tech history.

Having started at $29, it ballooned up to $125 and then crashed back down to $42. All in just 8 months.

Being so heavily involved in the Citrix world I could say that this is very bad news for those hedging their bets, as we are, on Citrix XenServer being a success.

Diane Green, the CEO of VMWare, claims there are only two other software companies, other than VMWare, who have been capable of maintaining 50% year on year growth or better after hitting the $1 billion revenue mark.

That puts VMWare up there with the very best. And for the doomsayers of late that have been predicting the demise of VMWare because Citrix and Microsoft happen to be doing something similar, this will be a sharp wake-up call.

VMWare make cracking products and they are streets ahead of everyone else in this market. Fact.

In some ways, VMWare currently find themselves in a similar situation to Citrix a while back – first to market and not a lot of competition (except the customer not doing anything at all).

There are some crucial differences, though, to the Utopia that Citrix used to revel in.

Firstly, not doing anything at all, when it comes to server virtualisation, is quite definitely the wrong decision and IT Directors and CTOs know that.

Server sprawl is immense and the business case for virtualisation is rock solid. When we look back in 5 years time, we will wonder how we ever thought it a good idea to have so many servers doing so little. All well and good so far for VMWare then.

Secondly, the competition is looming. Citrix dominated their SBC market masterfully Ericom, Tarantella, Jetro and the rest of them never even came close.

VMWare don’t have this luxury because server virtualisation is going to be a much bigger market.

Then, thirdly, there’s that Microsoft thing…

Where Microsoft has been more than happy to sit back and watch in unadulterated glee as the millions upon millions of Terminal Services CALs (that would not otherwise have been sold) rolled in, VMWare is (or will be) in direct competition to the Redmond behemoth.

Microsoft would never bite the Citrix hand that fed it, why would they? Why would you spend your money developing Terminal Server when you can just get your little brother to do it instead and take the cash for the TS license anyway?

VMware is different. VMWare are the school bully. They’ve been beating up Microsoft’s little brother and stealing his lunch. Now it’s payback time.

VMWare certainly are proving their doubters wrong. For now.

Rupert Collier, Product Manager for Citrix at COMPUTERLINKS, a distributor for Citrix and what used to be called XenSource