The Virtual Is Real: VMWare IPO

For over a year now, I’ve been saying that if you “follow the money”, you’ll see why the virtual is real. Today this became even more evident. Despite a down day on Wall St, the IPO of VMWare surged over 75%! VMWare makes software that enables the creation of virtual computers.

Virtualization software is designed to make a physical server act like multiple logical servers, improving server utilization by allowing IT managers to efficiently combine numerous computing resources on a single server.


These one-sentence descriptions are simplifications(CNET has a well done FAQ on this complex topic), but they are valid. Why has VMWare got investors so hyped? On analyst quoted in the InfoWorld article nails it:

“The market has finally begun to really see the potential and the disruptiveness of virtualization,”

CNN Money also puts their finger on it:

What’s made VMware a hot commodity is its virtualization-software technology, which is used by companies to simplify how they manage their system hardware from their software applications. The technology allows more efficient use of business systems and can help cut down on those systems’ costs.

However, there’s even more to it because virtualization impacts the software industry as well:

“We’re kind of at this point right now where we have tons of hardware horsepower throughput, etc. and we are being much more limited by the ability of people to manage and use things,” Haff said. “People really are willing to give up some of the underlying raw efficiency of hardware in return for something that, as a practical matter, users and operators can use in a more efficient way.”

The shift to virtualization has caused some turmoil for the rest of the software industry, however, which has traditionally priced its products based on the number of servers, or in some cases the number of server processors, that are running the code. Some interim pricing moves have largely addressed the current situations, but fundamentally, Haff said, software pricing will have to change more as virtualization takes hold.

“I expect that we are going to tend to see more software being licensed per-employee or per-use or metrics that are really much more tied toward the value that software is delivering as measured directly,” Haff said.

CNET: VMWare surge puts virtualization in the spotlight

Virtualization isn’t new(see The Roots of Hardware), it’s just coming to the forefront. It will play a key role in the coming boom in virtual property.



  1. Nanotech Virtual Machines…

    Software used in today’s conventional milling machines is helping nanotech researchers make progress in nanomanufacturing:
    The new technique suggests that the nanotechnology factories of the future might not operate so differently from existing …

  2. […] in the aftermath of the VMWare IPO, we’re seeing it unfold. “With virtualization, where you can run any operating system […]

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