VMware, Inc. Case Study

1. VMware, Inc.Case Study Presentation By: Bradley Atherton, Leslie Lainez, Mark Balingit, Roy Sanchez, Tony Vuong, Kyle Schuler

2. Background • First to the market to provide a virtualization solution for x86 based format and dominated the market • Founded By: • EdouradBugnion • Scott Devine • Diane Greene • Mendel Rosenblum • Edward Wang

3. Virtualization • Separates the physical hardware resources of a computer from its OS and software resources. • Significantly improved flexibility by improving • Availability • Disaster recovery • Serviceability • Testing & development • Staging • Provisioning • Security

4. Virtualization Architecture Hosted virtual machine Hypervisor • Virtualization software is installed on top of existing (Host) OS like an application • A guest OS is installed on top of the Virtualization software • Applications are then installed on top of the guest OS • Virtualization software (Hypervisor) is installed on directly onto bare metal hardware • Each VM resides on top of the Hypervisor layer

5. Key Features • Partitioning • Partitioning hardware resources (allowing server consolidation) • Isolation • increases security • Improved productivity of software testing • Encapsulation • Increase mobility/ transport • Increased software compatibility • Decreased likelihood of downtime

6. What are the drawback to virtualization? • Performance penalty. • Reduce performance 20% to 40% in a hosted machine. • What is Vmware’s solution? • What is Hypervisor architecture? • Virtual Machine Manager • With hypervisor architecture it only reduces performance by 10%.

7. What do critics say about virtualization? • Because software has direct access to hardware. • Vmware argues that virtualization simplifies through isolating application interfaces. Increase complexity Increase security risk Why?

8. What do virtualization do to price and licensing? • Vmware answer is to encourage vendors to adjust their pricing and licensing on virtual machine environment and use instance pricing. Enterprise Pricing & Licensing. Increase cost because some vendors charge more if you use more processors. CPU core (processor per unit) vs. single instance

9. How does VMware take advantage of the business environment? (2000 – 2003) • After the dot-com crash companies seek to reduce IT budget by consolidating servers. • VMware ESX Server helps consolidate servers demand went up help increase revenue. • VMware price ESX server near the price of a physical server rather than an operating system. • Server capacity continue to expand and improve.

10. What is the biggest problem facing VMware? • Linux – Xen virtualization included • Vista Server, Windows 2008 – virtualization technology embedded in the operating system. Competition from other software vendors such as operating system makers.

11. Competitors • Major Competitors • Microsoft • Citrix • Other Competitors • Oracle • Parallel • Red Hat

12. PROPOSED SOLUTIONS Develop in-house applications optimized for VM Ware Build a stronger business around service and support Focus solely on being a proprietary platform provide Give portions of the platform away for free (Foot in the door) Provide superior service and Support

13. Develop in-house applications • Acquisitions of different companies that bring their own specialization to the VMware platform. • SpringSource • Tungsten Graphics • Zimbra • Akimbi Systems • B-Hive network • Shavlik Technologies

14. Service & Support VMware’s revenue comes from service such as maintenance, upgrades, and training. Education services, Certification, and Consulting Technical Account Manager Program (TAMs)

15. Service and Support 30% of revenue from service and support in 2008, percent is now around 50/50 licensing/service Maintenance, upgrades, professional services and training License revenue 2011 - $1.84 billion Service revenue 2011 - $1.93 billion

16. Partnerships Developed strong partnerships with leaders of networking processing industries Intel and Cisco. Partnered with over four thousand individual companies which a majority of sales are derived from.

17. Partnerships

18. Foot in the door VMware provided VMware Server for free in early 2006 beating Microsoft's release by 2 months. This allowed companies to test out the product before purchasing a full featured version such as VMware ESX

19. Why is VMware’s virtual machine better? Because it has more features than any other vendors. 2007 Market Share

20. Globalization VMware is a global company with around 50% of revenues coming from different countries 2008 U.S revenue $988 million 2008 International revenue $893 million 2011 U.S. revenue $1.82 billion 2011 International revenue $1.94 billion

21. Founders

22. Scott Devine • Principle engineer • Currently still with VMware

23. EdouardBugnion • Left 2004 • Became co-founder of Nuovasystems as CTO (later acquired by Cisco) • Part of their server access and virtualization tech group

24. Diane Greene • Removed by force July 2008 (replaced by Microsoft veteran CEO Paul Martiz) • Invested in Nicirabecame a board member of Nimbula • Part of the Board of Directors of Google since January 2012

25. Mendel Rosenblum • Father of VMware’s vision • Left two months after his wife Greene • Currently a professor of Computer Science at Stanford.

26. Edward Wang • Left VMware 2009 • Principal engineer of VMware’s technology staff that was in charge of design and implementation of various portions of their main product

27. Server Virtualization Ratio

28. Market Segmentation

29. Survey says ?

30. Desktop Virtualization

31. vSphere5 Pros Cons • 200 + new features • Ensure edge over competitors • More management capabilities • Cloud Foundry • Easier for developers to build, test, deploy and scale any applications • Change in licensing • Charged based on CPU core • Limit on vRAM • Management “add-on” software price based on amount of virtual machine rather than physical hardware

32. Any Questions?

33. Bibliography "Acquisitions." VMware Company and Technology. Web. 16 Apr. 2012. <http://www.vmware.com/company/acquisitions/>. "Become a VMware Partner." : Virtualization Solutions and Programs. Web. 22 Apr. 2012. <http://www.vmware.com/partners/programs/>. "Big Vendors Look to Challenge VMware with Open Source." Computerworld. Web. 22 Apr. 2012. <http://www.computerworld.com/s/article/9216874/Big_vendors_look_to_challenge_VMware_with_open_source>. Bullard, W., Raj, N., Vaidyanathan, S., Yoffie D. “VMware, Inc. (A)”. Harvard Business School. 24 Sept. 2007.12 Feb. 2012. Marshall, David. "VMware 2011: The Good, the Bad, and the Cloudy." InfoWorld. 21 Dec. 2011. Web. 16 Apr. 2012. <http://www.infoworld.com/d/virtualization/vmware-2011-the-good-the-bad-and-the-cloudy-182328>. Marshall, David. "Where Are VMware's 'virtualization Fab Five' Now?" InfoWorld. 06 July 2010. Web. 16 Apr. 2012. <http://www.infoworld.com/d/virtualization/where-are-vmwares-virtualization-fab-five-now-296>. "VMware Inc. (VMW)." Stock:. Web. 22 Apr. 2012. <http://www.wikinvest.com/stock/VMware_Inc._(VMW)>. "VMware vs. Microsoft vs. Citrix." Network World. Web. 22 Apr. 2012. <http://www.networkworld.com/news/2010/060710-tech-argument-citrix-vmware-microsoft.html>.  "V-Index." V-index: Quarterly Updates on Virtualization Industry. Web. 16 Apr. 2012. <http://www.v-index.com/>.