VMware has maintained its functionality lead, introducing vSphere 5.5 in September 2013 (it released vSphere 6.0 after the cutoff for this analysis). VMware continues to have dominant market share, and customers remain very satisfied with product capabilities and vendor support. However, concern over price and vendor lock-in remains. Client inquiries have been significantly increasing about comparisons between VMware and Hyper-V, specifically. While few large enterprises are switching, some smaller enterprises that are not far along in their virtualization deployment are switching (often from VMware to Hyper-V, but sometimes from Hyper-V to VMware), and some larger customers are deploying alternatives to VMware in separate data centers or in branch/store locations.
VMware is still enjoying good growth, but growth is harder due to both increasing market saturation and competitive pricing pressure. An emerging concern is the rapid growth of IaaS cloud providers, especially Amazon Web Services (based on Xen), used mainly for new workloads that are designed for cloud computing. While VMware has a dominant share for existing enterprise workloads, its share of the newer, cloud workloads is much smaller — a major inhibitor to growth. While the overall installed base of VMs tripled between 2011 and 2014, the percentage of VMs in cloud computing providers grew from 3% to 20% in the same time. VMware launched its own cloud service in August 2013 (now called vCloud Air), but it is still a very small player compared with providers like Amazon.
With respect to the growing midmarket business, in which high-end management and automation features are less critical, VMware has retained a strong market share. (Gartner surveys consistently show that about half of midmarket companies, those with 100 to 1,000 employees, tend to use VMware.) However, as Microsoft gains marketing momentum, VMware will need to continue to offer low-price packages to remain competitive in this market. As VMware promotes virtualization for more mission-critical workloads, it continues to face an Oracle VM solution, whereby concern over platform certification will drive a small number of VMware users to Oracle VM. While Windows-based workloads have become heavily virtualized, there is still quite a bit of opportunity for Linux-based workloads. However, OpenStack, Red Hat and containers are growing trends driving Linux virtualization.
A key for VMware’s growth will be to expand outside of traditional applications, attract and enable developers, and succeed as a cloud provider (and/or as an enabler to cloud providers).
- VMware has a broad virtualization strategy from the data center to the cloud.
- VMware is a virtualization technology leader, with significant investments and innovation.
- VMware receives high customer satisfaction from a large installed base.
- The cost of VMware offerings tends to be high.
- VMware has a large number of third-party providers that offer VMware functionality, but the overall market share of VMware functionality in third-party cloud providers is small.
- VMware has a low penetration for newer, “cloud-native” applications.