VMware, Microsoft, others to fight for virtualization edge in Vegas next week

VMworld may be VMware's user conference, but its virtualization rivals will also be on hand

VMworld 2008, VMware Inc.'s annual user conference in Las Vegas next week, is expected to be crowded with a total of 14,000 attendees, including workers from more than 200 trade-show exhibitors that are all fighting for a piece of the x86 virtualization market.

The expected attendance, announced today by Palo Alto, Calif.-based VMware, is a 30% increase from last year's conference. And that total probably would have been even higher had it not been for the virtualization market leader's first European conference, which was held in February and drew about 4,500 attendees.

Many new products will be demoed on the trade-show floor, including rival offerings — most notably, Microsoft Corp.'s Hyper-V virtualization hypervisor, which was released for use with Windows Server 2008 in late June. In advance of VMworld, Microsoft today held a formal launch event for Hyper-V and other new virtualization technologies at which it said it would make a stand-alone Hyper-V Server 2008 version available for free downloads within 30 days.

VMworld is going to be a big conference in many ways. VMware is facing its first significant competitive threats, especially from Microsoft and Citrix Systems Inc., which acquired XenSource Inc. last year and is putting its research and development money behind that company's open-source XenServer technology.

And those companies are far from alone in challenging VMware. There's a raft of smaller vendors trying to gain market share at its expense, as well as relatively new entrants such as Sun Microsystems Inc., which last month began an early-access program for its upcoming xVM Server hypervisor.

This also will be VMware's first user conference since the company ousted CEO and co-founder Diane Greene in July, replacing her with onetime Microsoft executive Paul Maritz — a move that appeared to be driven by the increasing competition that VMware faces. Meanwhile, both VMware and Citrix announced hiring slowdowns this summer.

But the battle for attention that will play out at VMworld is taking place on VMware's turf. The company's first conference was held in 2004, just over three years after it introduced its flagship ESX Server software, with about 1,600 people attending. From the start, VMware has let competitors set up booths at its annual show, confident that users would nonetheless continue to choose its products.

Thus far, the company doesn't appear to have been hurt by its conference policy. VMware finished last year with revenue of $1.33 billion, an increase of nearly 90% from 2006. In July, VMware said it expected revenue to grow no more than 45% this year, although that's partly because it is growing off of a larger revenue base as a result of its past success.

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