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VMware (VMW -0.9%) gets cut to Hold by Deutsche's Nandan Amladi, who's worried about...

VMware (VMW -0.9%) gets cut to Hold by Deutsche's Nandan Amladi, who's worried about competition, billings growth, and execution. VMware's vSphere virtualization platform "continues to face pricing pressures from [Microsoft's] Hyper-V," and the rise of OpenStack is "driving up adoption" of Citrix's (CTXS) Xen virtualization software and the Linux-based KVM. Lastly, checks "indicate a fair amount of interest" in Microsoft's (MSFT) System Center management tools, which compete with parts of VMware's vCloud Suite. IDC estimates VMware's virtualization share fell to 56.8% in 2012, and Microsoft's rose to 27.5%. (cash flow guidance) (Craig-Hallum)
Comments (6)
  • Ed's perspective
    , contributor
    Comments (261) | Send Message
    Non geek question / insight / ......


    recent conversation with a high tech guru was that while many look at virtualization as hurting Cisco in that you don't need as many routers, the contrary is that any of these virtulization applications has to run over/on top of a physical system / network and the cloud will actually stimulate more hardware sales of network gear.


    I'm not smart enough to understand ALL of this .... but that insight if true makes some larger / legacy companies VERY valuable/cheap relative to the market as they are all priced for NO growth prospects.


    5 Jun 2013, 09:46 AM Reply Like
  • BL58
    , contributor
    Comments (36) | Send Message
    Network virtualization would dramatically prolong life of existing network components. For big service providers and companies that need their own datacenters, SDN is THE game changer. If they need a new feature they don't have to wait forever when hardware providers decide to implement it and then spend millions to upgrade their datacenters. Now they can stick to the existing hardware and upgrade new software on top of it (and software cycle is obviously much shorter).
    Also, aside from utilization gains SDN (network virtualization) allows much easier network management and automatization.
    Disclaimer: working in SDN company
    5 Jun 2013, 11:53 AM Reply Like
  • Bharzog
    , contributor
    Comments (2) | Send Message
    1. Routers route network traffic between locations (between branch offices and HQ). Router sales are unaffected by virtualization.
    2) Switches move data between servers in a data center. When you virtualize 10 servers you make 9 physical servers and their network ports go away as all 10 of those servers end up running on one physical box. Virtualization software contains a software switch that moves the data between the virtual servers in one server. So when you turn 10 servers with two switch ports each (20 ports) into one servers with two switch ports, you make 18 switch ports go away.
    3) Network virtualization will accelerate this trend by allowing more of the configuration of the network to be done in software from VMware and Microsoft, reducing the role of the switch to a dumb mover of bits.


    So the combination of server virtualization and network virtualization mean that Cisco sells many fewer switch ports (and therefore switches), and more importantly commodity switches instead of expensive value added switches. This is why Cisco was so angry when VMware bought Nicira.
    5 Jun 2013, 12:21 PM Reply Like
  • BL58
    , contributor
    Comments (36) | Send Message
    Great answer. My few cents.


    Routers (as well as vlan) are widely used to create distinct broadcast domains even within the same physical location (i.e., with the complexity of the network topology).
    Hence, this is true that routers are still required for inter datacenter connectivity. However, their need within the single datacenter should be diminished thanks to network virtualization.
    5 Jun 2013, 01:22 PM Reply Like
  • Bharzog
    , contributor
    Comments (2) | Send Message


    You are still confusing routers and switches. Switches create VLAN's within a data center. Network virtualization replaces hardware switches with software switches. In general both server virtualization and network virtualization do not have a large effect upon routers.
    5 Jun 2013, 09:58 PM Reply Like
  • BL58
    , contributor
    Comments (36) | Send Message
    I am not confusing routers and switches. I said that there're 2 most commonly used techniques to create broadcast domains: VLAN (through configuring switches) and routers. But it's fine as it's not that important.
    5 Jun 2013, 10:40 PM Reply Like
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