Virtual innovation puts young co in collision with Microsoft

VMware, a young Silicon Valley company, is the early leader of the virtual-machine software market.

VMware, a young Silicon Valley company, is the early leader of the virtual-machine software market. And that puts it on a collision course with Microsoft, the industry Goliath.

A virtual machine essentially mimics a computer so that several copies of an operating system like Windows or Linux can run on one physical machine. It allows computing chores on fewer computers, using less electricity, less space, promising a way to control costs at corporate data centres straining to keep up with the ever-increasing demands of the Internet age.

It also has strategic use in computing, as a layer of code residing between a computer8217;s hardware and the operating system, usurping some tasks, and potentially undermining the importance of the operating system.

The next wave of virtual technology, analysts say, includes software that lets virtual machines move freely across physical ones, juggling computing chores, so that applications don8217;t crash and web response times are faster. Another promising new ability is running desktop computers as virtual-machine software, hosted and managed securely from a data centre.

In a New York meeting last month, Steven Ballmer, Microsoft8217;s chief executive, said, 8220;Everybody in the operating system business wants to be the guy on the bottom,8221; the software that controls the hardware. And he vowed that Microsoft would 8220;compete very aggressively with VMware.8221;

When quizzed on Microsoft8217;s plans, Ballmer replied, 8220;Our view is that virtualisation is something that should be built into the operating system.8221;

VMware, however, points to license changes on Microsoft software that it says limit the ability to move virtual-machine software around data centres to automate the management of computing work.

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8220;Microsoft is looking for any way it can to gain the upper hand,8221; said Diane Greene, the president of VMware.

Yet VMware is making no antitrust claims against Microsoft, and legal experts question whether the friction between the companies is anything more than two rivals taking different paths to an emerging market.

VMware is thriving with sales touching 709 million in 2006, nearly double the figure in the previous year. In the fourth quarter, revenue was 232 million, growing 100 per cent from the year-earlier quarter.

VMware was founded in 1998 by Mendel Rosenblum, an operating-systems expert and his wife Greene, associate professor at Stanford University and veteran of Silicon Graphics; and three other computer scientists, Scott Devine, Edouard Bugnion and Edward Wang. Today, it holds about 80 per cent of the virtual-machine market that runs on computers powered by industry-standard Intel and AMD microprocessors.

8211;STEVE LOHR