- VMware will reduce its prices; and
- Citrix Systems will stop developing XenServer.
For some time now, VMware has successfully resisted reducing its prices mostly because it had no meaningful competition. With the release of Microsoft's virtualization alternative, Hyper-V R2, and third-party software such as Citrix Essentials for Hyper-V and VKernel Corp.'s Capacity Analyzer, that's beginning to change. The alternatives will likely force VMware to reduce its prices in some form or another. Potential 2010 VMware price cuts probably won't be directed at existing midmarket and enterprise customers, which have already invested heavily in VMware and have shown they are willing to pay for the advanced VMware feature set. Instead, any price cuts will be designed to lure small and medium-sized businesses (SMBs) and nonprofits, where Hyper-V has a compelling story to tell. Or, as Gordon Haff, the principal analyst at Illuminata Inc., put it: "Hyper-V is out there, and for a lot of Windows shops, [that] will be good enough and the path of least resistance." Rather than reduce prices outright, VMware might attract small businesses by adding greater functionality
In 2010, I also predict that Citrix will stop spinning its wheels with XenServer, its Xen-based server hypervisor, and release it entirely to open source. Citrix has already made moves in that direction, for example, announcing in October that it would open-source several core XenServer components but has thus far refrained from giving up on XenServer entirely. But the writing is on the wall for XenServer. In the two-plus years since Citrix acquired XenSource, it has consistently failed to make a dent in the server virtualization market, despite being largely free. Depending on whom you believe, Citrix XenServer's market share stands somewhere in the single digits. And now, the general availability of Hyper-V R2 marginalizes XenServer even more. Citrix's own development efforts show that XenServer is low on the totem pole of its virtualization offerings. In sales of its XenApp desktop virtualization suite, the company happily supports not only Hyper-V but also VMware ESX Server as the back-end hypervisor. And in its latest release of Citrix Essentials 5.5, it added a key feature – StorageLink Site Recovery – to the Hyper-V version months before the XenServer version is expected. Citrix has publicly committed to rolling out another major version of XenServer in 2010, complete with memory overcommit. Perhaps that, more than a lower price, will jumpstart adoption. But, in my view, the window of opportunity for XenServer has already closed, and Citrix will cut its losses sooner rather than later.
Let us know what you think about the story; email Alex Barrett, News Director at firstname.lastname@example.org.