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AS OF 12/4/2008 12:29AM EST

VMware to Offer ESXI for Free
By Jeff Feinman

July 23, 2008 — The second quarter was certainly a busy one for VMware, as the company acquired application performance management company B-hive Networks, and rolled out application virtualization product ThinApp 4 and Site Recovery Manager for disaster recovery.

But VMware’s most notable move during the quarter was replacing CEO and co-founder Diane Greene with former Microsoft executive Paul Maritz. He has already boasted that he knows the inner workings of Microsoft, and he knows how VMware can maintain its lead over the software giant.

One strategy to carry that out is by giving away products for free, as he announced last night that the company intends to offer its ESXI server for no cost. Maritz said that Microsoft’s new Hyper-V is just a single-layer hypervisor, and it is the equivalent of VMware's ESXI server. The ESXI server will be free as of Monday.

“I know that Microsoft can afford to play a long waiting game, but I also know from firsthand experience that where a competitor has a lead and that competitor invests and innovates to stay ahead, they can be very hard to catch, even for Microsoft,” Maritz said in published reports.

VMware late yesterday also reported its second-quarter earnings. VMware posted revenues of US$456 million, which comes out to a 54 percent increase from the same quarter in 2007. GAAP operating income was $61 million, compared to $47 million for the same period last year, while net income jumped to $52 million from $34 million over the same quarter last year.

U.S. revenues grew 43 percent to $240 million in the second quarter from the year before, and international revenues grew 68 percent to $216 million because of strong showings in Europe and Australia, the company said.

Related Search Term(s): virtualization, Microsoft, VMware

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