VMware Takes On Microsoft, Amazon in the Cloud

Palo Alto, CA-based software firm VMware (NYSE: VMW), a subsidiary of Hopkinton, MA-based EMC (NYSE: EMC), has rolled out an ambitious cloud-computing program that looks to challenge the big players in the space—Amazon, Google, Microsoft, and others. VMware makes virtualization software that helps companies run their information technology operations, like networking and desktop management, more cheaply and efficiently; these companies don’t have to buy and maintain as much expensive hardware, like servers of their own.

VMware’s new product, due out later this year, takes this concept to another level. It is a “virtual data center” operating system, which is designed to let businesses do the bulk of their storage and processing in the Internet cloud. Like other cloud-computing efforts, the VMware software will coordinate remote servers, networks, and storage hardware so that companies can tap these resources and pay for just what they need at any given time.

As Aaron Ricadela of BusinessWeek points out, VMware’s product strategy is particularly geared to compete with Microsoft’s recent cloud-computing initiative—and it reflects VMware’s escalating battle with the Redmond, WA, firm for IT market share. Paul Maritz, Microsoft’s No. 3 executive in the 1990s under Bill Gates and Steve Ballmer, took the helm of VMware last year. And just last month, former Microsoft exec Tod Nielsen came on as VMware’s chief operating officer. Now VMware competes directly with Microsoft’s virtualization services.

One thing is clear: the move is intended to make VMware’s IT offering more fundamental to a growing network of customers and partners that need computing power and storage capabilities on the cheap. Providing a reliable cloud computing service to Web 2.0 startups, e-commerce companies, and the like would go a long way towards establishing the virtualization firm as a much broader force to be reckoned with. We’ll be watching closely to see whether VMware can leapfrog its rival and gain traction in this increasingly crowded, and crucial, arena.

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