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VMware Offers US Employees A Chance To Swap Their Post-IPO Stock Options

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Tech Trader Daily found out that VMware today disclosed in an SEC filing that it plans to offer employees a chance to swap their post-IPO, “underwater” stock options for an equal number of options with an exercise price equal to the share price on the day immediately following the data the exchange is finished. Got that?

ZDnet clarifies:

Non-U.S. employees will be granted  a “to-be-determined proportionate number of restricted stock units after the exchange offer for U.S. employees is completed,” president and CEO Paul Maritz wrote in an e-mail to employees.

…

U.S. employees will get the same number of options – but at a price based on the close of the stock the day after the exchange is completed. In addition, the clock on the options vesting schedule will start over. The exchange is voluntary and company executives are not eligible.

John DiFucci, software analyst with J.P. Morgan apparently said this: “[This is more of] an effort to abate a brain drain from the company… While we consider this a modest positive for the stock, we also note that it acts to slightly dilute current shareholders.”

VMW, which rose $1.94 in the regular session, is off 28 cents, or 0.7%, to $38.61, in after hours trading.

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Rich Wolski on Eucalyptus: Open Source Cloud Computing (Video Interview – 2/2)

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In this second part of our video interview with Rich Wolski (see the first part here), recorded at the O’Reilly Velocity conference, we learn how Eucalyptus came around the Amazon subscription method, where credit cards are the key to authentication. Offering ‘free and open’ clouds in university environments was achieved by introducing a system administrator in between the user account request and the issuing of certificates. Upon user request, the Eucalyptus user subscription interface generates an e-mail to an administrator, who will then perform a ‘manual’ verification. This can be a phone call or a physical meeting.


Eucalyptus Director Rich Wolski on open source cloud computing, Xen and Amazon’s EC2 (part 2/2) from Toon Vanagt on Vimeo.

Users did not like Rocks (leading open source cloud management tool), but the community (in smaller community/ deployment supports) preferred to do this manually. So Eucalyptus 1.1 provides Guidance, a script to build from scratch by hand.

A ‘build with one button’ remains the goal for future versions.

The full Eucalyptus image is only 55 Mb (without Linux image) and includes the necessary packages in order to make sure all of the revision-levels are fully compatible. Eucalyptus comes as Free BSD Open-Source license with a small disclaimer that the University of Santa Barbara explicitly wants to avoid any intellectual property infringements and will take necessary steps if needed.

Virtualization is supported by Xen 3.1 for security sake (3.0 works too, but is discouraged).

Lessons learned in building clouds from open source are quite rare. Here are a few from Rich:

Unlike commercial environments (where one controls the configuration, hardware purchase and networking), the architectural decisions are very different in open source environment, where one does not know the installation. One of the current challenges is to build a system depending on the control you have over your specific installation, you could successfully remove more of the portability from the system as you needs fit.

A second lesson is that people do things by hand and this is an opportunity for automation. Nobody is deploying Linux manually, instead sys admin use distributions. Shouldn’t there be a similar cloud distribution product out there? The people at Puppet were eager to help on providing such scripts for cloud deployments. According to Rich, this illustrates how O’Reilly should be credited for creating a good atmosphere at the Velocity 08 conference where a lot of cross-fertilization happened.

Rich ends the interview by throwing a fundamental question at the cloud community. He classifies current cloud initiatives on a scale based on the ‘closeness’ of the application layer to the cloud API. At the one end of this spectrum, he puts Google Apps (with Python oriented function calls) and at the other end Amazon EC2 (a set of very simple web service interfaces to the underlying virtualization technology) and all other cloud offerings float in between. This impacts what you can do with virtualization. Google AppEngine becomes your compiler on their end of the scale.

Rich wonders if this tighter link to the Google AppEngine will become a liability or an asset in the future when it comes to virtualization capabilities?

We invite you to provide your answers in the comments below!

Microsoft To Release System Center VMM 2008 Soon

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Diane Prescott, Product Manager, System Center at Microsoft posted an article on the official SC blog today sharing that the launch of the next version of Virtual Machine Manager (VMM) is imminent, specifically in Q4 2008. The beta was formally introduced by the company end of April 2008.

System Center Virtual Machine Manager (SCVMM) 2008 will be available as a stand-alone product, while the current version only comes bundled with Server Management Suite Enterprise. Prescott also said something about the pricing structure:

“[SCVMM 2008] will follow the licensing model set forward by the SMSE. It will be sold as a per-device enterprise server management license (ML) and will include rights to the management server. Because we’ll be selling the VMM 2008 enterprise server ML on a per-device basis, which makes sense in the context of virtualization, we’ll be targeting a price which will be approximately 10-15% less than the SMSE at that time it’s generally available. Additionally, because of the new value and functionality being added to the various System Center offerings over the next year, including VMM, Operations Manager and Configuration Manager, we will be implementing a price increase to the SMSE of approximately 10-15% in the same time frame. We’re still working on the specifics regarding the pricing and licensing of VMM 2008 and the SMSE and we’ll have further details to share in early August.”

Next to support for Hyper-V, SCVMM 2008 will also offer management capabilities for VMware ESX environments, allbeit through VirtualCenter.

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VMware Formally Releases ThinApp 4.0 Into The Wild

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Only a few days later than anticipated, VMware has released ThinApp 4.0, its first application virtualization solution (formerly called Project North Star) after snapping up Thinstall earlier this year.

ThinApp 4.0 (build 2200) is the next major release of the former Thinstall solution called Application Virtualization Suite 3.2, and has certain new features, such as:

  • Application Sync: enables you to deploy application updates. Application Sync automatically checks for and installs updates to your packaged applications. Updates might include changes such as a new version, service pack updates, or configuration changes in the package.ini file
  • Application Link: connects deployed applications. For example, you can establish a relationship between a deployed instance of Microsoft Office 2003 and a new Microsoft Office plug-in. Application Link enables you to establish a link between applications without having to encapsulate them into the same executable package

A trial download is available here.

ThinApp comes bundled with VMware Workstation under the name ThinApp Suite. The company offers a starting package for 50 concurrent clients at $6,050 (including a 12×5 Gold Support yearly subscription), with additional clients starting at $47.19 (including a 12×5 Gold Support yearly subscription).

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Citrix Aims To Make Creation of Hypervisor-Independent Application Workloads Easier with Project Kensho

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Citrix today announced “Project Kensho,” which will deliver Open Virtual Machine Format (OVF) tools that allow independent software vendors (ISVs) and enterprise IT managers to easily create hypervisor-independent, portable enterprise application workloads. These tools will allow application workloads to be imported and run across Citrix XenServer, Windows Server 2008 Hyper-V and VMware ESX environments.

Citrix boasts this implementation will solve a multitude of interoperability issues between virtualization platforms while allowing automated provisioning and management of applications, rather than just virtual machines. Users will be able to easily install and use any OVF packaged application workload regardless of which virtualization platform they use – whether it be XenServer, Hyper-V, or ESX.

“XenServer delivers the benefits of fast, free, ubiquitous and compatible virtualization, whether from Citrix, Microsoft or VMware,” said Simon Crosby, CTO of the Virtualization and Management Division, Citrix Systems. “Project Kensho highlights the Citrix commitment to interoperability for virtualization, while maximizing price/performance and richness of features at the virtual infrastructure level.”

The OVF specification was originally co-authored by Citrix and VMware, with contributions from Dell, HP, IBM and Microsoft. The companies then jointly submitted the draft to the DMTF standardization process.

Project Kensho will support the vision of the Citrix Delivery Center product family, helping customers transform static datacenters into dynamic “delivery centers” for the best performance, security, cost savings and business agility. The tools developed through Project Kensho will be integrated into Citrix Workflow Studio based orchestrations, for example, to provide an automated, environment for managing the import and export of applications from any major virtualization platform.

A technical preview of Project Kensho tools is expected to be available for free download in September 2008.

Diane Greene’s Departure from VMware: The Week After

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It’s been exactly a week since word got out that VMware co-founder and acting CEO Diane Greene was leaving the company to be replaced with former Microsoft executive Paul Maritz, who prior to the move headed EMC’s cloud computing division. Evidently, this event spurred tons of reactions worldwide, with lots of speculation, analysis and predictions for VMware’s future. Now that the dust has settled a little, here’s what we gathered from the past week:

Diane Greene most certainly did not get ousted only because of the disappointing financial results and prospects. While this may have played a role in the process, it’s a fact that Greene did not see eye to eye with EMC’s CEO and VMware chairman Joe Tucci in large part because of her determination to let the company sail a largely independent path. Rumor has it that she was pushing hard for the company to be spun off, and only a few hours before her departure was making headlines in the press and on blogs, EMC shares went up on rumors of a full spin-out of VMware to shareholders with minimal tax implications starting in early 2009.

Contrary to some speculation, Greene wasn’t against selling to EMC, but she was not always happy with the way its new owner tried to steer VMware’s course. It’s very likely that ousting Greene had been on the table for several months, and that it wasn’t prompted by a single event or market dynamics. The subsequent FORM 8-k eventually stated ‘Termination without cause’.

Greene gained a lot of respect both within the company (especially from the early employees and management team) and outside, helping VMware become the fastest growing software company this side of Google, with a killer IPO as a result, an impressive market share for its core business, and loads of technological innovation which seemed to set its competitors back with every new product release. But the question remains: did Diane Greene really have what it takes to stay at the helm with competitors like Microsoft and Citrix slowly switching to full gear, while small startups started to eat away at the company’s market share with small, but nasty bites?

We believe the switch may not be such a bad thing for the company after all. Maritz is a smart, ruthless manager and he knows how to play the game. He also carries a lot of insider knowledge from his days at Microsoft (and EMC), and we believe he might be able to turn the company’s slipping revenue streams around and grow the company into a position where its competitors can’t simply crush it under their weight. Unlike some, we’re bullish on VMware’s prospects, particularly on the enterprise market. If it will play a large role in making virtualization a hot topic for SMB’s as well, remains to be seen.

Meanwhile, its stock is trading at 40.50, recovering slowly after taking a big hit following the news of Greene leaving and a slightly lower revenue forecast.

On a sidenote, we consider it a shame that with Greene’s departure, the number of female CEO’s at Silicon Valley’s 150 biggest corporations is now down to zero. However, it was already a shame there was only one before she left.

Also, we’re still wondering if Mendel Rosenblum, chief scientist at VMware, one of its 5 co-founders and husband to Diane Greene, will remain in his position at the company for much longer.

Don’t hesitate to post your thought on the above in the comments!