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VMware, Inc. Message Board

  • jamiejz jamiejz Oct 24, 2007 7:37 PM Flag

    EMC + VMW = $90 billion - The math: $70 billion increase in total Market Cap in less than 180 days

    Longs, dare to refute any of my below observations:

    As a consultant, I have used this technology for the last 6 years (since 2001) and maybe 3-5% of my customers have adopted it in Production. Rest all of them have either used it for Test labs (free version) or plan to use it for DR (like my current company). And for the last 2 years, Xen has really picked up speed in the Open Source world (RedHat and Suse Linux now comes integrated with XEN) and SMBs which rely on free software. Or they can use the free VMWare Server.

    2 Main Reasons for poor adaptation in Production:
    1. Speed: You have 4 physical servers which are 25% utilized. You would think, you can put all 4 or even 3 on one VM and you will get the same performance. Think again. There is a very noticeable degradation in CPU and network through-puts when running under VM (even with their ESX version which surprisingly (according to VMWare) runs an embeded OS. So it does not have to sit on top of another OS.

    2. Cost: VM Enterprise is very VERY expensive. In our case, it equates to the cost of one Blade server. So you think you save on Hardware, you end up spending on the license, plus you will need 1-2 VM experts on your pay-roll.

    So, do not get me wrong, I have recommended VMWare and similar VM products to many of my friends for their home desktops or laptops. But I will never recommend buying VMWare stock at such lofty levels. Not at $100, not even at $50, maybe at $25.

    Mark my words, there is not much growth left for VMWare especially with so many free products already available. Corporations have realized that there is no cost advantage either. In fact you get performance degradation for the added cost.

    Imagine the company EMC which had a market cap of around $20 billion just 6 months back (trading at $12), is now worth $90 billion ($48 billion EMC + $42 billion VMW) on back of what ? A product which will have around $250 mil in 2007 profits and mounting competition.

    So the math is: $70 billion increase in total Market Cap for $150 mil in additional profits (VMW was already making money while part of EMC).

    And you foolish longs expect it go higher and keep going higher? And that too when the country is almost in a recession. Go for it !

    Needless to say, I own Jan and Apr'08 85/90 puts and will buy more if it continues upward.

    From $20billion to $90 billion in less than 180 days. Like somebody had said about VMW being the biggest Casino stock ever to be played in the US markets.

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    • Jamie,
      I have serious doubts that there is a grain of truth in this propaganda disguised as sincere experience. For the moment, I'll give you the benefit of the doubt, and say simply, that if this is truely your job, to assist in the installation of VMWARE, and this is the best you have achieved, you don't know what you are doing, and/or you are not fully exploiting VMWARE, and it's facilities.

      Would you please tell me what company you work for, so I can tell friends and family not to contract them for their major Infrastructure re-architecture.

      I am so sick of seeing this propaganda from MSFT bigots, and SUN/Solaris folks who sware by their favorite million dollar solutions that created the very sprawl that VMWARE solves, and if you need help finding folks with genuine installation/migration experiences, I can hook you up. For that matter so can VMWARE, but then you must know that if you are truly who/what you purport to be.

      You praise freeware such as XEN, as if the entire suite of facilities that VMWARE, and Blade Servers offer is found in XEN running on good old all over the place 1U 2U 3U 4U servers popping up everywhere like mushrooms (and we know what mushrooms grow in), on KVM's that cost massive money in and of themselves, with massive amounts of BTU's, and several 20-40 ton Air conditioners, with massive power, with massive DAS (Direct attached Storage) that must be individually managed, and unique recovery techniques, and you like your job of configuring the RAIDS over and over on each system you provision for your alleged clients and probably don't even subscribe to the conept of Centralized Storage, whether SAN NAS, ISCSI, or whatever.

      In actuality you have no clue as to what the Virtual paradigm currently offers, or how to employ it to simplify to a Japanese degree of elegant simplicity. This is art work, and I may not know fine art, but I know what I like.

      I don't like the folks who are OS bigots, and try to shoot down something because they were trained in something else, and they might have to re-train in the right platform (DEAL WITH IT, and welcome to IT) who want to perpetuate what they know instead of what is best. You call yourself a consultant. Let me suggest that you consult someone who has a differing opinion than yours, and really find out the difference between what you and your company are doing, and the right way.

      There's two ways of implementing VMWARE. There's your way, and there's the right way.

      You feign altruistic intentions in your post which is what I find most offensive, and hence my spirited response. It's people like you who have held back VMWARE and kept it from the sunlight for too long. You probably think that MSFT doesn't do anything wrong, and love their products, and see your provisioned server business dropping if you are actually a consultant with the skills that you purport to possess, which I seriously doubt.

      Make no mistake, this paradigm shift is just as significant if not more so than the shift from DC to AC power Generation was to the world. Look it up, because you appear to be way too young to understand that reference, or what this paradigm actually is.

      This is the mainframe on steroids, with a really serious low-fat diet. This is every bean-counter, executive, Applications manager, and Technician's dream come true. And you seek to sully it with your casual comments that you post with obviously very subjective motivation, and intentions.

      It's sad, you either just �don't get it�, or you are afraid of it. You should take a long look at which category you fall into.

      • 4 Replies to buyandby
      • Wow, congratulations, you have made VMWare a product out of space, super AI, rocket science stuff, etc.

        WTF is so difficult about architecting & installing ESX and P2V your existing servers on to VM and using vMotion and stuff. And WTF is so difficult mounting RAIDS and connecting to SANS, etc.

        When did I deny that the product is not nice. Why the hell would I use it for the last 6 years. It is good for the reasons I stated before and it is bad for the reasons I stated before as well. (Speed and Cost). It degrades performance and it is a very Costly solution. Sure it may save you some server space and some BTUs. But nobody today in their right mind buys monsters like Sun E10k, etc. We have over 200 servers, 80% of them are on IBM Blades which takes up just over 2 Racks (less than 25 sq.ft). Each Blade center holds 20 blade servers and share a common power supply. Yes, we do not have 150 power supplies. How naive you think the rest of the world not using VMW can be ?!

        And server wide changes are pushed out on click of a button using MS (free) and Symantec products. Plus we use Symantec LiveState for our recoveries. It may not be as easy as a VM, but it is not bad at all. We could recover a server in less than an hour. That does not mean, our site is down. Other servers are handling the load just fine.

        The point is VMWare is not GOD which you longs are trying to portray. There are other products and designs which can do the job just as good and a lot cheaper. Who cares about 25-100 feet of extra space? And then end up living with lower performance and added cost to hire & keep VM experts.

        And prove me wrong, name some of your big clients (Fortune 100) who are running VM in production and I will rest my case. Why don't I see any of the big names (IBM, GOOG, YHOO, AAPL, EBAY, AMZN are some of the core Technology companies) on the VMW's site under customers ? I guess, they may not be as smart as the rest of you folks out here to realize the benefits of VM.

        PS: I work for a fortune 100 company and am partly responsible for securing my company a spot in the top 25 companies Information Week 500 Award this year and 4 times running in the top 50. So please cut the BS about my qualification. For clarification, I am not a VM consultant but have been a user for a long time and know enough to rationale with you so-called big heads. I specialize in Security and Server architecture but have to deal with the VM nuances from time to time.

        Enough said.

      • Bravo Buy!!... great post!

        Alot of companys such as Boeing and HP in my local are catching on to VWM and there are MANY more!

        Less Hardware
        Energy efficient because it reduces the number of computers
        Less floor space, something EVERY big business "needs" and "wants"!

        Plus I am biases, I don't like the "evil empire" and live with in spitting distance of them, I am and of tired it! lol

      • Thanks Buyandby. I'm glad you responded with the spirit and words you did. I an applications manager and VMWare adds so much more flexibility in work/life balance and business continuity. I also used to be a solutions architect for a storage company. VMWare was software that sold itself to clients.

        Jamie does not know what he is talking about. I hope he is truely not a technology consultant. Bad consultants can cost companies millions from initial cost as well as significant post deployment opportunity cost.

      • If yahoo had 10 stars, I would give this a 10.

    • Dumb ass, your EMC valuation...($48 billion EMC + $42 billion VMW) off by 36.2B using your own math...EMC valuation according to your numbers is (48B - .86(42B)) = 11.88B. This is because EMC owns 86% of VMW, hence if VMW is 42B, then 86% of 42B is 36.12B, which is EMC's stake. Therefor your 48B valuation of EMC is (11.88B EMC + 36.12B VMW)

      People need to get there facts straight before posting on this board. You guys jump to conclusions before reading the facts. So many said they only beat by 1 cent, when in actual they beat by 6 cents since someone people don't understand non-gaap earnings.

      • 2 Replies to ritesh0100
      • WTF are you talking about the Math being wrong here. And you call me dumb. Again for idiots like you in simple English:

        Before VMW IPO: EMC's was one company with market cap (incl. VMWare and other Products) of $20 billion.

        Now we have 2 companies each having market cap of $48 billion and $42 billion for a combined market cap of $90billion.

        EMC's market cap doubled to $48 billion because it's share priced doubled to $22+. So just EMC's outstanding shares will fetch $48billion. And on top of it EMC's has 90% VMW share which will fetch it another $35 billion or so.

        So you could argue EMC is worth ($48 billion + $35 billion (90% VMW) and VMW is worth $5 billion.

        But the reality remains that both companies combined command a market cap of $90 billion as compared to EMC which had a market cap of $20billion before VM IPO.


        If you still do not get it, try this:

        If EMC were to slowly but surely sell its 90% stake for $100 a share to MS or some entity, EMC will get close to $35 billion for it. What do you think will happen to EMC's market cap ? According to you stupid, it will stay the same.

        In fact it will theoretically go up to nearly (48 + 35) billion. And that is exactly my point.

        Over and out. Good luck to you longs. Merry away like they did with SUNW when they announced JAVA or when PALM (traded as high as $150 I believe, currently trading at $15) broke off from 3Com.


        And by the way, I know ESX has an Embedded OS. What I meant to say was even with an Embedded OS, (surprisingly) the performance degradation is still apparent. And not just 8-10%, it is to the tune of 20%-30% if you account both CPU and network through-put especially on Linux VMs.

        Here is what VM support has to say on it:

        "Poor networking performance has been observed in virtual machines with SLES 9/10 Linux guests, but other versions of Linux guests based on the 2.6 kernel may also cause this behaviour.

        This problem hasn't occurred in virtual machines with RHEL 4, but it could occur if certain non-default driver functions are enabled."

        This is not a lie. I have the email from VM Support to back me up.

        And somebody said, they P2V'd 3 racks of Sun Hardware to one Qaud Opteron on VM. You got to be kidding me and that too in Production and drove it back in a Car. What are you talking about ?

        You may make money in the near term if the stupid market keeps up with the charade and ignore the recession threats so blatantly. But in the long run (jan-mar'08), you will remember me.

        Over and out.

    • i am a systems architect.
      Poor adoption in production?
      Whatever you have been smoking - pass it over here. Every major financial in NYC either has some VMware in production or had plans to implement it.
      Performance degradation is expected and accepted.. the penalty is not that high. 8-10% from our tests across different platforms. Network performance degradation is NOT noticeable, as long as you dedicate NICs to VMs.
      Nobody really cares about VMware on desktop - it's all about the server market (ESX), which DOES have it's embedded OS.. and if you install it at least once you would know that.

    • Great post,to bad you are going to lose everything

      • 1 Reply to weswillwin
      • Nop, sorry, I am doing very well with all my short picks (COMV, CAVM tanking since last week, DDUP tanked today and STAR today tanked AH as well) except for VM which could tank tomorrow if my gut is correct (street may not like lack of forward guidance but it just hates no break down of software vs support license). I am doing bad-ok on all my longs except for AAPL which is understood in this market.

        On VMW, I am down maybe $600-$700 total. I only have 8 puts total. But I will add more if VMW rises. I have only $2500 to loose max on my VMW puts (so far) but imagine if VMW tanks to $30-$40 by the end of next Q or by Apr'08, my returns will be 25-30x.

        I think I am a very savy investor (buy low-sell high/go short) and am currently at 78% cash. Yes, the market is going to tank and tank big time. My colleagues can vouch for my predictions in the last 1-2 years about housing/sub-prime/prime/arm resets/$ crash/recession/ and what not, 3 weeks back I send an email to all my friend to take money out of their stocks (or go short if they have the stomach) fearing what has happened in the last week or so. A couple of them listened and are they not grateful. And this is just the start.

        I am sure, you will remember me and my post 1-2 months from now.

    • Fortune 100 companies are rolling out vmware, just about everyone of them.

      "With more than 20,000 companies now running VMware technology, including 99 of the Fortune 100 companies, VMware hopes the growth trend will continue."

    • 1. Speed: You have 4 physical servers which are 25% utilized. You would think, you can put all 4 or even 3 on one VM and you will get the same performance. Think again. There is a very noticeable degradation in CPU and network through-puts when running under VM (even with their ESX version which surprisingly (according to VMWare) runs an embeded OS. So it does not have to sit on top of another OS.

      This statement alone is why I would never hire you for a consultant.If you are experiencing a noticable degradtion like you r stating you are obviously not implementing this correctly and need to rework your deployment strategy. Also you really dont need to have VM experts to be employed within your company as most administrators can pickup the technology fairly quickly. Last statement, major companies do not like using freeware and hence will purchase enterprise due to vendor support. For you to claim that VMWARE has no growth either means you are a) Short in the stock or b) really dont pay attention to your industry.

    • That's all an investor really needs to know.

    • Could not have said it any better!

    • Seems that the large companies I work for are all lining up to host applications via VMWare...Citrix/Microsoft's XEN solutions are vaporware right now and when they do come out will be generations behind...

    • Trust me brother, I'm an engineer and a VMware Certified Professional. I have to say that I'm shocked at home many companies are deploying VMware in production, dev, staging and using it to migrate legacy white boxes to VM's. My last project in San Fran, we P2V'd 3 racks of Sun equipment (worth 3million in 1999) on to ONE quad opteron box and drove it back to LA in my car. That is insane shit.

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