Broadcom Agreement for VMware Highlights Rise of Virtualization

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Software provides a critical, under-the-radar component of that process designed to help companies work across different cloud platforms — in part by replacing bulky computers, data and networking equipment with cheaper, more agile software, they say.

The idea of ​​virtualization is fundamental to this modernization. It’s comparable to replacing a watch, voice recorder, phone and camera with a single smartphone that supports digital versions of all these tools. In recent decades, this concept has been used to replace expensive hardware-based computing systems with more efficient software-based ones.

“Virtualization has become incredibly important,” said Karena Man, a consultant at management consulting firm Egon Zehnder.

Here’s why VMware software virtualization is in demand.

How was VMware started?

Computer scientists Diane Greene and Mendel Rosenblum met at the University of California, Berkeley. They later got married and founded VMware which was launched in 1998 with Ms. Greene as CEO. The company was acquired by EMC Corp. in 2004. After a series of ownership changes, Dell Technologies Inc. said last year that it would spin off VMware Inc.

Over the years, the company has emerged as a leading software provider for corporations looking to get more efficiency out of their computing systems. In February, VMware reported $12.85 billion in total revenue for fiscal 2022, up 9% from 2021, driven by online software revenue.

What does VMware do?

VMware’s core virtualization software basically converts hardware into software applications, or “virtual machines,” that run on a server and perform the same basic functions as a physical computer or data and networking equipment.

“Virtualization was the first step in decoupling software from hardware,” said Sunny Gupta, co-founder and chief executive of software company Apptio Inc.

Since each application has its own operating system, multiple virtual machines can operate independently on a single server. As such, they don’t compete for computing power, said Andrew Lerner, vice president of research at research and consulting firm Gartner. Inc.

Virtual machines are held together by software called a hypervisor.

Ted Smith, president and co-founder of Union Square Advisors LLC, said VMware has built a successful business by telling CIOs who manage large data centers that “we can help you manage them much more efficiently.”

Why is virtualization important?

Virtual machines can be switched between data centers, private clouds and public clouds. This allows companies to combine compute, data, and storage resources across their own systems and those of third-party cloud providers, who lease compute resources to their customers.

One of the main advantages of virtualization is the portability of applications, said cloud consultant and former VMware solutions architect Sarbjeet Johal. This is important, Johal said, because when companies have applications running in the cloud, they may need access to company data that normally resides in a private data center. VMware allows companies to easily transport that data where it needs to go, he said.

“Hybrid cloud is a concept where people can run workloads between the public cloud and private data centers seamlessly,” said Milan Shetti, chief executive of Rocket Software. “This wouldn’t happen without virtualization,” he said.

Without virtualization, companies need to take a “peanut butter” approach to IT, where applications are “distributed evenly across the organization and everything gets the same amount of storage,” said Egon Zehnder’s Man. With cloud computing, you have a lot more flexibility, she said.

write to Angus Loten at angus.loten@wsj.com and Isabelle Bousquette at Isabelle.Bousquette@wsj.com

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