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Intel wants a piece of VM, MS just wants it all!
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Written by Daniel   
Monday, 09 July 2007 11:56
Intel buys into VMWare
ARS Technica
By Jon Stokes | Published: July 09, 2007 - 11:28AM CT

Intel and VMware announced today that Intel Capital is taking a $218.5 million stake in virtualization company VMWare. Intel will purchase 9.5 million Class A shares at $23 per share, which, at the completion of VMware's forthcoming IPO, will give Intel about a 2.5 percent stake in the company. Because VMware's stock is split between Class A shares, which have less voting power, and Class B shares, Intel won't control that many votes in the company, but they will get a board seat......

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There are a few good reasons for Intel to get on board the VMware train right now, even if Microsoft is currently gearing up to wreck that train if it can. (More on the Microsoft angle in a moment, though.) First, VMware is currently the market leader in virtualization, especially when it comes to all-important enterprise-level management functionality. Second, VMware is gearing up for what will probably be a successful IPO, given their prominent position in this hot space and given current market conditions. So it's a good bet that Intel will make money off of the VMware IPO. Third, Intel has much to gain by seeing any x86 virtualization vendor succeed, because the chipmaker will sell most of the hardware to make the virtualization market go regardless of who wins on the software side. So an investment in VMware is an investment in growing a vital market for Intel.

All of these reasons, along with the aforementioned board seat, were probably factors in Intel's decision to invest in VMware. The question that remains is this: what happens when Microsoft not only matches VMware's management functionality but integrates their entire virtualization solution seamlessly into Windows?
A shift in the market

A while back, I got about 3,000 words into a long tech feature on virtualization before realizing that a) it's nearly impossible to come up with a taxonomy of virtualization solutions that is fine-grained enough to be meaningful, yet abstract enough to be useful (this is because x86 virtualization is in a class by itself, and even if I just stuck to x86 I'd wind up writing a series of "how it works" pieces on specific vendors' packages), and b) actual low-level implementation differences don't matter nearly as much today as they did before Intel launched VT-x with the Core 2 Duo....

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