VMware is said to be the pioneer of virtualization. Whenever VMware announces a big idea, it’s a big deal for the virtualization world.  But competitors are on the rise, and Microsoft is making a tough fight in the virtualized server environment.  Stratus, one of the leaders for uptime assurance, released a semi-annual survey on market capitalization of virtualized server environments and guess what?  VMware is losing its market share to Microsoft.

According to the survey, VMware is holding a 59 percent share compared to 53 percent on Microsoft Hyper-V. When the same survey was conducted a year back the results were favoring VMware and had a strong lead in the virtualization software. VMware was the frontrunner for business to use its virtualized product with a 78 percent market share compared to 38 percent of Hyper-V’s share. The survey was conducted among 250 respondents who are using VMware.

Microsoft’s recent gains in the market is primarily attributed to its bundling strategy and IT organizations experimentation with other virtualization products. Hyper-V is bundled with Windows Servers and organizations that had brought Windows Server to upgrade their platform got a built-in access to try out a new product. One other reason is the changing pattern of VMware licensing model. VMware is changing the licensing model for its vSphere 5 product. Companies spent millions of dollars on infrastructure, up-gradation, and training and in other services. But with changing pattern of licensing model, they have to again reevaluate all these factors, which could add more costs.

The virtualization market is expanding, and it’s not limited to only server virtualization technology.  Desktop virtualization, storage virtualization and application virtualization are some of the current buzz phrases in IT today. “The future of virtualization is mixed-vendor environments, as companies select the best products for particular workloads,” said Roy Sanford, Stratus’ chief marketing officer.

Even though VMware updated its pricing scheme, it’s only pouring more efforts into its product lineup.  VMware recently launched vSphere 5, giving importance to cloud computing and virtualization for small-to-medium sized businesses. The launch was mainly focused on storage and the integration value that VMware brings to its users. VMware aims to bring new opportunities for virtualization with its launch of vSphere 5.

VMware’s upgraded technology offers a more reliable infrastructure suite, and it is bringing more customers, including government organizations. The City of Foster City, California has recently selected VMware View virtual desktop brokering software for its new Virtual Desktop Infrastructure (VDI) project. The VMware benefit would provide a reduction in staff time required to manage desktop software issues and hardware failures issues. “We chose VMware View because of its flexible access options, proven brokering capabilities, and our familiarity and experience with the VMware vSphere tool set.” said Foster City Senior Systems Analyst Rob Lasky.

City of Foster City is not the only one: VMware is also going after a UK government cloud initiative called government cloud (G-Cloud). The UK government is planning to adopt G-Cloud to secure its government infrastructure, reducing energy consumption and aims to provide greater flexibility. And as the market leader for virtualization, VMware will try and capitalize on this sector. VMware has already gained government clients here in the states. Hampshire County Council has virtualized around 90% of its infrastructure using VMware products.