If the question at the start of VMware 2013 Monday morning was where VMware was headed in the coming year, company CEO Pat Gelsinger has answered it: VMware is moving up the virtualization stack with tools and APIs to facilitate integration between virtualized data center environments and cloud services in a hybrid cloud architecture. While this is not really a surprise move — hybrid cloud is a recognized major trend in enterprise computing today — it does reinforce that trend, and it provides a direction to keep VMware ahead of its rivals technically and so maintains its premium status in the market.  And significantly VMware is doing this on top of OpenStack, the Open Source technology supported by HP, IBM and a large number of other contributors, large and small.

OpenStack has been seen as an attempt to counter the early dominance of Amazon AWS . If it looked something like a Hail Mary in spring, it has grown into a major movement by September, and VMware’s support is a major addition to its momentum, although it is unclear how concerned VMware is about the politics of a portion of the IaaS race, where neither it nor EMC has a horse. It may have been a purely pragmatic choice, better than basing its tools on AWS, which would surrendered control of part of its fate to Amazon, or spend months and millions reinventing the wheel. The Open Source alternative puts its development far ahead, allows it to maintain full control over its products, and gives it the benefit of a huge, diverse body of developers. In TheCUBE Tuesday morning Rackspace CMO Rick Jackson talked about how Open Source alternatives eventually take over on every layer of the IT stack, and while that is not always true — Microsoft Windows still holds a major share of the server space and dominates in the desktop — it does have a certain inevitability in most areas of the stack. If so, OpenStack appears to be the future in IaaS.

VDI

This still leaves questions unanswered. One is VDI. It increasingly appears that the VDI train is finally gathering momentum. Certainly several guests on theCUBE, including Praveen Akkiraju, VCE CEO, and Lee Caswell, VP of Virtualization, at Fusion-io, both mentioned VDI as an important growth market. VMware has never had much traction in this part of the virtualization stack, and lately Microsoft has been playing its desktop software licensing card to help it take that market from Citrix, the former dominant player. And several service providers now offer VDI-as-a-Service, which allows companies or divisions within them to bring VDI to their employee’s desktops and mobile devices without having to build an infrastructure to support it at all. Depending on pricing, this is likely to be a popular option both with medium-sized companies that do not have the resources to build and maintain a VDI system in-house and with shadow IT inside enterprise operating units who don’t want to wait for IT to build, test, debug, and deploy an internal solution.

VMware COO Carl Eshenback said  in TheCUBE late yesterday that end-user software is one of the three areas that VMware has focused on in the last year under Pat Gelsinger. It has built a dedicated software team to sell that software. The question is what VMware brings to the table to overcome Microsoft’s advantage in end user software in the enterprise. Certainly when CIOs and for that matter CTOs and CFOs talk about virtualization they are envisioning delivering Windows, Office, and other core Microsoft functionality to employees on their laptops, tablets, and smartphones, and Microsoft can always offer special licensing deals to hold its clients. This is Microsoft’s market to lose, and it is more likely to lose it to VDI-as-a-Service providers than to VMware.

Software Defined Data Center

The Software Defined Data Center is the third of VMware’s three strategic focus areas according to Eshenback. Here VMware is playing into its strengths. It may see other vendors, such as HP with StoreVirtual, gain market share in some specific component areas, but overall VMware is in a strong position to dominate this market. And, as Echenback emphasized in theCUBE, the technologies are all available now.

The question is how quickly the market can absorb them. Storage and network virtualization are both complex, and the internal politics as the new unified management technology that is a large part of software-defined breaks down the traditional IT silos will be difficult at best. Echenbach said storage and network professionals want something better than manually managing each component of the infrastructure, but if their jobs are threatened they are more likely to resist the change than welcome it. Given that after a decade the market is still absorbing server virtualization, this is likely to be a slowly developing market. However, it will happen, and it is VMware’s to lose.

Finally one important question yet to come up is software development support. Several CUBE guests have emphasized that new-generation applications are driving virtualization and hybrid cloud, which in turn is driving the hardware market, not vice versa. That means that VMware should be working to provide developers and the new devops groups appearing in some ITOs with a strong environment for developing those applications on vCenter. This is not on VMware’s list for the first year of Gelsinger’s list. Echenback said it might be a focus at VMware 2014, but whether that is just his personal hope or a part of the longer term plan was not clear.

To weigh in on these and other questions, join the VMworld discussion group on CrowdChat hosted by SiliconAngle Founder and CEO John Furrier and Wikibon Co-Founder and Chief Analyst Daid Vellante. To see TheCUBE interviews from the first two days of the conference, go to the SiliconAngle channel on YouTube. And to watch today’s interviews live, go to SiliconAngle.TV.

Today’s Schedule

Those and other questions may be answered when theCUBE resumes its webcast today at 9:00 a.m. PT. The first guest on the schedule is VMware CEO Pat Gelsinger. Other highlights of the third day schedule include:

10:20 a.m. PT Martin Casado, Chief Architect for Networking, VMware;

10:40 a.m. PT Bill Feathers, SVP & GM, VMware Hybrid Cloud Services Unit;

11:00 a.m. PT OpenStack discussion with Joe Arnold, CEO of Swiftstack, and Josh McKenty, Co-founder & CTO of Piston Cloud; and,

1:00 p.m. PT Sanjay Poonen, GM, End-User Computing, VMware.

This promises to be the day to stay glued to theCUBE on SiliconAngle.tv.