Rivals chip, chip, chip away at VMware hypervisor dominance

It’s clear that VMware(s vmw) has moved beyond the hypervisor: It’s pushing the more profitable Vsphere management tools and of course its new VMware vCloud Hybrid Services cloud. But still, it’s got to be a teensy bit worried by growing encroachments from rival hypervisors chipping away at its ESX customer base and the third-party developers that serve those customers.

This week, Convirture added Hyper-V support to its tool, which already manages Xen, KVM, and ESX environments. Likewise, Nutanix, the converged infrastructure player (which just snagged a cool $101 million in new funding, BTW) also launched support for Microsoft’s Hyper-V hypervisor. Nutanix started out as an ESX-only shop but added KVM last year. And now there’s Hyper V support for that product as well.

Why does this matter? It’s clear that vendors and some customers see VMware virtualization –based on ESX — as expensive to run and support and increasingly see the alternatives — in this case Hyper-V — as viable and potentially cheaper alternatives.

Convirture and Nutanix are just the latest converts. Veeam, a company that started out with VMware-only tools in 2006, added Hyper-V support for its backup and replication product in 2011 and last year added Hyper-V to its virtualization management software. In addition, as part of a bigger Oracle-Microsoft alliance outlined last June, Hyper-V is the only non-Oracle hypervisor that Oracle officially supports.

None of this is good news for VMware, which really wants enterprise and business accounts — the sorts that run Microsoft Windows and Oracle databases in house — to either run VMware on premises or put those enterprisey applications in vCloud Hybrid Services. If they are instead moving to other hypervisors, they are less likely to do so. The lowly hypervisor does, in fact, matter.

VMware’s ESX ruled the roost for many years, as VMware’s related products got more feature-rich and expensive. VMware’s problem is that folks got sick of paying what Convirture CEO Arsalan Farooq and others call “the VMware tax.” And those users now know there are alternatives — including KVM, Xen on the open source side and Hyper-V — that are as good and perhaps better than ESX, and can be part of less-expensive virtualized environments than what VMware offers.

And that means that VMware — which, to be fair, still leads the market in server virtualization running in most enterprise data centers — cannot take this threat lying down while it builds out it’s cloud strategy.