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"Intel, under their packaging, with their brand, to their channels, will resell VMware [server virtualization software] as an OEM. It's our standard vSphere, but it will be an Intel SKU," said Doug Smith, senior director of global channels at VMware Inc.
That opens up a much broader channel for vSphere into small and medium-sized businesses (SMBs) that buy custom-built "white-box" servers from system builders.
The deal is something of a coup for VMware, which must fend off Microsoft's increasingly aggressive forays into server virtualization with Hyper-V. Microsoft has long offered Windows Server (and Hyper-V) through Intel's system-builder program.
The news comes out of VMworld 2009 this week in San Francisco. VMware fields its own year-old system-builder program but has fewer than 100 participants thus far. Intel has a much more established and bigger system-builder channel. Smith even said that existing VMware system builders would probably work through Intel's program.
This agreement also helps Intel bolster white box makers, a strategic part of its overall channel. Hewlett-Packard, IBM and Dell are dominant server players but after them, white box makers represent a huge, if fragmented, channel. Without them, the big server vendors hold too much leverage for Intel to tolerate, some in the channel say.
Intel, by virtue of its size, can negotiate better volume prices and terms on behalf of its white box partners to help keep that segment viable and more competitive with the big server vendors.
"Intel is doing everything it can to keep the channel alive in servers. There's such a big difference between the top three server makers and everyone else, that Intel needs to strengthen [white box suppliers]," said Todd Swank, vice president of marketing for Nor-Tech, a Burnsville, Minn. systems builder
Chuck Orcutt, product manager with white box builder Seneca Data, said nearly all of his customers express interest in virtualization and thus ask about VMware . The easier it is to package virtualization up for them the better, he said.
"Specifically, there is an Intel product called Modular Server which has been a great fit for virtualization projects. It is VMware-certified, has a build-in SAN and redundancy features that complement VMware's business continuity features as well," Orcutt said.
North Syracuse, N.Y.-based Seneca Data right now mostly builds the hardware component of a solution, but Orcutt thinks the VMware/Intel deal will make it easier for it to provide a more integrated solution. Seneca also builds Windows Server-based servers and so can offer Hyper-V virtualization as well.
"In a production-line environment, system builders don't want to wait for a software license download key that can take five minutes or maybe five hours to do," Smith said.
He pointed out that in most market-share surveys of Intel X86 servers, system builders in aggregate represent one of the top five server providers, after Hewlett-Packard, IBM and Dell.
The VMware-Microsoft contretemps will only get fiercer as Microsoft pushes Windows Server 2008 R 2 with Hyper-V R2 (as well as standalone versions of Hyper-V R2) when they are both broadly available this fall.
VMware's vSphere 4 has been available since last spring.
This story was updated Monday morning with system builder comments.