VMworld becomes mainstream San Jose Mercury News, 9/12/07, Scott Duke Harris (EMC/VMware; HP mention) "You're virtually there," punned a sign by the escalator. A company offered bumper stickers: "I brake for virtualization." Such are the gimmicks at VMworld, a three-day conference that opened Tuesday at San Francisco's Moscone Convention Center. Think of it as the Burning Man of "virtualization," an esoteric software field that has rapidly bloomed into a full-fledged industry, involving both powerhouse companies like Microsoft, Hewlett-Packard and Intel as well as a fresh crop of start-ups. Founded four years by VMware, the Palo Alto-based pioneer of virtualization, VMworld's progress illustrates the virtualization phenomenon. The first VMworld, held in San Diego in 2004, attracted 1,400 participants from major companies, start-ups, government agencies and universities. By 2006, attendance had swelled to 6,700. This year the event drew nearly 11,000 participants, with booths from more than 200 companies. Press registration showed just over 100 journalists from 17 countries, said VMware spokesman Greg Eden. It's a lovefest for virtualization, the term for a breed of software that enables a single computer server to run multiple operating systems, enhancing efficiency and reliability while curtailing costs and energy use. Chris Sims, a network engineer for Clayton County Water Authority south of Atlanta, said he was a 19-year-old college student when in 1998 he stumbled upon a free download of VMware's initial software offering. Soon, he was running Linux and Windows simultaneously on a little, weak laptop - a dazzling feat at the time. In 2004, Sims said, he became reacquainted with VMware to upgrade the water authority's information technology system. He attended the 2006 VMworld for the government rate of $995 and figures the knowledge he gained saved the water company between $10,000 to $12,000 easily. Sims anticipates greater savings still, with plans to consolidate from four racks of servers to two because of virtualization. "We love VMware. We love VMworld," said John Bara, vice president of marketing at XenSource, a Palo Alto-based company that is prospering from the virtualization wave. "VMware is benevolent enough to let us attend." XenSource claims more than 1,000 customers, but is dwarfed by VMware. Last month, one day after VMware debuted on Wall Street with a public offering that saw its stock soar 76 percent on the first day of trading, the Florida-based firm Citrix announced that it would buy XenSource for $500 million. The deal has not closed yet. Bara, a 20-year Silicon Valley veteran who joined XenSource in early 2006, seemed quite pleased with that price for a company with only 80 employees. Does he have stock options? "Oh, a few," he said with a smile. The $500 million price for XenSource illustrates the escalating value of virtualization. XenSource was founded in 2004, the same year VMware was bought by storage giant EMC for roughly $650 million. Today, VMware's market capitalization exceeds $25 billion, making the EMC subsidiary America's third most valuable software company after Microsoft and Oracle. Bara, who had previously worked at Intel and Interwoven, said virtualization once seemed like a niche technology - "a great tool for sales engineers to build repeatable demos. . . . Now it's breaking out into the mainstream." VMware announced Tuesday that it would acquire Dunes Technologies of Lausanne, Switzerland, for an undisclosed amount. It also announced that Dell would be the first company to offer servers embedded with VMware's next generation of virtualization software. Agreements have been made with several other computer companies to offer the virtualized servers. Start-ups, meanwhile, are looking for their piece of the action. 3Leaf Systems, based in Santa Clara, came out of stealth mode in May. It used VMworld to announce new software that it says dovetails with virtualization to simplify data center management. Xsigo Systems, a Sunnyvale-based start-up and potential competitor of 3Leaf, used VMworld to showcase its technology, a combination of hardware and software that it says will simplify management of input/output. Xsigo's marketing gimmick was free T-shirts, including one that said "Pimp Your I/O." "This is how we get people to take our T-shirts," said Jon Toor, Xsigo's vice president of marketing. "It's not our tagline. Mark Linesch : Open Grid Forum (OGF) : Hewlett Packard 281-514-0322 (Tel) : 281-414-7082 (Cell) : mark.linesch@hp.com : linesch@ogf.org