VMware Unveils the Industry’s First Operating System for Building the Internal Cloud—VMware vSphere™ 4

Next Generation Virtualization Platform Helps Enable Enterprises and Service Providers to Deliver Efficient, Flexible and Reliable IT as a Service

PALO ALTO, CA — VMware, Inc. (NYSE: VMW), the global leader in virtualization solutions from the desktop to the datacenter, today announced VMware vSphere™ 4, the industry’s first operating system for building the internal cloud, enabling the delivery of efficient, flexible and reliable IT as a service. With a wide range of groundbreaking new capabilities, VMware vSphere 4 brings cloud computing to enterprises in an evolutionary, non-disruptive way – delivering uncompromising control with greater efficiency while preserving customer choice.

As the complexity of IT environments has continued to increase over time, customers’ share of IT budgets are increasingly spent on simply trying to “keep the lights on.” With the promise of cloud computing, customers are eager to achieve the benefits, but struggle to see the path to getting there. Leveraging VMware vSphere 4, customers can take pragmatic steps to achieve cloud computing within their own IT environments. With these “internal” clouds, IT departments can dramatically simplify how computing is delivered in order to help decrease its cost and increase its flexibility, enabling IT to respond more rapidly to changing business requirements.

VMware vSphere 4 will aggregate and holistically manage large pools of infrastructure – processors, storage and networking – as a seamless, flexible and dynamic operating environment. Any application – an existing enterprise application or a next-generation application – runs more efficiently and with guaranteed service levels on VMware vSphere 4. For enterprises, VMware vSphere 4 will bring the power of cloud computing to the datacenter, slashing IT costs while dramatically increasing IT responsiveness. For hosting service providers, VMware vSphere 4 will enable a more economic and efficient path to delivering cloud services that are compatible with customers’ internal cloud infrastructures. Over time, VMware will support dynamic federation between internal and external clouds, enabling “private” cloud environments that span multiple datacenters and/or cloud providers.

“Since pioneering virtualization for x86 systems 10 years ago, VMware has delivered an impressive list of ‘industry-firsts’ – the first hypervisor, the first VMotion™ capability now synonymous with VMware, and the first platform for pooling servers, storage and network, allowing customers to decrease the capital and operating cost of computing by up to 60-70 percent,” said Paul Maritz, president and chief executive officer, VMware. “VMware vSphere 4 is the next evolution along this path of innovation. By giving IT organizations a non-disruptive path to cloud computing, we will be leading our customers on a journey that delivers value every step of the way, delivering up to an additional 30 percent cost reduction today while enabling IT to provide reliable and adaptable IT services.”

FICO, the leading provider of analytics and decision management technology to the world’s top banks and credit card issuers, commented on how VMware vSphere 4 will improve the efficiency of its business.

“As a critical player in the global financial services ecosystem, we require flexibility and standards to stretch the limits of our IT resources and adjust to the unknown,” said Christopher Rence, CIO, FICO. “With VMware vSphere as the foundation of our cloud computing initiative, we’re now in a better position to deliver a unified platform that enables the world’s top financial services institutions to make effective and confident decisions at all stages of the customer lifecycle.”

VMware vSphere 4 Delivers Unprecedented Efficiency, Control and Choice
VMware vSphere 4 extends the previous generation VMware platform – VMware Infrastructure 3 – along three dimensions: it delivers the efficiency and performance required to run business critical applications in large scale environments, it provides uncompromised control over application service levels, and it preserves customer choice of hardware, OS, application architecture and on-premise vs. off-premise application hosting.

Efficiency. One of the primary benefits customers are seeking with cloud computing is decreasing the cost of IT services, freeing up budget to focus on delivering new capabilities that strategically differentiate the enterprise. VMware vSphere 4 enables transformative capital and operational expenditure cost savings over and above what was possible with the previous generation VMware Infrastructure 3:

* About 30 percent increase in consolidation ratios, further decreasing infrastructure cost per application.1
* Up to 50 percent storage savings with VMware vStorage Thin Provisioning, which minimizes storage overprovisioning by enabling virtual machines to consume storage only as needed. Accrued across all VMware vSphere customers, these storage savings would free up enough storage to save up to 50 times the number of pictures currently on Facebook. 2
* Up to 20 percent additional power and cooling savings with VMware Distributed Power Management which uses VMware VMotion to automatically place all virtual machines on as few physical servers as possible without compromising service levels, and power down physical servers that are not needed. The power savings with VMware Distributed Power Management across all VMware vSphere 4 customers over one year could power a country the size of Denmark for 10 days.3

TradeBeam, a leading provider of global on-demand supply-chain management solutions, has used the beta version of VMware vSphere and expects it to increase the company’s competitive advantage.

“Cloud computing is the future for us, and VMware vSphere 4 is the ideal platform to build our internal cloud,” said Nasser Mirzai, IT director at TradeBeam. “In our business, every sale requires a proof of concept which can become lengthy and expensive by using dedicated infrastructure. With an internal cloud built on VMware vSphere 4, we will be able to provide that infrastructure as a user friendly service to our sales teams and prospects. They will be able to request the infrastructure they need through a simple web portal and get it on-demand with guaranteed service levels and lower costs. That means getting the prospect up and running in one day instead of two weeks; the lead stays hot and we can increase our conversion rate while decreasing the cost of sales.”

Performance and Scalability for the 100 Percent Virtualized Internal Cloud
VMware vSphere 4 delivers significant performance and scalability improvements over the previous generation VMware Infrastructure 3 to enable even the most resource intensive applications, such as large databases and Microsoft Exchange, to be deployed on internal clouds. With these performance and scalability improvements, VMware vSphere 4 will enable the 100 percent virtualized internal cloud.

* VMware vSphere 4 delivers more powerful virtual machines with up to:
o 2x the number of virtual processors per virtual machine (from 4 to 8)
o 2.5x more virtual NICs per virtual machine (from 4 to 10)
o 4x more memory per virtual machine (from 64 GB to 255GB)
o 3x increase in network throughput (from 9 Gb/s to 30Gb/s)
o 3x increase in the maximum recorded I/O operations per second (to over 300,000)
o New maximum recorded number of transactions per second - 8,900 which is 5x the total payment traffic of the VISA network worldwide4
* Targeted performance improvements for specific applications:
o Estimated 50 percent improved performance for application development workloads
o Estimated 30 percent improved performance for Citrix XenApp

BayScribe, a leading provider of dictation services, supporting more than 50,000 physicians nationwide and facilitating more than 500,000 transcribed reports each month, commented on enhanced application performance with VMware vSphere 4.

“We have been using the VMware vSphere 4 beta, and even with the beta code, we have observed greatly accelerated application performance compared to VMware Infrastructure 3" said Steve Bonney, vice president of business development at BayScribe. “As a result, we are now planning to run the production database for our primary revenue generating application in a virtual machine on vSphere so that we can also take advantage of the availability, security and scalability features built in VMware vSphere 4.”

* VMware vSphere 4 brings the capability to aggregate large number of virtual machines and large amounts of physical infrastructure into a single logical resource pool or “compute plant” on a cloud scale in order to create “the mainframe of the 21st century.” VMware vSphere 4 can pool together up to:
o 32 physical servers with up to 2048 processor cores
o 1,280 virtual machines
o 32 TB of RAM
o 16 petabytes of storage
o 8,000 network ports

Control. VMware vSphere 4 enables efficient operational control of these very powerful “compute plants” with new large scale management features such as VMware Host Profiles and VMware vNetwork Distributed Switch that allow easy standardization of server security, storage and network settings; automating configuration management and reducing errors due to misconfiguration. For an environment of 100 virtualized hosts, these new management features can save an estimated 25 weeks or half year of system administrator time, thus significantly reducing operating cost.

VMware vSphere 4 brings uncompromised control over application service levels – enabling the right levels of availability, security and scalability to all applications independent of the OS or application architecture. All these new application service level capabilities can be delivered with one-mouse-click configuration simplicity, for set-it-and-forget it management simplicity, further reducing datacenter operating costs.

* Zero downtime, zero data loss protection against hardware failures with VMware Fault Tolerance, without the cost and complexity of alternative solutions.
* Minimized planned downtime due to storage maintenance and migrations with VMware Storage VMotion, available with a new administrator interface, which provides live migration of virtual machine disk files across heterogeneous networked storage types.
* Quick, simple, integrated, and cost effective disk-based backup and recovery for all applications with VMware Data Recovery.
* Easier and stricter security compliance with VMware vShield Zones which simplifies application security by helping to enforce corporate security policies at the application-level within logical zones in a shared environment, while still maintaining trust and network segmentation of users and sensitive data.
* Easier application service level management with VMware vApp, which is an industry standard way to encapsulate all virtual machine components of an application and describe their compute and memory resource requirements.

Southwestern Energy Company, an integrated energy company primarily focused on the exploration for and production of natural gas, is using VMware Fault Tolerance.

“VMware Fault Tolerance is extremely useful,” said Larry C. Miller Jr., senior systems administrator at Southwestern Energy. “This is a welcome addition to our arsenal of high availability technologies because it makes previously very high-end, expensive and complex functionality truly accessible. VMware Fault Tolerance can be turned on and off with a mouse click and while protecting applications against hardware failure.”

Choice. With VMware vSphere 4, customers retain flexibility of choice, remaining independent of hardware, OS, application stack, and service providers. For example, VMware vSphere 4 offers the broadest choice of guest operating systems over any other virtualization solution on the market today. This means customers can support their existing applications and feel confident about future applications, while retaining the flexibility to deploy within internal or external clouds.

“The days of the traditional monolithic operating system are numbered,” said Chris Wolf, senior analyst with Burton Group. “Server platforms are now being purposed-built for virtualized workloads, and many of the roles associated with the traditional OS are transitioning to virtualized internal and external cloud-based infrastructures. Organizations looking to gain the operational and financial benefits of cloud-based IT can do so today by deploying purpose-built cloud infrastructure software that streamlines internal data center operations, while providing a gateway to future external cloud expansion.”

Qualcomm, a leader in developing and delivering innovative digital wireless communications products and services, commented on the flexibility that VMware vSphere 4 can provide for its business.

“VMware has provided us with cost savings and efficiencies for a number of years,” says Paul Poppleton, IT architect, Qualcomm. “With VMware vSphere 4, we can leverage our virtualization implementations to get greater economies through an internal cloud strategy. As a leader in virtualization, VMware is positioned to help us continue to automate and streamline our infrastructure to best serve our business needs, on or off premise.”

VMware vSphere 4 Pricing Starts at $166 per Processor5
VMware vSphere 4 is expected to be generally available later in Q2 2009 and will be available in six editions meeting the requirements, use cases and budgets of customers of all sizes. In the current tough economic climate, VMware vSphere 4 offers unbeatable value to customers with up to 30 percent higher consolidation ratios, up to 50 percent storage savings, and up to 20 percent power savings over the previous generation of VMware Infrastructure 3.

* VMware vSphere 4 Essentials, priced at $995 for three physical servers, or $166 per processor, provides an all-in-one virtualization solution for the small office IT environment. VMware vSphere 4 Essentials Plus, priced at $2,995 for three physical servers, or $499 per processor, adds high availability and data protection capabilities that are otherwise out of reach for the small office IT environment. VMware vSphere 4 Essentials Plus is the only virtualization offering that provides integrated, built-in availability, data protection, patch management, and customizable alerts and reports at this price point.
* For datacenter deployments requiring the ability to scale and grow, VMware vSphere 4 provides four editions for four distinct use cases:
o VMware vSphere 4 Standard priced at $795 per processor provides significant server consolidation ROI with new cost saving capabilities including thin provisioning for up to 50 percent lower storage costs and performance optimizations for up to 30 percent higher consolidation ratios than the previous generation of VMware software.
o VMware vSphere 4 Advanced priced at $2,245 per processor provides application availability and protection. Live migration with VMware VMotion, and the addition of VMware Fault Tolerance for continuous availability, VMware Data Recovery for backup, and VMware vShield Zones for security uniquely deliver Always on IT in one integrated package.
o VMware vSphere 4 Enterprise priced at $2,875 per processor adds automated resource management with VMware DRS and VMware Storage VMotion.
o VMware vSphere 4 Enterprise Plus priced at $3,495 per processor includes the full range of VMware vSphere 4 features for transforming datacenters into internal cloud computing environments including VMware vNetwork Distributed Switch and VMware Host Profiles for simplifying the operational management of large deployments.
* Special Upgrade Promotions for Existing VMware Infrastructure Customers. Existing VMware Infrastructure 3 customers with valid support and subscription contracts are automatically entitled to VMware vSphere 4 editions. (For more information, visit the VMware vSphere 4 upgrade center at: http://www.vmware.com/go/vsphere-upgrade-center.) VMware is offering limited time promotions for existing VMware Infrastructure 3 customers wishing to upgrade to VMware vSphere 4 editions over and above what they are entitled to under their support and subscription contracts:
o VMware Infrastructure 3 Standard to VMware vSphere 4 Advanced: At less than 50 percent of the upgrade list price, customers can add key features such as live migration with VMware VMotion, continuous availability, network security zoning, and data protection. Suggested US list price: $745 per processor
o VMware Infrastructure 3 Enterprise to VMware vSphere 4 Enterprise Plus: At less than 50 percent of the upgrade list price, customers can add key features such as dynamic resource allocation, power management, live migration, the distributed switch, and host configuration controls. Suggested US list price: $295 per processor

For more information on VMware vSphere 4, please visit: http://www.vmware.com/go/vsphere.
For more information on the VMware vSphere 4 pricing, please visit: http://www.vmware.com/go/vsphere/buy.

About VMware
VMware (NYSE: VMW) is the global leader in virtualization solutions from the desktop to the datacenter—bringing cloud computing to businesses of all sizes. Customers rely on VMware to reduce capital and operating expenses, ensure business continuity, strengthen security and go green. With 2008 revenues of $1.9 billion, more than 130,000 customers and more than 22,000 partners, VMware is one of the fastest growing public software companies. Headquartered in Palo Alto, California, VMware is majority-owned by EMC Corporation (NYSE: EMC). For more information, visit www.vmware.com.

VMware, vSphere and VMotion are registered trademarks and/or trademarks of VMware, Inc. in the United States and/or other jurisdictions. All other marks and names mentioned herein may be trademarks of their respective companies.

Forward-Looking Statements
Statements made in this press release which are not statements of historical fact are forward-looking statements and are subject to the safe harbor provisions created by the Private Securities Litigation Reform Act of 1995. Such forward-looking statements relate, but are not limited, to, the benefits of customer adoption and deployment of our products and architecture and expectations for the release and delivery of our products. Actual results could differ materially from those projected in the forward-looking statements as a result of certain risk factors, including but not limited to: (i) the duration and deepening of negative economic or market conditions; (ii) delays or reductions in consumer or information technology spending; (iii) competitive factors, including but not limited to pricing pressures, industry consolidation, entry of new competitors into the virtualization market, and new product and marketing initiatives by our competitors; (iv) our customers’ ability to develop, and to transition to, new products, (v) the uncertainty of customer acceptance of emerging technology initiatives; (vii) rapid technological and market changes in virtualization software; (viii) changes to product development timelines; (ix) our ability to protect our proprietary technology; (xii) our ability to attract and retain highly qualified employees; and (xii) fluctuating currency exchange rates. These forward looking statements are based on current expectations and are subject to uncertainties and changes in condition, significance, value and effect as well as other risks detailed in documents filed with the Securities and Exchange Commission, including the report on Form 10-K for the year ended December 31, 2008, which could cause actual results to vary from expectations. VMware disclaims any obligation to update any such forward-looking statements after the date of this release.

1Based on VMmark benchmark comparing the performance of ESX 4.0 on 2-socket server with 6-core Intel processors to the performance of ESX 3.5 on 2-socket server with quad-core Intel processor.
2 Calculation based on the usage of VMware vStorage Thin Provisioning across all VMware virtual machines - we assume thin provisioning is turned on for all current VMware virtual machines and this results in deferred storage needs of less than 50%
3 Calculation based on the usage of VMware DPM across the current installed base of VMware ESX - we assume DPM gets turned on across all servers and some number of those servers get powered off on nights and weekends
4 Benchmark published at VMworld EMEA http://www.vmware.com/company/news/releases/performance-vmworld.html
A single VMware vSphere 4 VM delivers 5 times the payment traffic of VISA, which is estimated at 55 billion transactions over the four quarters ended Sept. 30, 2008.
5 All prices referenced in this section are suggested US list prices and may be subject to change.