High demand for virtualization in China, VMware says

The firm counts government ministries and some of China's biggest companies among its clients

VMware will expand in China as it moves to meet rising demand for desktop and data center virtualization in the country, a company executive said in an interview Wednesday.

VMware is rapidly building a customer base among smaller Chinese firms - those with 1,000 or fewer staff - even as it expands services for bigger clients with mature virtualization systems in place, said Andrew Dutton, VMware's new Asia Pacific head.

VMware's business in China tripled last year. The firm expects to have 350 staff in China by the end of the year, up from about 200 now.

That level of growth could continue for a number of years, Dutton said.

"As we see opportunity present itself, we'll staff up to meet that opportunity," he said.

VMware releases local Chinese versions of its products about two months after their English-language launch. The company counts government ministries and some of China's biggest firms among its customers. High levels of virtualization at clients such as China's statistics bureau and the Agricultural Bank of China have created a need for stronger support staff in China, Dutton said.

"Some of the customers here are so mature, or they're becoming so mature, in the use of IT that they need to be right up at the cutting edge, and to do that they want access to the minds that built the products," he said.

Data center virtualization provided about 90 percent of VMware's revenue in China last year. Less than 10 percent came from desktop virtualization, but the firm hopes to raise that number. It expects revenue from desktop products in the first quarter of this year to match the figure for all of last year.

Large firms including banks and telecommunications operators have been among the fastest to virtualize their servers in China, while high costs and a lack of awareness have made small firms slow to follow suit, said Ravi Shekhar Pandey, an analyst at Springboard Research.

Foreign companies offering virtualization in China could find it difficult to crack software and service sectors dominated by Chinese firms, said Pandey.

"I have a strong feeling that Chinese customers are more comfortable working with Chinese companies," he said.

Still, Microsoft and Virtual Iron rank beside VMware as foreign firms that have made inroads to China's virtualization market.

"VMware has an advantage in the sense that it is recognized in every market as somebody who pioneered this, who made it easy for companies to virtualize their infrastructure," Pandey said.

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