Hewlett-Packard And Dell: The PC Virtualization Threat

A couple of years ago, no one had heard of virtualization. Now, the leading company in the field, VMWare (VMW) has gone public. And, the service is moving into the core business of HP (HPQ) and Dell (DELL)–the PC.

Virtualization allows multiple operating systems and multiple applications on the same computer at the same time. So far, it is a big business in running servers where enterprises are investing billions of dollars in hardware and virtualization can cut down on the number of servers needed.

But, now the software service is moving in the direction of PCs. And, why not? VMWare has a market cap of nearly $24 billion and is up almost 50% since its recent IPO.

Pano Logic Inc has recently created a small box “that connects to a display and keyboard, and to a computer network,” according to The Wall Street Journal. The device means each computer display can go without a processor or storage device. 

It would be easy to say that a service like this will take a long time to build market share. But, virtualization has become popular enough with servers that it is beginning to cut into sales volume. It may  not be this year, or next, but the process is coming to PCs and that means a real threat to sales at Hewlett-Packard and Dell before the end of this decade.

Douglas A. McIntyre