Uh-oh. The engineers behind the scenes at VMware (NYSE: VMW) are human, too.
The virtualization expert rolled out an update to its ESX platform a few weeks ago. Perhaps the most tempting of the new features in this "hypervisor" -- a product that runs virtual machines as close to the hardware as possible for maximum performance -- was that you can use one version of the software (ESXi) for free, forever. No more licensing hoops to jump through! Try before you buy into the entire VMware Infrastructure platform! Woo hoo!
But the ESX and ESXi updates rolled out to customers with a time bomb hidden inside. In a move common to beta software projects everywhere, the built-in licenses were set to expire last night and somebody forgot to remove that limitation. Oops. That's the opposite of the intended effect.
So come early morning, updated virtual machines started seeing license errors on reboot, leaving them unusable until VMware released a patch for the problem some 20 hours after it was discovered. If you're an IT manager who's trying to impress your bosses with the benefits of virtualization, 20 hours of downtime ain't doing you any favors.
Apologies have been flying all around, while rivals like Microsoft (Nasdaq: MSFT), Sun Microsystems (Nasdaq: JAVA), and Citrix Systems (Nasdaq: CTXS) must be enjoying this moment in virtual machine history. The issue was clearly human error, rather than something intrinsically wrong with virtualization as a concept or even VMware's implementation thereof.
It's a definite PR gaffe, even though a rather small number of customers should actually be affected: those with a recently patched ESX server, rebooting in the short window between the license expiration and widespread news about the whole thing, with system administrators who didn't want a dirty workaround like changing the system time. Oh, and they patched a production-level system after less than two weeks of quality assurance in a development environment. It will change the way VMware goes about its own internal testing procedures, particularly under the watchful eye of a new boss. If we get better software out of this harmless episode, I'm all for it.
Investors should call it a storm in a teacup, though. I'd be very surprised if the incident affects the next quarterly report at all -- assuming that my former sysadmin colleagues were doing their jobs properly. The stock is cheap today, and VMware is still growing like a bamboo shoot with the heft of semi-parent EMC (NYSE: EMC) behind it. Don't be scared.
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