Friday, October 17, 2008

Obstacles to Business Environment Virtualization

A lot has already been said and written about why many business customers have not climbed aboard the virtualization bandwagon.  VMware has probably spent more time and effort on analyzing that perplexing issue than anyone, but all of the newer players have begun to scratch their heads as well.  Adding the already-difficult aspects to the ever-tightening gauntlet of economic uncertainty and constraint, the result is an ever-more skeptical view about the virtues and practicality.

Anyone that's spent time dissecting the ramp-up costs, knows about the work it takes to convince the budgetmeisters of jumping into datacenter virtualization.  This is the most likely environment where it takes hold from an IT perspective.  Desktop virtualization has become so common as a testing environment that it's as boring as LAN cabling these days.  It's the jump from that level to actually consolidating servers and server roles that makes everyone hold their breath and hope for the best outcome.  The stated benefits are well known:  space and resource consolidation, reduced energy costs, reduced footprint management, increased flexibility and redundancy, and so on.

So, with all that great stuff, why aren't ALL businesses rushing to move their physical servers into virtual environments?

You might say it's the economic mess causing it.  But this has been a problem for vendors long before the economy turned sour.  Long before that.  There's always a segment of the landscape that rushes the beach first.  Eager to take the fortification and put up a flag as an "early adopter", followed closely by the "avante garde" customers.  But all of those combined account for a small portion of the entire market which has a room with physical servers, albeit a "data center", which could (possibly) benefit from going virtual.

So why is it?

Here's what I think... It's the vendors' fault.   The vendors have retracted from face-to-face marketing in favor of "marketing from a distance".  The costs of travel, salaries, resources and sheer logistics have all ganged up on the finance department to rethink priorities and that's been a powerful force against the mobile salesperson.  Taking current and potential customers out for the fancy lunch was a nice job perk, and probably didnt' hurt sales much, but finance folks only care about "COSTS".  The problem is that focusing on one side of the equation creates an imbalance, and the imbalance here is that customers aren't seeing as much "in-your-face" marketing of their products and services.

I work in the IT department for a major corporation that spans the globe, and after having been inside that environment for years I can easily see the impact and difference of this.  In the 1990's dot-com boom, vendors were hanging around like flies at a Summer picnic.  They were just everywhere.  They became as commonplace as the guys that stock the drink machines.  Demos seemed to be much more common also.  Not online WebEx or Placeware (heh, remember Placeware?  *sigh*...) but actual demonstration held in a conference room, a hotel banquet room or whatever.  Swag was handed out like campaign buttons at a convention.

Times have changed.  Results have also changed.

With things going the way are in the credit and financial markets, the squeaze is definitely being felt all up and down the supply and consumer chain.  Technology markets have enjoyed a delay in some respects that other markets have taken on the chin (auto sales, real estate, etc.)  How long our industry will remain bouyant is anyone's guess.  I've already taken a hit on the chin with a layoff earlier this year.  I'm just starting to breathe again, but I don't take anything for granted anymore.  I may never look at life the same way.  It was my 9-11 wake-up.  One of the things it helped me see better is how important it is to market aggressively.

VMware is facing a huge, HUGE threat from Microsoft.  This is pretty obvious.  And it's not unthinkable that like past Microsoft adversaries, they too will fall by the wayside.  But there will be others in line to either join or fight.  Being as vertical as they are, VMware can't afford to stand still, or even march in the same direction too much longer.  They seem to be making strong effort at diversifying and grabbing some acquisitions along the way, but they're still too narrowly defined to battle indefinitely against Microsoft.  They will have to adapt to new strategies or whither away.

The list of fallen foes is long enough that VMware should know better.  So why then is Microsoft gaining ground so much faster than they are?  Because Microsoft starts with a "name" and a huge customer base, for one.  Then there's the "free factor" which Microsoft is very good at playing.  They did it with IE against Netscape, and WMP, and Outlook Express and games and utilities and so on.  They're doing it again with virtualization.  First it was Virtual PC.  Now it's Hyper-V.  VMware is scrambling to counter this strategy but they can only give away so much before it starts to cut into their bottom line to the point that they hemorage and then the staff starts running for the exits.

Microsoft is vastly more diversified and therefore more resilient to revenue loss in isolated business segments.  The only limitation is litigation (the DOJ and EU).  They will continue to circle their wagons on VMware until they implode or get acquired by someone either bigger than EMC or someone on another channel, out of Microsoft's way.  If we truly aspire to a "Free Market" system, the laws of economic nature will not bode well for VMware in the months and years ahead.  VMware arguably has superior, more mature products and technologies than Microsoft does.  But Microsoft never stands still and they're famous for closing the gap and going for the throat.

Did I just reiterate what everyone else already has?  Yep.   But why?

Because it's reason enough to make it even more imperative that VMware get a salesforce out on the road (or in the air) and meeting customers face-to-face.  Doing demos in their faces.  Handing them goodies again.  Bring back the firm handshake.  It's the only way to buy more time, and possibly turn the tide in their favor.  It's a long shot, but it's their only shot.
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