I've been watching the chess-like moves of Microsoft, Citrix and EMC/VMware since all entered the ring and began their testosterone-fest pose-down months ago. It seems like each contender has their eye on the championship belt wrapped around the midsection of VMware, weighing in at 500 lbs, but rapidly losing weight. If they don't do something soon, they're going to get knocked down to the welterweight class, maybe featherweight.
Let's face it, VMware is not a diverse company in terms of product streams. Everything they do and offer, comes down one pipeline into one general market: virtualization. Diversity is EVERYTHING in the tech world. History is a great teacher. Lotus, Netscape, WordPerfect, need I say more? VMware is walking in the same footsteps as those guys and they've attracted intense attention from the same adversary: Microsoft. But this is 2008, and Microsoft isn't the only player in that space. In the past, whenever they stepped into the ring, others stepped out or figured out how to partner with them and survive. Like Remora cleaning a Shark.
Not this time. More have stepped in along with Microsoft and all are gunning after the same target: VMware. The problem is that it doesn't look like VMware has learned anything from past Microsoft battles and conquests. Nothing at all. Rather than diversifying, they're still expanding into the same narrow market space. Rather than getting innovative with licensing and pricing, they're sticking to the same flagship model and trying desperately to protect it. I don't see it working much longer. The rapid exits of top-level management and talent is a clear sign that people are seeing bad things ahead.
Don't get me wrong. There's nothing wrong with VMware's products. They make very solid products and their marketshare is clear proof that the world understands that. However, the economy is weighing extremely heavy on the tech industry,and even heavier on customer budgets and budget plans. Microsoft is indisputibly better positioned to cut prices and make more aggressive changes to out-flank their competitors. They simply have more eggs in more baskets and more resources to make more eggs and more baskets in shorter time. As with everything Microsoft does, their 1.0 products get an eye and a lot of scorn and disrespect. Most of the time deservedly so. Then comes 2.0 and they get a serious consideration. And then 3.0 when they usually choke off the competition.
VMware surely sees SCVMM and Hyper-V as Microsoft's 2.0 attempt (following Virtual Server as being 1.0). When the next iteration of Hyper-V and SCVMM arrive, it will only take clever pricing, licensing and marketing for Microsoft to begin choking off VMware, whether slowly or rapidly. That only depends on how much effort Microsoft exerts and what the economy is like when they do it.
What VMware needs to do right now is get crazy. Un-shackle their enterprise-oriented licensing model and steep pricing to allow SMB's to benefit from their goods. Right now, a small business can't even begin to play with ThinApp or Virtual Center, simply because of the entry-point licensing requirements and the rather difficult pricing model. Microsoft has placed the same choke collar on App-V by requiring Software Assurance and MDOP, which almost no small business can even consider, let alone qualify for.
I've said it before: Small businesses (rather: SOHO) can benefit from ThinApp, XenApp, App-V, SVS, etc. in many ways. Disaster recovery comes to mind quickly. But there are other savings in terms of periodic updates, upgrades and roll-outs. But that's only the smallest example. Servers and desktops may be a no-brainer for large enterprise customers, but they can be of great use to smaller environments as well.
The fork in the road is approaching fast for VMware. They'd better figure out something innovative soon, or they may be yet another notch on the bed post for Microsoft.
Disclaimer: Everything you read above (if you stayed awake that long) is only the opinion of this author and is based on nothing of any substance or importance in the grand scheme of things. Any references or links made to this article may risk your professional credibility and general peer respect. Comes with everything you see here, batteries not included.
