Could VMware be the next Novell? That's the question Gartner managing vice president and chief of research for Infrastructure David Cappuccio asks in a provocative post, one that bears further discussion. While VMware is at the top of its game, there are several historical analogs between VMware and Novell.
I'll let you read Cappuccio's excellent post for his full argument, but the crux of it is that in the face of dominant but pricey technology, many buyers will turn to "good enough" to fill their needs. For Novell, that competition to its 90 percent market share came from Windows, which displaced Novell's "great technology that was more complex (or complete) than most customers needed."
Today, VMware faces a host of rising threats. Cappuccio picks out Microsoft's Hyper-V as chief among them:
[L]urking in the background is this little thing called Hyper-V; not as robust, or as tested as VMware, with almost no install base, and certainly not ready for prime time in most people's minds. However, it will be an integral part of Windows 7, Windows Server 2008 and Windows Server 7 in 2010. Why should you (or VMware) care? Because like "free networking", or "free SharePoint", hyper-V will get used, slowly at first, but as more and more systems get installed the base will increase and within just a few short years companies will discover (surprise, surprise!) that they have business applications running on both VMware and Hyper-V.
Free-and-good-enough is a great strategy, and one that Microsoft has long used to exceptional effect.
Of course, Microsoft isn't the only one playing this game. Xen is included for free in Linux, though Red Hat is pushing to move users to KVM (and succeeding to an increasing extent). Virtualization customers are spoiled for choice.
All of which leaves VMware exposed. This isn't to suggest that VMware should resign itself to obliteration. Indeed, VMware has gone on the offensive, releasing a host of software as open source to combat open-source alternatives, most intriguingly its open-source virtualization client, as OStatic's Sam Dean notes.
Novell didn't respond to its Netware demise until it was too late. VMware seems to be learning from history.
The real question is whether it will be able to go as low as Microsoft and the Linux vendors on price while still maintaining "good enough" profits. I suspect it will fail in this because for VMware, virtualization is core and it must price accordingly. For Microsoft, Red Hat, and Novell, virtualization is a critical complement, but not the core of their businesses. Complements are cheap, core is not.
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