VMware feeling the open-source sting
A range of great analyses today of what went wrong with VMware. In case you missed it, the company lost 25 percent of its market valuation and a CEO. Many are suggesting that pressure from open source is the culprit, and it seems a very plausible rationale.
Dana is willing to believe that VMware's new Microsoft-esque CEO may be able to "turn things around with a proprietary strategy...[demonstrating] that management was to blame," but he doesn't seem to think this is likely.
OStatic is even more emphatic that VMware was living on borrowed time as open-source vendors like Red Hat, Novell, and Sun embed virtualization technology into their operating systems: "Virtualization, is, at its core, headed for software utility status, and will likely be wrapped into operating systems, and increasingly adopted in open source form for free."
My colleague, James Urquhart, pinged me tonight to suggest that "Management is where its at. VMWare has good technology there (see B-Hive), but they only do it for their stuff." This is perhaps sustainable if VMware had a way to embed its technology everywhere, but arguably the operating system vendors are much better positioned to do this, and it will be their management offerings that encroach upon and eventually take VMware's market position.
It was great while it lasted, VMware. Who knows? Maybe it can last a few more years. But I wouldn't bank on it. Neither, apparently, would Wall Street.
Matt Asay brings a decade of in-the-trenches open-source business and legal experience to The Open Road, with an emphasis on emerging open-source business strategies and opportunities. Matt is vice president of business development at Alfresco, a company that develops open-source software for content management. He is a member of the CNET Blog Network and is not an employee of CNET. Disclosure. You can follow Matt on Twitter @mjasay. 
http://www.theregister.co.uk/2008/07/08/tucci_costs_vmware/
And you can get Virtual Iron for for 80% less than VMware licensing. Do you think this open source based product is affecting VMware?
http://www.virtualiron.com/
- by patricio3838 July 10, 2008 11:21 PM PDT
- Much has been made of VMW core business becoming a commodity. VMW has been combating the ?hypervisor as commodity? issue caused by open source, Citrix and Microsoft via a bundling strategy. So it?s interesting that today it was revealed that they?re increasing the price of products and support by 10% Europe and ANZ. Read here: http://www.virtualization.info/2008/07/vmware-to-raise-prices-in-europe-by-10.html
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(3 Comments)And as of July 3 they increased the price of their VI Midsize Accelerator Kit (a bundle), sold to the mid-market, by $5,000 to almost $20,000. This price doesn?t include mandatory support. So clearly VMW doesn't believe it needs to lower prices.