Reader Feedback on VMware Replaces Co-Founder Greene

Published: July 22, 2008

Not everyone agrees with a lot of things I say in my articles, much less everything, which is a good thing because I am sure I am not always right. It takes a lot of ideas thrashing around to come up with correct responses to any situation, which is why I have always believed that if you let democracy work--I mean really let it work, without trying to twist and turn and bend and warp it--it actually does work. Anyway, I like the give and take of feedback, and here is an interesting bit that came in last week in the wake of our coverage of VMware's founder, Diane Greene, being pushed out of the company.

Tim:

I wondered, reading your article on Greene's departure, if you were entirely sober when you referred to VMware software as expensive. I had the [dubious] pleasure of establishing the first European distribution relationship with VMware back in Jan 2003, and in the absence of any VMware presence at all initially, and certainly no guidance on how to sell the stuff, I quickly became expert on what turned customers on about it.

One of the things that generally got attention was that the software costs could be recouped purely in the savings on SAN connectivity virtualizing three or four physical servers running on one host. Tim, nothing is expensive that saves more than it costs to buy. I was alarmed after the first year of handling the stuff at how laughably cheap it was, and still is. On the other hand, I could argue that all software is inherently worthless, and that it only has value when its behavior resonates with a business need--a convenient argument I've used persuading resellers to buy the "free" Red Hat Enterprise Linux suite, which attracts revenue through subscription and support chargeables.

Kind regards,

Phil

Quite sober, Phil.

You can't expect to charge $6,000 to virtualize a $2,000 server. I believe that, and I say that as the guy who has to make the money to pay for the servers around here. The pain point for virtualization, as we know, is Windows. Cheap Windows boxes. If you want to address that market, you have to price for it. Had VMware taken a volume approach to begin with--and maybe a little open source, too--VMware would not be facing the Microsoft and Citrix Systems threats today.

Then again, EMC would not have been able to pump up a company with $1.3 billion in sales to a market cap that was kissing $60 billion or some insane amount, either.

The AS/400 was a far better platform for making business applications than Windows a decade ago. Who won? The low-cost, volume leader. The AS/400 used to be the volume leader in the midrange. But, no mas. I am not saying that VMware is at that point yet, but I am saying it has to be careful about proprietary file systems, closed source code, and high prices in a market that increasingly expects open or at least mixed source (no, I don't include shared source as a third or viable way to get street cred in the open source community) and something more in line with the actual cost of a server and its operating system.

I see what you are saying, and I am not arguing that for the early adopters, the SAN connectivity and server consolidation savings are not real. But for the great unwashed out there in SMB land, VMware's coolest tech--the kind SMBs desperately need--is too expensive.

--TPM

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VMware Replaces Co-Founder Greene with Microsoft Hotshot

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