VMware Wastes Strength in Virtualization ROI War with Microsoft

CIO —

I realize that it's a tradition in the computer industry, but I find it a little disappointing to see virtualization giant VMware following the same competitive marketing obsession that made industry powerhouses of Banyan Systems, WordPerfect, Digital Equipment and Novell.

Each of those companies, at one time, were considered absolutely dominant in their own markets and gradually lost those positions partially by focusing on the elegant engineering of their original product set and failing to recognize the point at which customers began to take that function for granted.

Once that happens—usually after Microsoft and a whole bunch of other companies offer a good-enough version of the same product—you have to offer customers more than just elegantly engineered basic functions and focus on what more you can do for them.

As a reporter covering the network operating system market in the mid-90s I spent a lot of time talking to Novell engineers about how much faster NetWare was than NT Server at file and print—the product and functions that built the company.

Customers already took file and print for granted, though; they wanted a server that did more than just file and print. They wanted one that could run applications and connect them to the Internet and reduce the number of operating systems they had to deal with every day, even if it didn't do some things as quickly as NetWare.

But rather than demonstrate what else a customer could do with network management, groupware and other products that were bundled with the operating system, as Microsoft did, Novell focused on telling everyone how much better NetWare was than NT. Bad move.

VMware's showing signs of making the same mistake.

The most recent example is actually fairly excusable. As part of its most recent beta release, Microsoft posted a virtualization ROI/TCO calculator designed to show potential customers how cheap it will be to go with Microsoft's built-in, practically free virtualization server rather than VMware's.

The VMware folks have some good points in their overly detailed refutation; VMware has its own ROI/TCO tool, too. Microsoft appears to have distorted the licensing costs -- understating the cost of its own licenses and required add-ons, and inflating those of VMware.

It's not far down the rathole yet, but VMware is reacting to the promise of direct competition from Microsoft —and existing competition from every vendor that can squeeze a Xen hypervisor into its product bundles—by focusing on the past rather than the future.

VMware execs in the field are also quick to talk about how much more efficient VMware's hypervisor is, too.

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