Thinking Out Loud: Is VMware Legitimizing the Competition?

I was reading a completely unrelated post on Alessandro’s site this morning about how VKernel is reacting to VMware’s release of CapacityIQ when a thought occurred to me: is VMware legitimizing the competition?

Here’s the excerpt from Alessandro’s post that started me thinking:

And of course VKernel now is also in hurry to clarify that support for Microsoft Hyper-V and Citrix XenServer is coming.

Now, let me ask you this question: what is one of the largest complaints about products like Microsoft Hyper-V and Citrix XenServer? It’s the size of the partner ecosystem. Customers are a bit more hesitant to deploy these other solutions in part because there aren’t as many partner solutions out there to complement the virtualization solutions.

So, as VMware expands into new markets like capacity management and monitoring, backups, etc., former VMware-only partners are forced to adapt their products to work with Hyper-V and XenServer in order to protect themselves. This causes the size of the partner ecosystem for VMware’s competitors to grow, eliminating that complaint and removing one of VMware’s competitive advantages. In effect, VMware’s own actions are building out the partner ecosystem for their competitors and thus legitimizing the competition.

Am I crazy? Am I wrong? What is a company like VMware to do, if anything? I’d love to hear your thoughts.

UPDATE: Some readers have pointed out, rightfully so, that “legitimizing” isn’t really the best word to use here. Perhaps “assisting” or “helping” is a better word?

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  1. Paul’s avatar

    You are crazy! : )

    Kidding. This is an inevitable trend industry we have seen with nearly every Enterprise product as it matures over time. The example the kids of today remember as the first was WinZip.

    Remember when you used to need it – then Microsoft “killed” them? Look what Apple does when it wants, iTunes itself… there are 1,0000 other examples.

    Should VMware not do this and let the ecosystem require a lot of third party products? That’s a different problem and not as obvious a win in the long term as some may think. There are reasons beyond stock price to integrate native. Customers want fewer interfaces, regardless of whether its a DB, a Backup tool or Web Site Builder.

    To be a relevant over time, you have to innovate or you will be gobbled up in the big tent of a bigger product. IMO, VKernel is being childish and pretending there was no warning and no precedent. Run to Microsoft very publicly, but they’ll do the same thing when it suits them. Does anyone doubt that? VMware just has to go first -becuase- its the most mature product.

    Remember though – VMware has its own challenges. Its winning the Hypervisor war by a mile on features and innovation but it now must educate and market against the Redmond Machine. This will be interesting to watch. I say VKernel has it easy!

    -P

  2. Michael Keen’s avatar

    You make a great point here Scott. IM the partner ecosystem has to expand beyond just VMware as VMware starts to tear down the current partner ecosystem that was built up around them, as they start to take more and more features, like cap mgmt, monitoring, backups, etc, the partners in this area have no choice but to support Hyper-V and XenServer.

    As we were judging the “best of” awards last year at VMworld, cross-platform capability was one of the criteria for the partners in my category.

    Legitimizing the competition? No, the competition is already legitimate but now the partners in this space are seeing what VMware is doing and to maintain their own viability in the market they need to support the other hypervisors.

    Great post. Cheers

  3. Steve Kaplan’s avatar

    Both a good observation and question Scott (not about being crazy, about what should VMware do?). It would be an interesting, and not unprecedented, strategy to intentionally leave opportunity for ecosystem partners to add value. Microsoft did this for many years with Terminal Server. In this case, however, I think the industry is already too big and growing too quickly – ecosystem partners are going to embrace Hyper-V and XenServer as their virtualization revenues increase regardless of what VMware does. While I don’t think VMware should specifically target niche markets with revenue growth in mind, it shouldn’t intentionally exclude them either if deemed an important part of an overall strategy as a virtualization/cloud computing platform.

  4. Dave Convery’s avatar

    Scott -
    You are absolutely not crazy…On this anyway :oD

    I think the “problem” surrounds the fact that VMware is a software company. They have created a few great virtualization products and continue to improve them and upgrade them. But upgrades and improvements only bring limited growth. The growth comes from new stuff, either created or acquired. Acquiring stuff costs more money and gives less payback than creating. You’re right about the ecosystem as well. The partners must now spark up relationships with the competition in order to stay alive.

    It’s a shame VMware can’t come up with some NEW ideas on its own.

    Dave

  5. Louw Pretorius’s avatar

    When a company grows past a certain size, they have to start competing in a more open playing field – if thats the right phrase.

    They have to start branching out from “just virtualising” or risk stagnating – think Netware (brilliant fileserver with nothing added)

    VMware needs to add value to their virtualising dish to truly become the Datacenter of tomorrow.

    Yes there are trade-offs but then it’s like growing up, sometimes your favorite shirt just don’t fit anymore.

  6. Mike Laverick’s avatar

    What’s VMware to do. Nothing. This is a great thing you are doing – acting as spearhead for the industry – whilst lazy & non-innovative companies (er, like your competition) continue to lag behind in a herd like fashion. After doing the innovation the next step is keep on improving it, and re-evaluating this valid-add against its true market value. The problem I see that sometime VMware makes for itself – is sometimes marking things as “experimental” and also pricing or SKU’ing features out the reach of the bedrock of its customers – host profiles and DvSwitches could be a case in point…. The last thing customers want is innovation that locks them forever in one provider – I think Paul’s “Hotel California” argument – has merits – despite not being a huge fan of 70′s supergroups!

  7. Philip Sellers’s avatar

    Scott, I agree with you. I think its one of their unintended consequences, though I agree with Michael that the competition is already legitimate. We are already using XenServer in production in addition to our VMware, and while it lacks some of the management and features, it meets the needs for our virtualized XenApp servers.

    I think its going to be increasingly difficult for VMware to charge for the add-on management products and maintain their market share. I have always thought that VMware will have to take and bundle some of these add-on products into their existing Enterprise licensing to preserve customers paying those annual subscriptions, instead of having them abandon the VMware ecosystem and moving to a competitor as the competitors mature. Adding these management capabilities, if only basic or scaled back functionality, into their existing structure would also help convert some new customers who would have to pay for third-party partner software to meet the needs on a competitor’s hypervisor — helping level the cost/benefit ratio that may soon tip in the competition’s favor.

  8. Jason Boche’s avatar

    I wouldn’t say VMware is forcing it but they are accelerating it, particularly with the cost of some of their bolt ons (ie. vChargeback).

    Competition in the hypervisor market was inevitable. The proliferation of management tools adapting to other hypervisors is equally inevitable.

  9. slowe’s avatar

    All,

    Great comments! Thanks for everyone taking the time to share your thoughts.

    “Legitimizing” was definitely not the right word, but I think Jason Boche has it right—is VMware accelerating the adoption of cross-platform support by the virtualization ecosystem, thus leveling the playing field and eliminating one of their competitive advantages? I think we can all agree that it’s necessary and expected for VMware to move into new markets; it is, after all, a fiduciary responsibility the company has to its shareholders. Are there other ways in which VMware could seek growth without jeopardizing the partner ecosystem?

    I think we can also all agree that it was inevitable for the partner ecosystem to expand their support for multiple hypervisors; again, it’s in their best interests as well. But are they being “gently driven” to do so by VMware’s expansion moves?

  10. Carlos’s avatar

    Scott,

    All the partners ecosystem were going to do that sooner or later (take a look at Provision Networks for example) and Microsoft HyperV R2 is ging to accelarate that process as soon as it starts to get some marketshare. The partners are here to make money and it makes no sense to disregard one of their main benefits: they can support multiple hypervisors (Nor VMware nor Microsoft will be able to do that with their mangement products).
    Partners have to add value. vKernel is no longer doing it over VMware Capacity I/Q so they have to reduce the price and start to provide more value (that is, support other hypervisor offerings). But all the efforts will go for HyperV, Xen is almost dead from a market point of view.

  11. John Gannon’s avatar

    It’s a no brainer for a small ISV to say they have non-VMware hypervisor support on their roadmap (after all, most customers say they want choice of hypervisor – although today they are only choosing VMware)

    However, in practice I have a hard time believing they(small ISVs) will in the near term prioritize features/functions/bug fixes for non-VMware platforms.

    In a couple of years there may be some revenue to be had selling tooling for the non-VMware platforms, but I don’t think the market is there just yet.

  12. Michelle Pappas’s avatar

    Hey Scott- I am not certain that the largest complaint I’ve heard has to do with the partner ecosystem as much as finding an admin. that is certified and really good with anything other than VMware. Not to say that they don’t exist, just not as plentiful. That being said, John Gannon is correct- most “small ISV’s”
    will inevitably be asked what else is supported, and it’s pretty standard to respond that something is on the road map. Just remember that the Oracle/Sun deal is being blocked by the EU due to a supposed monopoly,
    so that tells me that no one company should not have a monopoly on anything. Customers like choice. Competition can be very healthy!
    Better that a customer choses than doing nothing, right?

  13. rbrambley’s avatar

    Scott,

    Great post.

    I had some fun with this scenario a while back and came up with “The Laws Of vMotion” to help describe a VMware partner’s decision to broaden support.

    http://vmetc.com/2009/07/24/veeam-now-supporting-microsoft-hyper-v-server-2008-r2/

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