Time for VMWare to change its pricing model

The once darling of the software industry, VMWare, is currently struggling to recover to anything close to what it was. With stock once riding high at $124 per share, it is now struggling to break the $40 barrier.

VMWare rode the initial wave of the virtualization revolution, producing high quality software to allow you to run and maintain multiple operating systems on one host. They were largely uncompeted for a number of years, but now that the computing world has decided that virtualization is indeed here to stay and will shape our landscape, a number of competitors have appeared, including solutions from Microsoft.

I am a proud VMWare customer having purchased their excellent Workstation product. In this world of open source, it was the only software purchase I made in 2007, and I do not regret it in the slightest. It is a solid piece of software and infinitely better than just their free VMPlayer.

But you see that's part of the problem. Having now acquired my excellent software, I have no desire or requirement to upgrade. This version is doing everything I need it to do. No more money coming from me for the foreaseeable future.

Part of the problem of VMWare is that they are struggling to close the big enterprise deals, with companies taking longer to decide, with many opting for smaller and short term contracts.

The virtualization world has not only changed how we think about server infastructure, but also how we think about billing. Gone are the huge initial outlays for expensive kit and network that we will probably never need, well not at first.

Virtual hosting companies, like Amazon and Flexiscale, all charge with a usage model. This "per-CPU hour" works very well in a virtualization world, where you can quickly ramp up to multiple running instances.

through gradual temperature increase

We've all heard the old story about how to boil a frog, you put it in a pan of warm water and slowly bring it to the boil. The frog will quite happily sit through the whole experience. In today's financial climate, companies have gone off boiling water, instead opting for the warm water.

There just isn't the money to instantly boil frogs.

Much of VMWare's sales come from their enterprise software that lets organizations run their own cloud internally on their own hardware. Instead of going for hugely expensive licenses, they should maybe look at the "per-CPU hour" model and see if they can turn around some of their dithering enterprise customers.

VMWare are in trouble without a doubt. After ousting their long term CEO and Founder, Diane Greene, their share price continues to tumble and something drastic needs to change to their underlying model, before this once darling of the software industry is just a chapter in the history books.


Recent Cloud posts

Recent JAVA posts

Latest CFML posts

Site Links