VMware's Woes Are Just Beginning

The other week when I talked to Xen's chief architect Ian Pratt, he was quite firmly of the opinion that VMware's days were numbered. Then came VMware's shuffling of CEOs (and convulsing stock prices), and what seemed like doomsaying now seems like a grimly realistic prediction. And there's plenty of signs open source is the reason why, but it's also part of a larger picture.

First, the obvious stuff. VMware stands to lose plenty of ground in the virtualization space to a whole bunch of competitors, Xen being one of the biggest. Not because VMware doesn't have a good product (they do -- I'm using it right now for an upcoming feature), but what they offer for the money is becoming that much less competitive when Xen can offer many of the same things either for free or as part of a commodity solution.

It's the second part that's at least as important as the first. Microsoft's own answer to Xen, Hyper-V, has debuted to broad acclaim -- and since it's essentially a freebie that comes with Windows Server 2008, it's automatically a competitive solution. VMware's business model has for too long assumed such things would always be worth spending extra for. In many cases, it is, but not nearly to the extent that it used to be. To wit: I can get a perfectly good desktop-environment virtual machine system from VirtualBox, so why spend the money for VMware Desktop when the advantages are minimal at best?

I'm not sure this is going to be solved by VMware providing open source or entirely free versions of their products. I'd guess free rather than open source would be their choice, given VMware's history and the fact they just brought in ex-Microsoft vet Paul Maritz to run things. That or they have to create something so fantastic that people are going to want it no matter what.

VMware's plight is something of a microcosm for what's happening in the software world at large. If you can't find a good way to compete with "free" -- and there are legitimate, profitable ways to do that -- you're not going to be in this game much longer.