VMWare May Have to Re-evaluate its Cloud Management Pricing

One of the most common downsides of cloud technology is being on the lead is overconfidence. When business enterprise is at record high of 10 times the previous revenue scales, 35% growth and 80% market share the common issues include being unable to self-critique one’s performance.

Netfix has a lot to say about the leaders in the cloud industry; one of them is VMWare. VMWare continues to evolve in many areas and needless to say that their products are way out on the lead. Currently, they are working on becoming an IT platform management company. vSphere being the basic platform where additional management applications can be sold.

Everything is happening too quickly and analysts say that 74% of Q2 Enterprise license registrations came from vSphere, infrastructure software and 12% of Q2 came from management products, which was nearly, zero just a year earlier.

The issue here is that VMWare may be making very high projections from their cloud management enterprise. One thing that needs to be re-assessed is the software’s pricing scheme, which is currently on a per server per VM plan.

If a company needs to purchase the whole stack, they need to consider that VMWare’s own chart of cost estimates show that additional VMs for the entire infrastructure will cost twice the price of the hypervisor itself.

What is ironic about all this is the fact that VMWare has made it its business and marketing strategy to leverage on the cost savings of their server consolidation, but judging from the figures that is not the case.

Another concern would be the fact that SRM and vCloud Director are not compatible with each other. Another is that no business would have to implement the Site Recovery Manager for each of their VM. In the end, companies may have to end up buying so many products that are like an a la carte selection, which will unnecessarily escalate the cost of infrastructure.

This kind of pricing that VMWare is using is a strategy to shield VMWare cloud management against its competitors. They are trying to place their customers in a situation where they will not look elsewhere for their cloud solutions. The customers, however, do not know that the lack of understanding of the cloud complexities may place an unpredictable IT budget to the current infrastructure.

Another concern that needs evaluation from the CIO standpoint is the fact that VMWare’s management stack can only utilize virtualized servers, which means non-virtualized IT equipment will no longer be useful in the new cloud platform that is unlike other competitor products that can handle both platforms at the same time.

Due to the current VMWare pricing challenge a lot of competitors like DynamicOps, Platform Computing and Abiquo are taking advantage of the situation.


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