VMware should have begun with a hefty pricing model

This is totally another perspective and somehow I can kind of agree with Michael here. Many firms would be dying to get this software that dramatically saves their costs. More like what Oracle RAC does, it is a unique technology and they continue to charge a lot for it. Customers who do need RAC will go for RAC. But what Michael is forgetting is that VMware is not only watching the ceiling, it is watching the floor as well. Having priced heavily would have had ramifications of totally different dimensions.

Let me explain it this way. 2000 bust was a real bust. A lot of disastrous scenarios unfolded. we are into recession, we do need to consolidate and VMware is not on the ceiling. so coming back to the discussion, I think that ESX server is priced right. It is not too heavy and it is not dirt cheap.

SMBs who are looking for creative solutions can hook up with Dell, with its new EqualLogic and get that iSCSI going. They can buy Virtual Iron or Citrix's virtualization and can move on from there as they scale.

VMware is moving unperturbed in its domains (Fortune 100, -500, -1000). I am sure thet Q4 earnings will not be disappointing.

Anyways here's the other perspective:

Today, as a VAC, “The worst ROI I’ve ever seen was for a customer with just 14 servers that needed to buy a new SAN [storage area network]. They saw ROI in less than a year and saved $180,000 over three years,” he said. “That’s still pretty compelling in my book.” Shops with more servers and a pre-existing SAN tend to see dramatically better numbers.

But setting its pricing so low was “a mistake” on VMware’s part, Tharp argued. “It gave them no wiggle room” a situation that manifests today as a “reluctance to negotiate any kind of discount.”

Ah..hindsight is hihdsight. When I do consulting I leave all options open: Citrix, Sun, VMware, Virtual Iron. Whatever you want, the engineers can make it all work.

Here's Alex's post.