Yankee Report on Virtualization - Part 1: Pricing wars and heated competition

I chatted up with Laura a few days back and she clarified things which appa"rant"ly are put differently everytime someone speaks of it. Laura did mention that all she was pointing out to the facts:
- VMware is a leader here BUT it is bound to face some serious heat this year. We expect some really heated 3 quarters ahead!
- Microsoft is not hte only contender, Citrix, in my opinion is the bigger contender here!
- Being the sole and only market leader is no fun, its time to see some value and healthy competition in this market. And VMware realizes that it is not easy.

My full analysis on the article and my RTA session will follow, we'll take it a step further and mix it with our upcoming noveau ideationist series where we will help firms work on a more effective M&A strategy to identify, acquire and go to the cloud target.

Anyways here is one of many such articles on the web:

"VMware is the champion right now, but everyone's looking to take them down," says Laura DiDio, a Yankee Group analyst.

So if VMware is the major player, who are the competitors?

The obvious choice is Microsoft. But it could also be Citrix or Sun, Oracle, Virtual Iron, Novell or Red Hat.

"VMware's biggest vulnerability is pricing," says DiDio, who just published a report on the virtualisation price war.

Less expensive is not always better, but VMware's product retails for about $3,000 (£1,500) per socket, while the other virtualisation vendors typically charge $700 (£350) to $800 (£400), according to DiDio. Microsoft's Hyper-V will cost $28 (£14) as a stand-alone product or come free as an add-on to Windows Server 2008. The EMC-controlled VMware hasn't indicated any possibility of lowering prices, but it does offer one free product called the VMware Server, intended to lure new customers.

A Yankee Group survey last year had 55 percent of server virtualisation customers planning to use VMware, 29 percent opting for Microsoft, 14 percent undecided and the rest buying from one of several other vendors. Some estimates have VMware holding 80 percent of the market or more. (These numbers don't include Unix and mainframe virtualisation, where IBM is a big player).

Microsoft is thought to have the most promising shot at overcoming VMware's huge market lead. But this is a rapidly growing market, and each player has a chance to carve out its own niche while luring customers away from VMware and its flagship ESX Server. Here's a detailed look at what several analysts say are the vendors that pose the biggest threats to VMware.

Read here