...just a phenomenal R&D group, and it's in the customers' interest and our partners' interest that those people stay productive and keep inventing. But, as you increase [sales] volume, you don't have to charge the same thing to pay those people. So there are some economies that are going to change as the volume goes up. We're not there yet
But this is the software business. Once you pay X amount of dollars to develop a product, you can sell it to a market over and over. It doesn't cost ten times more to produce ten times as many units.
That's exactly right. So I do believe that it's not healthy for the software industry to keep charging the same thing if you have a radical change in volume.
So as VMware is used more widely, the price will go down. But will the fundamental technology price go down to zero?
You know, I don't think there's anything at zero; you look at Red Hat, it's not zero. You have to pay to maintain things, you have to pay to support things, and you have to pay to do new things.
HP, Intel, AMD, Sun, IBM — they're all funding development of Xen in varying degrees. Do you see price pressure on that core virtualisation product?
Today, we don't see the price pressure.
Years ago, back in that early 2000s, you had hoped for an IPO .
Planned for an IPO.
Right. Why did you end up being acquired by EMC instead?
A lot of things happened. We were growing incredibly rapidly. We'd been profitable for a couple of years, so we clearly could go public. We also seemed to suddenly have a lot of suitors. We had always had offers, from when we were a year old, but all of a sudden it got kind of intense. We felt like this could work — maybe we should get proactive about this. I have to say it has worked out exceptionally well. The company has just thrived, you know, as an independent subsidiary of EMC. I consider it quite a luxury that I am really focused on growing VMware as opposed to the quarterly [results].
There are a lot of Silicon Valley start-ups that have an exit plan, which is to get acquired by Cisco or some big company, but there are also a lot of Silicon Valley start-ups that want to be independent. What did you weigh when you were going through this decision?
Independence for independence's sake was never something we were after. What we were after was bringing this technology to market and letting it realise its full potential. It's just really exciting for us to see the customer adoption of this technology and the partner cooperation and collaboration around these technologies and it's fun and that has grown and expanded since the acquisition. Had we lost that, it would have been the wrong thing to have done, but we didn't.
And you probably wouldn't be in charge of VMware?
No, probably not.
I often gauge acquisitions by what happens to the founders.
Yeah, we're all here. I thought it was pretty amazing that six years into the company, when we got acquired, we were all still there. And now it's two years after the acquisition.
Talkback
Me thinks that the future of virtual machines (as in virtual workspace) is in being able to function as a gadget for web-based portals. Meaning, someone connects and authenticates to a web based portal and that makes it possible to open up a virtual machine (within the web browser) in which a (not web based yet) application can do its thing.
Me also thinks that as the price for hardware and software licences goes down the business case for virtual machines (as in virtual servers) will become less attractive. Given also that, like it or not, virtual machines do add to the complexity and risk management factors by violating the proven rule: Keep It Simple, Stupid. As in: favour the option that lets you achieve the same with less components. Murphy can tell you why. On the other hand: working fallback capabilities and diversity help ensure business continuity in the longer run.
Other things to keep in mind: there are always more ways then one to achieve goals. Including options that would enable to use existing hardware for a couple of more years and just add what you're lacking in one creative way or the other..
My advise would be to know what you have overall and how it works (A), know what you need overall and working how some time from now (B), figure out at least two ways to get from A to B in a certain level of detail (because certain details matter in IT and most of those are not technical in nature), choose, plan the work, work the plan and stick to it.
If however you find along the way that things don't work out as pictured then don't be afraid to rediscover A and B again because most organizations learn the most along the way. Seldom do they get it right the first time. So build in room for such events beforehand.