This should be of concern to VMware, simply because Hyper-V is poised to be free, for all intents and purposes, bundled with the Windows Server 8 OS. The real upside to that is enterprises may be able to gain the upper hand in licensing negotiations with VMware and others.
Raj Mehta, CEO of Infosys International, an IT services firm based in Plainview, N.Y., says, "We have proactively and aggressively pursued the vendors, and negotiated [customers] much better deals.”
However, success in negotiations will invariably be affected by the power dynamics between vendor and enterprise customer, which will ultimately play a role in how costly and comprehensive virtualization licensing will be. In turn, vendors may not be as willing to compromise if they see negotiating price as a threat to the bigger picture--namely, their revenue stream.
Conversely, customers would want "the right to run anything, anywhere, but they don't want to pay more to buy [these rights]" and may look to renegotiate for virtualization software based on existing license agreements with the vendor, says Buchanan.
According to a new report from Gartner,Top Five Server Virtualization Trends, 2012, VMware's customers are not abandoning ship, but they are very interested--perhaps for new deployments, a business that isn’t virtualized yet or a branch office--in looking at a secondary vendor. "For net new [customers], it’s the 80/20 rule: They’re looking at having a secondary vendor for new technology and getting a new footprint in that technology and learning something new, and perhaps to gain leverage to negotiate with VMware," says Tom Bittman, a VP and analyst with Gartner Research.
He says another trend reshaping server virtualization in 2012 is that VMware’s competition has improved significantly in the past few years, and price is becoming a big differentiator. In addition, virtualization pricing models continue to be in flux, and a move toward private and hybrid clouds "will ensure that virtualization pricing will continue to morph and challenge existing enterprise IT funding models."
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