VMware CEO, Diane Greene, told a room full of people at the Lehman Brothers investor conference that she wasn't concerned about competition affecting her product's pricing or positioning.
Greene said that while competitors are coming into the market, coming out with a hypervisor product isn't an easy task. She said that VMware isn't really seeing these competitors come up very much because they don't have an offering that basically gives the same benefits that VMware offers its customers. In fact, Greene told the audience that when competitor products do come up during deal negotiations, a natural thing for a purchasing agent to do, at the end of the day they know they are going to deploy VMware.
But the fact of the matter remains, over the next 12 to 24 months, VMware is going to have to contend with competition coming from the likes of Citrix, Red Hat, Novell, Virtual Iron, Oracle and Microsoft to name but a few. So the real question is, can VMware retain its 80-90 percent share of the virtualisation market? And can it do so with the same amount of return that they've been so very fortunate to earn as of late, making it the world's fourth largest publicly traded software manufacturer with a market value of about $37 billion.
When asked about the sustainability of their software margins, Diane Greene told investors at the Lehman conference that VMware is a pretty progressive company and that they have continued to develop new products that have added value to help enable them to maintain their price points because of all the amazing new functionality that is of very high value in terms of cost savings for their customers.
And when asked if over the next 12-24 months with all of the competition coming, if she thought that VMware would still be able to be a premium priced product going forward? Greene said that it was a myth that VMware is a premium priced product. She said that VMware is charging for some pretty amazing features in their Enterprise bundles, and continuing to add functionality that lets people automate and make their data centre incredibly efficient, flexible and easy to manage. And at that price point, VMware doesn't see any issue because of the roadmap that the company has in place.
Greene told the investors that VMware's software is far more feature rich and has far more advanced capabilities than rival virtualisation companies. And she added, VMware allows businesses to get more out of their virtualisation than just simply consolidating servers. It can boost the efficiency of the data centre, streamline operations, and provide high availability and disaster recovery.
VMware shares have more than quadrupled since the company's IPO at $29 per share. On 31 October, shares hit a record high of $125.25. But the stock has declined since then, as low as $71.44.
The competition is coming, and they are all going after the market leader make no mistake. This month however, VMware is also expected to release its 3i and 3.5 versions of its latest VMware Infrastructure virtualisation platform. Greene said her competitors don't have a comparable solution. Is she right?