VMware's competitive challenges and market position against Microsoft

¶ … Vmware

Pros and Cons of VM Ware

Over the last several years, the marketplace for servers and virtual machines has become an avenue many technology firms are focusing on. This is because these large devices are used to store tremendous amounts of data for cloud computing. One of the biggest companies is VMware. Founded in 1988, they have transformed how various products and services are delivered to cliental utilizing their computers, platforms and applications. (Standard and Poor's, 2013) (Kerravala, 2013)

However, other organizations are entering the sector in order to become dominate and take market share away from VMware. The most notable is Microsoft. They see the tremendous amounts of opportunity and the ability to become a major player by offering alternative choices. This is from VM being unable to offer solutions which can be horizontally integrated with other platforms. The result is that earnings have become very volatile and executives are warning about potential challenges ahead. (Standard and Poor's, 2013) (Kerravala, 2013)

Evidence of this can be seen by looking at earnings for 2013. They went from $.74 to $1.04. For the upcoming quarter, analysts are expecting these numbers to come in at $.80. This is illustrating the fundamental challenges the company faces. In demonstrating, how they are different from competing products on the marketplace. ("VMware," 2014) (Standard and Poor's, 2013) (Kerravala, 2013)

These shifts are indicating a change in attitudes among cliental who are becoming more fickle. To fully understand what is occurring requires examining the company closely by looking at the benefits and drawbacks. Together, these elements will illustrate the opportunities and challenges the firm faces in the future.

Research Questions

To understand what is taking place at VMware requires creating different research questions. This will focus on specific advantages the company has available and it will enable everyone to evaluate critical weaknesses. These elements will illustrate how the firm is making these adjustments and the long-term impacts it will have on the organization. The different questions that will be examined include:

What are the primary advantages of VMware solutions in comparison with other products on the marketplace?

How is the company adjusting to changes in demand from cliental and the emergence of new competitors?

What are the critical weaknesses with the firm's merchandise, solutions and customer services?

What areas are competitors taking advantage of these weaknesses, in order to capitalize off of them at the expense of VMware?

These different questions will focus the research and allow actuaries to objectively analyze what is happening with the firm. When this takes place, they can see the effects of these shifts and determine specific steps the company must take to deal with them. It is at this point, when accurate insights can be provided in the form of a working strategy for helping the organization to understand and evolve with them. (Creswell, 2013)

Purpose Statement

The purpose of this study is to comprehend specific factors that will have an impact on the ability of the firm to compete inside the marketplace. This will occur through carefully examining them in conjunction with each other and how these changes are affecting the firm. Once this takes place, is when specific insights will be provided which are highlighting how different variables will influence the strategies used by the organization in the long-term. The findings will help to create a working protocol for addressing these problems and making the company more responsive to the needs of stakeholders. This is when they will be able to regain their dominance and integrate new ideas as a part of their business model. (Creswell, 2013)

As a result, the knowledge that is obtained during the process will help everyone to adjust to changes in the marketplace by creating a working foundation of recommendations for the management to embrace. Once this takes place, is the point they can begin implementing these conclusions to understand and deal with critical threats. In many ways, one could argue that this is the key all firms must follow in order to adapt and evolve with a host of challenges. (Creswell, 2013)

A good example of this can be seen with ideas from Deming (2009). He determined that no company is safe in any industry. This is because the marketplace is continually evolving based upon changes in demands from customers. Those organizations which can understand and address them will become the most dominant inside their sector. These insights were used by Toyota to go from an obscure company after the end of World War II to one that is the largest manufacturer of automobiles in the world. (Deming, 2009)

The lessons that can be learned from this, is that VMware must understand and address these issues. Otherwise, there is the possibility they will find themselves at the bottom wondering why they have fallen so far. This study will seek to understand these changes and offer specific insights to help the company make these transformations. When this happens, they will be capable of adapting to new competitors and the changing needs of cliental. This is the way they will maintain their lead and can continually build upon it.

Literature Review

To fully understand the possible opportunities and challenges impacting VMware requires examining other sources. This will be accomplished utilizing the qualitative method and comparative analysis. The qualitative approach is looking at different sources to understand specific factors impacting the firm and their strengths. This will identify key trends and determine critical weaknesses impacting the organization. (Spitzlinger, 2010)

To corroborate the different types of information, comparative analysis will be utilized. This is when various facts will be contrasted with each other and then placed into a general category. Anything that cannot be confirmed will be disregarded as an anomaly. While the findings, which are supporting each other will help to identify key trends and determine the various strengths / weaknesses of the organization. (Spitzlinger, 2010)

These insights will enable the research to take a more objective approach. Once this takes place, is the point these findings can be utilized to support different patterns and effectively determine how VMware can adjust with the challenges it is facing. This is when the information will be a valuable tool. That is supporting the conclusions and enabling management to see the most effective approaches for addressing key challenges in the future. (Spitzlinger, 2010)

Strengths of VMware

VMware's greatest strength is the kinds of solutions it offers to cliental. According to the company (in the source titled the Advantage of VMware) (2014) there are number of advantages they offer to customers over other providers. Some of the most notable include: security / reliability, convenience, hardware independence and manageability. ("Advantages of Using VMware," 2014)

In the case of security / reliability, there are a variety of benefits this provides to cliental to include: backups, restricted access to sensitive data and high amounts of uptime. As far as convenience is concerned, the protocol can be adjusted to the Adobe Flex solution. This enables customers to create their own personalized dashboard and other features for the specific needs of their organization. ("Advantages of Using VMware," 2014)

Hardware independence allows firms to utilize an open operating system. This can be accessed through specific desktops and mobile devices. The basic idea is to enable companies to use the information stored on the servers in a platform that makes the most sense for them. Manageability is when the firm does not have to install any hardware and they can easily create a solution that is simple and user friendly. ("Advantages of Using VMware," 2014)

These features are important, as they allow cliental to have a variety of protocols available for dealing with a variety of challenges. When this happens, they are able to adjust and evolve to the various issues they will face inside the marketplace. The result is that over 500 thousand customers are running these solutions as a part of their basic IT requirements. This means that VMware has an advantage over competitors by offering them with something more. That is embracing state of the art solutions. This is demonstrating how the company is able to adapt to the needs of cliental by offering them with superior quality. ("Advantages of Using VMware," 2014)

Moreover, Standard and Poor's (2013) found that the company has been aggressively acquiring smaller firms over the last several years. A few of the different ones include: B- Hive Networks, Trango Virtual Partners, Zimbra, Spring Source, Gem Stone, Slide Rocket, Dynamic Ops and Desktone. Each one of these companies has specific patents and technology that will help VMware to understand and offer cliental with innovative solutions. In the future, this enables them to know the marketplace better and make adjustments to changes quicker. ("Standard and Poor's," 2013)

These acquisitions have enabled VMware to provide cliental with solutions to address their virtual needs utilizing hypervisors. At the same time, they have expanded their product lines of servers and workstations. In the last several years, this has enabled the firm to maintain its position inside the marketplace and continue to remain competitive. ("Standard and Poor's," 2013)

This information, is illustrating the long-term effects of running applications which are compatible with the Linux, OS and Windows-based operating systems. This means that customers are able to create solutions which will meet their needs and can work with a variety of devices in the process. It is at this point, when they will have greater amounts of flexibility. That enables them to adjust with the various challenges they are facing. This helps clients to evolve with shifting demands inside their sector and the business itself. ("Standard and Poor's," 2013)

Furthermore, Sherwood (2013) determined that VMware has the experience in becoming the first company to offer cloud solutions to cliental. At the same time, they are creating new application utilizing a hybrid cloud. This is when they are using a series of hypervisors to give them greater amounts of flexibility in determining their needs. The result is that the company is the marketplace and will remain at the top of this position for the next several years. This enables them go directly up against any competitor and maintain their lead. (Sherwood, 2013)

The information from this source is showing how VMware has been able to adjust to changes in the markets by offering customers with innovative solutions. This allows the firm to offer cliental with something more that is addressing their needs. In the future, Sherwood believes that these shifts will help the company to deal with critical challenges it is currently facing. (Sherwood, 2013)

As a result, one could argue that these changes are a part of an effort to understand and deal with problems which have been plaguing the firm over the last two years. This means that any kind of concerns are short sided by failing to understand the steps the management is taking to address them in the longer term. It is at this point, when it will be able to regain market share and directly challenge other competitors who do not have these kinds of products and services available to cliental. (Sherwood, 2013)

Furthermore, the University of Illinois conducted an independent analysis on the advantages of utilizing VMware (in the source titled The Benefits of VMware). They determined that in addition to the other strengths discussed earlier, there is one critical factor that makes this the solution of choice (i.e. lower costs). This takes place through server consolidation. Under this program, the University was able to free up more data space, improve security protocols and increase productivity. This resulted in them seeing a 75% decrease in their IT budget from working actively with VMware to address the various challenges they are facing. When this happened, they began to offer students and staff with more innovative programs and access to a larger amount of information. This helped to contribute to an increase in enrollment and enabled the school to remain one of the most competitive academic institutions in the country. ("The Benefits of VMware," 2013)

The information from this source is useful in demonstrating how VMware is reducing the costs for cliental. This enables them to have the customized solutions that address their current and future needs. Once this takes place, is the point these improvements allow them to be more responsive to stakeholders from working with a reliable partner they can count on. ("The Benefits of VMware," 2013)

McCarthy (2012) is adding to these conclusions by showing how there are specific factors that are giving VMware a distinct advantage over other firms. He conducted a survey of 100 business executives and found that the company is the preferred IT service provider in contrast with other organizations. This is because they are focusing on giving cliental greater flexibility in customizing specific platforms to meet their different needs. (McCarthy, 2012)

The table titled Appendix 1: McCarthy Study is illustrating these results. The main reason why so many executives overwhelmingly prefer these solutions are: they can be integrated with their different programs, they provide them with greater amounts of flexibility, they have better support and cliental could more effectively understand / adapt to these applications. (McCarthy, 2012)

This has led to the company adapting and evolving to the changing needs of customer. The result is that VMware is redefining the industry and the kinds of products / services they are providing to cliental. This is giving them a distinct advantage over other firms and the kinds of solutions they are delivering in the process. (McCarthy, 2012)

The information from this source is illustrating why so many organizations are choosing VMware over others in the marketplace. This is because the company has been focusing on providing them with superior products and services. These factors enable executives to address their IT needs and increase productivity. When this happens, the organization is more responsive to their customers and can remain competitive. In many ways, one could argue that executives at a variety of different firms will look exclusively at the bottom line results. VMware is the one firm that will help them to meet key objective and increase their ability to adapt to changes inside the marketplace. (McCarthy, 2012)

At the same time, VMware has forged critical alliances with organizations such as Cisco. The basic idea is to offer everyone with greater amounts of flexibility in using the power and the solutions of both to help them achieve key objectives in the process. Evidence of this can be seen with information provided by Cisco (in the document titled Why Choose Cisco and VMware). They determined that this partnership allows customers to receive a number of benefits by working with the two organizations simultaneously. The most notable include: widely adopted virtual platforms, superior price to performance ratios, a simplified provisioning / operations model, uncompromised user experiences and an accelerated ROI utilizing competitively priced infrastructure. ("Why Choose Cisco and VMware," 2014)

These insights are showing how the alliance between these firms enables customers to receive better service and support. This means that they can address critical challenges they are facing and more effectively adjust to shifts inside the marketplace. When this happens, they will have state of the art solutions utilizing the integrated power of two organizations. ("Why Choose Cisco and VMware," 2014)

The information from this source is useful, in demonstrating how strategic alliances allow VMware to offer cliental with something more. This enables them to give a variety of companies' better solutions which are customized for addressing these needs. Over the course of time, this enables them to evolve and adapt to the challenges they are facing in a globalized marketplace. At the same time, they can take advantage of new opportunities and become more effective in reaching out to new markets. ("Why Choose Cisco and VMware," 2014)

Moreover, Chao (2014) determined that VMware is going through a transition. This is because the last two years, involved the firm focusing on these shifting needs and spending tremendous amounts of resources to enhance their competitive position. During an interview with the CEO, she concluded that any kinds of setbacks will be temporary. This is based upon the new applications which are being rolled out by the firm. (Chao, 2014)

Evidence of this can be seen with Martin Casado (the CEO) saying, "We're at the point where we want to focus on getting customers into production and being successful at scale. VMware will continue working on general product development and evolution. We're going to continue to re-implement networking pieces within the virtual domain so that more and more falls under the scope of these network virtualization platforms. Network virtualization has the potential to 'totally change the security paradigm.' The hypervisor and virtual network is a 'Goldilocks Zone' for security, he said: close enough to applications to provide meaningful visibility and semantics, but far enough away to create isolation, therefore neither too hot nor too cold. This Goldilocks Zone allows for deeper, more contextual knowledge and insight of application processes and user behavior than what a traditional, hardware-based network can provide and can then make that information available for security devices like next-generation firewalls. I think this really is, by itself, pretty revolutionary. So a lot of focus is going to be, how do we use this position to get more visibility, and do we push that throughout the virtual network to get more and ubiquitous enforcement, independent of what's running and what's moving around the topology. Overall, VMware plans to harness the unique capabilities of virtualized networks to enable what he described as ubiquitous, very context-aware security." (Chao, 2014) This is illustrating how the company understands these issues and they have been continually evolving with them. As a result, this is indicating that the firm is releasing new products and services to evolve with them. (Chao, 2014)

The information from this source is useful in understanding and addressing key challenges which could be having a negative impact on VMware. The long-term effects are that the firm understands the needs of customers and is willing to do more to provide cliental with the kinds of solutions that will address these issues in the longer term. When this happens, the organization is more prepared for key challenges and can quickly adjust with them in the future. (Chao, 2014)

Furthermore, Karafilis (2012) found that VMware has a distinct advantage over other firms inside the marketplace. This is because it provided cliental with various benefits which help to address specific issues impacting them. The most notable include: it reduces the time / costs involved on IT tasks, enhances backup / data protection, allows firms respond to the changing needs of clients, improves hardware consolidation / utilization, enables companies to easily recover from human errors, it extends the life of legacy applications and enhances server security. These factors are something which is not offered by competitors in the marketplace to them. This is what helps to make VMware the provider of choice in dealing with a host of challenges they are facing. (Karafilis, 2013)

The information from this source is effective in demonstrating why VMware has become an important partner in addressing key issues and enabling them to make adjustments. When this happens, cliental can create solutions that are addressing specific problems and become more competitive. This makes them better prepared for evolving with the shifting needs of their cliental in the longer term. (Karafilis, 2013)

At the same time, Gardner (2012) concluded that VMware has some of the best support inside the sector. This gives them an advantage over competitors by building upon the insights of trained professionals to help troubleshoot critical problems for cliental. It also, allows the company to understand the customer's specific needs and create solutions which enable them to utilize the full benefits and features provided by the organization. (Gardner, 2012)

These factors are one of the many reasons why VMware is considered to be the industry leader. As a result, they have been able to redefine the marketplace and the kinds of solutions they are delivering before and after the sale. This builds a sense of trust with cliental by helping them to understand and address critical challenges in the long-term. Most organizations will need this at some point in time, in order to remain competitive and adjust with critical challenges in the future. (Gardner, 2012)

The information from this source is illustrating how VMware is at the forefront for innovation by having the best support. In many ways, one could argue that these shifts enable the company to understand and address critical challenges early. This is when the customer will avoid major problems with other carriers and can evolve with them better. (Gardner, 2012)

As a result, the different trends from the various benefits are illustrating how the VMware has a number of distinct advantages. The most notable include: customizable applications, more tools, enhanced security features, lower costs and outstanding customer service. These factors are playing an important part in determining why a company will chose them over competitors. At the same time, the firm is working on new solutions to help them evolve with the challenges they are facing. This is why they are considered to be the leader inside the sector. It is also demonstrating, how they understand critical issues and why they are willing to change to keep up with what is most important to cliental. (Keys, 2009)

Discussion

There are both strengths and weaknesses which have the potential to have either positive or adverse impacts on VMware. This is because they are at a crossroads in the sector. As more players are emerging to take advantage of the growing demand inside this marketplace. In the case of opportunities, the firm has a well-known brand name and recognition for the value it has created to cliental in the past. (Stagner, 2012)

Yet, at the same time, there is the possibility they have a host of threats that will have a negative impact on the firm. This is because competitors are introducing similar solutions and they have the ability to match them in price, quality and services. These issues have the potential to hurt their capacity to adjust with the changing needs of cliental inside the marketplace. (Stagner, 2012)

To deal with these challenges, the company needs to utilize an all encompassing approach. This can be achieved by building off of their new hybrid platform and then troubleshooting critical weaknesses. One possible strategy is for the firm to have specialized teams that will test vulnerabilities within the platform from internal weaknesses and malware threats. They can introduce and enact various patches early. This will prevent any kind of negative incidents from being reported in the popular press. (Stagner, 2012)

At the same time, independent consultants need to be brought in. They will assess these issues and determine what steps the company needs to take to deal with changes inside the marketplace. When this happens, they will provide specific recommendations as to what cliental want, the perceptions of the firm / competitors and ideas for becoming the first organization to meet these shifting needs. This will allow VMware to adjust and evolve with critical challenges early. Over the course of time, this enables the organization to be more responsive by taking a proactive approach in the process. (Stagner, 2012)

These solutions were selected because the company is at a crossroads and is starting to allow past successes to influence the mindset of employees and managers. This is slowly eating away at their ability to understand and address important issues quickly. In many ways, one could argue that they are falling into the same trap. That has occurred with lots of firms inside the technology sector. (Stagner, 2012)

Logical Design

In this situation, VMware needs to change its focus on offer innovative solutions that will address the needs of cliental. To do this, means that they need to create a system which is concentrating on meeting key objectives. This requires implementing a responsive protocol. It will emphasize having various teams and independent contractors to serve as the eyes and ears of the organization.

At the same time, the management will concentrate on having research and development enact protocols to deal with critical weaknesses in the various platforms. One possible approach is to follow the conclusions from the teams / contractors. They will test the system for vulnerabilities and interview customers about their perceptions of the firm. This will identify how the organization's views are changing and potential areas where they could be losing competitors to customers.

Once this takes place, is when a survey will be sent out to customers asking them to discuss specific challenges and how they are impacting the decisions they make. These conclusions will lead to a better understanding of how applications are being utilized and potential areas where shifts will occur. This will be forwarded to response teams. They will have the responsibility of implementing them. In order to, help the company maintain its competitive edge and take advantage of new opportunities. The process will be constantly evolving based upon these findings and it will enable the firm to deal with key issues impacting quality, security and their perceptions among stakeholders. The various resources that will be used include: key personnel, various departments, strong managers and technology. This will streamline the ability of VMware to troubleshoot and address these problems early.

Evaluation

The evaluation will be carried out by having a survey sent out to customers. This is designed to ensure that the organization is effectively responding to their needs and understands what is most important to them. During this process, they will discuss their experiences, how this shaped their perceptions and areas for improving upon critical weaknesses.

According to Tallon (2012), these procedures have been shown to be effective in helping firms to understand and evolve with changes they are facing inside the marketplace. Evidence of this can be seen with him saying, "Strategic information technology alignment remains a top priority for business and IT executives. Yet with a recent rise in environmental volatility, firms are asking how to be more agile in identifying and responding to market-based threats and opportunities. Whether alignment helps or hurts agility is an unresolved issue. Using data from a matched survey of IT and business executives in 241 firms, we uncover a positive and significant link between alignment and agility and between agility and firm performance. We also show that the effect of alignment on performance is fully mediated by agility, which environmental volatility positively moderates the link between agility and firm performance, and that agility has a greater impact on firm performance in more volatile markets. While IT infrastructure flexibility does not moderate the link between alignment and agility, except in a volatile environment, we reveal that IT infrastructure flexibility has a positive and significant main effect on agility. In fact, the effect of IT infrastructure flexibility on agility is as strong as the effect of alignment on agility. This research extends and integrates the literature on strategic IT alignment and organizational agility at a time when both alignment and agility are recognized as critical and concurrent organizational goals." (Tallon, 2012) This is showing how different results from a survey can make firms more responsive to the needs of customers. These insights can be integrated as a part of their organizational goals.

Conclusion

Clearly, VMware is at a crossroads. This is taking place with the firm facing the challenges from its previous successes. For many organizations this is problematic, as these issues will create a situation where employees and executives will fail to understand the marketplace and what is most important to customers. When this happens, there is the possibility they will lose cliental and see their profitability start to decline.

Inside the technology sector, these challenges can become more pronounced as firms are seeking out avenues to capitalize off of these shifts. In the case of data storage and cloud technology, this is taking place with more competitors entering the markets. For VMware, this means that they must understand and be the first to offer cliental with the kinds of products and services they are demanding.

The best way that this can be accomplished is to build off of the brand name and utilize the new hybrid solutions to illustrate the benefits they offer. The most notable include: security, reliability, low costs, flexibility and outstanding customer support. This will help the company to evolve with shifts and maintain their strong reputation inside the marketplace. In the future, this enables the firm to continue to dominate an industry they built and enhance these views among cliental.

Yet, the company can also be its own worst enemy. This is taking place with employees and executives failing to understand / troubleshoot problems early. These issues are challenging, as they will negatively impact their ability to offer cliental with solutions they need. A recent example of this can be seen with the fact that their security protocols were breached. The fact that the management had to send out various patches for a host of applications, is indicting how these challenges are becoming more pronounced.

To make matters worse, firms such as Microsoft have created their own solutions and are aggressively marketing them to cliental. This is problematic, as they have the reputation, cash and expertise to dominate the marketplace. Unless VMware takes this into consideration, there is the probability they will face a significant declines in their customer based over a period of many years. This is when they will have damage to their reputation from failing to take these different variables into account.

To deal with these challenges, the firm needs to use a different approach that focuses on having response teams address key issues. They will work in conjunction with consultants and third party providers to identify these challenges. At the same time, the company could use surveys to understand the needs of cliental and respond to them early. This will keep them one step ahead of the competition by taking these variables into account. If this kind of approach is taken, it will help the firm to identify potential challenges / needs and quickly address them.

In future research projects, there will be a series of questions that will identify the impact of this model. The most notable include:

What are the effects of surveys in understanding the ability to change the mindset of the firm over a number of years?

How can other checks and balances be implemented?

What shifts are currently taking place, that need to be addressed in the long-term?

These different areas will help to focus on specific issues in the IT sector and improve the ability of executive to understand key issues. When this happens, they can become more responsive to the needs of cliental. This is the point VMware can adapt and maintain its competitive edge.

Appendix

Appendix 1: McCarthy Study

Firm / Platform

Executive Preferences

VMware

34%

No Preference

25%

Open Stack

14%

IBM Smart Cloud

12%

Cloud Stack

9%

VCE

4%

Eucalyptus

3%

Appendix 2: Logical Design

Management

Response Team 1

Response Team 2

Response Team 3

Consultants / Third Party

Consultants / Third Party

Consultants / Third Party

Surveys

Customers

Competition

Changes in the Marketplace

(Arthur, 2012)