By Paul Kunert
31 October 2008
Going against the general upward trend across sections of the industry where vendors are preparing to hike prices to counter an appreciating dollar, VMware will slash its list price by 10% from Monday.
This cancels out a 10% rise the virtualisation behemoth introduced on 1 September, which combined with the rallying of the US currency has made VMware less competitive, particularly against Microsoft, said partners.
Some distributors have been gradually increasing their list price in October to counter exchange rate movements and before VMware’s move Interchange had this week warned resellers to expect a 15% rise on Monday.
Matt Piercy, senior director of OEM alliances EMEA confirmed the price reduction and hoped distributors, all of whom buy its software in dollars, would now decide to shelve plans to hike prices.
“We are making this move in a market where the currency exchange rate is starting to hurt our channel partners,” he said.
Piercy said, “I hope our move means [distributors] will not raise their prices, I can’t control the price our partners sell at but as a vendor we are taking positive steps”.
He declined to comment on how VMware is able to make price cuts at a time when most other vendors are, if anything, hiking theirs but insisted it was not in response to weakening market conditions.
A spokeswoman at Interchange said it applauded the move by the vendor and was now “proactively reviewing the situation”, having previously resisted the trend in VMware’s channel of raising prices in October.
There were no plans for “blanket prices rises” said Niall McGrane, virtualisation director at Magirus, who said it had been taking gradual steps to counter the exchange rate changes.
Sources close to the vendor said VMware had not predicted the sweeping moves in the currencies at the time of the September price rise which was making its products appear to be around 20% more expensive.
With Microsoft entering the virtualisation space in the summer, one reseller said VMware needed to sharpen its competitive edge as the giant from Redmond was gunning for market share.
