VMware to raise prices in Europe, Australia and New Zealand by 10% starting Sep. 2

Posted by Alessandro Perilli | Thursday, July 10, 2008 | 12 Comments

The storm that is currently investing VMware, started with the sack of its CEO Diane Greene, may be not finished yet.

virtualization.info has just learned that VMware is about to increase the price of all its products and support subscriptions in Europe by 10% starting Sep 2, 2008.

On July 7, just one day before the Greene’s removal was formally announced, VMware communicated the news to its distributors through an online webcast.
Subsequently, the distributors announced the upcoming price increase to the whole sales channel with dedicated emails.

The last term to buy any VMware product at the current price is September 1st.

The official motivation for this notable change is the high currency volatility in Europe.
Anyway it’s worth to note that VMware always required its worldwide distributors to pay all prices in US Dollars.

One of the biggest critics that VMware always received is about the high prices, often unaffordable for SMBs. And this is why cheaper alternatives like the ones offered by Virtual Iron and now by Microsoft get remarkable attention despite a not comparable feature-set.
This move may further push the European customers towards these competitors.

The early feedbacks that virtualization.info collected so far about this move are not positive (also because the partners price discount didn’t change accordingly).

The question is if the price increase is really dictated by the high currency volatility in Europe or if it is an attempt to alleviate the bad financial performance that VMware is suffering right now.

What’s sure is that the European sales channel will have a hard time explaining the departure of VMware CEO and the price increase to all those customers that are already courted by Microsoft.

Update: virtualization.info has just learned that the 10% price increase is confirmed also in Australia and New Zealand.
At the moment we can’t confirm when the new prices will be applied.

It seems that the high currency volatility is not just a European problem.

Second update: VMware is not the only one increasing its prices. Oracle did the same one month ago (15-18% increase) and Forrester predicts that even more companies will follow shortly.

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12 Comments

Shan Friday, July 11, 2008 1:40:00 AM

Given that in the few years I've lived in Australia the US dollar has dropped like a stone, VMware should be leaving the retail price alone and charging resellers in AU$, or even reducing the cost in such markets. On the other hand, the discount levels enjoyed by large corporates mean that retail pricing is pretty irrelevant anyway.

David Caddick Friday, July 11, 2008 5:11:00 AM

I'd second that Shan, the US Dollar is generally tanking globally as a result of the "Credit Crunch" and numerous other issues besetting the US economy, if anything the VMware pricing is becoming more affordable in EMEA and ANZ because it's pegged at the US Dollar.

So does that mean that VMware/EMC felt they were leaving money on the table? so is this the rationale for upping the prices else where except the US?

Anonymous Friday, July 11, 2008 8:09:00 AM

ARROGANCE thy name is vmware. We are DONE with vmware. DONE DONE DONE. They're support stinks to high heaven, their sales people are complete douchebags and now they're raising prices on software that is already over priced.

Anonymous Friday, July 11, 2008 11:30:00 AM

For gods sake, stop picking on VMware!! Most Global software companies uplift price in Europe, guess why? Because its more expensive to live, work and do business here, quit complaining, buy online from US if its and issue, then guess what, you won't get a partner here in EMEA to support you! Too expensive, compared to what! Running physical machines? We get 16 VMs running 2003 on a dual core box, so 2 X VMware licenses, get a grip folks, how the hell is that expensive!!

Anonymous Friday, July 11, 2008 12:34:00 PM

Bullshit, as usual it is all about the money.

VMware just tries to utilize stronger currencies to get more and more.
They do not care either when other currencies should be weaker then the US dollar - or does anybody expects lower USD prices in the European Union if the Euro should ever get back there where it started off?

BTW: which lunatic had the idea to raise the pricing for Standard Accelleration pack by USD 5.000 ???
Hey VMware management guys - not interested in customers any more???

Gareth James Friday, July 11, 2008 12:35:00 PM

Hmmm... the South African Rand roughly tracks the Euro, oh yes and the Pound. Hang on it seems to me that all the currencies in the world are bouncing around relative to the Dollar. Here's a thought, pehaps the rest of the currencies globally are okay and the US economy is in the crapper. The sooner we peg Oil prices to the Euro the better.

Bjørn Anders Friday, July 11, 2008 1:33:00 PM

VMware has always had fixed WW prices in USD.
With the dollar tanking it is not strange
they start doing differenciated pricing.
All non-US countries has been enjoying
considerable price declines in local currencies
over the last years for their VMware SW.

Heck, 10% do not even counterbalance the EURO appreciation over US dollar _this_ year.

FabrizioV Friday, July 11, 2008 4:59:00 PM

Being a VMware customer and knowing other who use their products I can say that a lot of small companies are actually using VMware server to save money.

If the forecast is for growing prieces,and if Microsoft virtualization will transform in something more reliable, I expect a lot of SMB to leave VMware products.

Anonymous Friday, July 11, 2008 6:35:00 PM

The purchasing power parity (E:$) is 17% affected and therefore there is a need to change pricing in euro pegged areas....GBP is not that badly affected but if it needs doing then may aswell do it all at once.

Matthijs Friday, July 11, 2008 9:05:00 PM

When you ask me this is just a way to get customers to quickly buy their planned VMWare licenses before the 2nd of September; maybe to do some damage control to the figures of Q3 ?

I also can't blame VMWare for doing this because of the affected purchasing power parity and I'm surprised it took VMWare this long to do this anaway.

Anonymous Thursday, July 17, 2008 4:00:00 AM

What comes next .... pricing per core , per VM, per packet ?

Anonymous Thursday, July 31, 2008 4:32:00 PM

It's supply and demand. The demand for VMware is high enough to warrant the price... not just the initial purchase price, but all the savings you get when you can now lay off 1/2 your IT server guys because you won't need them anymore.

If you don't understand economics, TCO and value, like pretty much most CEO's and CFO's don't, then you'll be more inclined to cough about price and look towards other vendors. Every vendor will have issues with support (sometimes you just get an idiot on the other line), I've personally experienced this with HP, IBM, Dell, Microsoft.

The big question isn't price it's value, so compare feature sets, performance and support, take into consideration how many IT guys you will be able to lay off, and your decisions will be easy.

Microsoft are notorious Me-too's in every new product release, always a few years behind until it's enterprise ready. And the Xen based VM's sound like their Windows support is weak from a performance point of view (at least from the reviews I've read).

VMware to raise prices in Europe, Australia and New Zealand by 10% starting Sep. 2

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