It’s sometimes hard to remember that smartphones are still a recent phenomenon with the first devices to be categorised as such being less than a decade old. Sure there were phones before that which you could say were smartphones but back then they were more an amalgam of a PDA and a phone more than a seamless blend between the two. Back then the landscape of handset providers was wildly different, one that was dominated by a single player: Nokia. Their failure to capitalize on the smartphone revolution is a testament to incumbents failing to react to innovative upstarts and their sale to Microsoft their admittance of their fault. You can then imagine my surprise when the now much smaller company is eyeing off a return to the smartphone market as pretty much everyone would agree the horse has long since bolted for Nokia.
The strategy is apparently being born out of the Nokia Technologies arm, the smallest branch out of the three that remained after the deal with Microsoft (the other two being its network devices and Here location division). This is the branch that holds Nokia’s 10,000 or so patents and so you’d think that they’d likely just be resting on their laurels and collecting patent fees for time immaterial. However this section has been somewhat busy at work having developed and licensed two products since the Microsoft deal. The first of which is z Launcher an Android launcher and the N1 a tablet which they’ve licensed out to another manufacturer whom they’ve also lent the Nokia brand name too. The expectation is that future Nokia devices will likely follow the latter’s model with Nokia doing most of the backend work but then offloading it to someone else to manufacture and ship.
There’s no doubt that Nokia had something of a cult following among Windows Phone users as they provided some of the best handsets for that platform. Their other smartphones however had no such following as their pursuit of their own mobile ecosystem made it extremely unappealing to developers who were already split between two major platforms. Had Nokia retained control of the Lumia brand I could see them having an inbuilt user base for a future smartphone, especially if came in an Android flavour, however that brand (and everything that backed it) went to Microsoft and so did all the loyalty that went with it. Nokia is essentially starting from scratch here and, unfortunately, that doesn’t bode well for the once king of the phone industry.
Coming in at that level you’re essentially competing with every other similarly specced handset out there and, to be honest, it’s a market that eats up competitors like that without too much hassle. The outsourcing of the actual manufacturing and distribution means that they don’t shoulder a lot of the risk that they used to with such designs however it also means they have little control over the final product that actually reaches consumers. That being said the N1 does look like a solid device but that doesn’t necessarily mean that future devices will share the same level of quality.
Nokia is going to have to do something to stand out from the pack and, frankly, without their brand loyalty behind them I’m struggling to see what they could do to claw back some of the market share they once had. There are innumerable companies now that have solid handset choices for nearly all sectors of the market and the Nokia brand name just doesn’t carry the weight it once did. If they’re seriously planning a return to the smartphone market they’re going to have to do much more than just make another handset, something which I’m not entirely sure the now slimmed down Nokia is capable of doing.
I haven’t talked about the Apple vs Samsung court case that’s been raging on for the past year mostly because I didn’t feel like there was anything interesting to say about it. Usually these kinds of court cases are business negotiations that have gone south and they’re just using the legal system to figure out who should be paying who for what. The Apple vs Samsung case was slightly different as it appeared to be more of a move from Apple to try and block Samsung out of the USA market, one where they’re starting to get quite the foothold thanks to their flagship Galaxy devices selling like the proverbial hotcakes. Samsung isn’t completely innocent in this regard either, pulling the same kind of tactic in other markets.
Of course the news recently broke that after 2 days of deliberation the jury on the Apple vs Samsung case returned the verdict that Samsung had indeed wronged Apple and were awarded a cool billion dollars in damages. The damages were broken down on a per device level based on the jury’s judgement of how much they infringed on what the appropriate damages would be. No matter what the decision in the case ended up being there was always going to be something of a media storm following it, and boy was there ever.
On the surface it didn’t look like the fallout from the case was doing Samsung any favours. Trading for Samsung stock closed 7% down on the day after the announcement was made, wiping $12 billion of value from the company and making the fine look like a pittance by comparison. Of course the verdict isn’t completely finalised yet with a potentially lengthy appeals process (and issues with the way the jury decided the verdict could have the whole thing thrown out) to come but there’s no denying that the immediate down turn in the confidence that the market has in Samsung will affect them adversely in the short to medium term.
However Apple may have set themselves up for an unlikely consequence: they put Samsung in the same league as them.
Us high tech geeks could rattle off the differences between Apple and Samsung’s products for hours and realistically they’re completely different beasts. However with this very public lawsuit Apple has gone on record saying that Samsung is basically equivalent to them and that hasn’t gone unnoticed by the general public. Indeed this was very much the same way Samsung managed to establish itself as a dominant player in the LCD TV business, often being touted as the cheaper version of the higher quality Sony¹. The same thing appears to be happening in relation to Apple with Samsung more than happy to be second fiddle in such a large market. Indeed the numbers back this idea up, especially when you look at the sales figures of their recent flagship product, the Galaxy S3.
I didn’t come up with this idea myself however, that credit goes to two posts I caught on Google+. It still might be wild speculation but the history of similar things happening with Samsung and other competitors does lend some credence to the idea. Whether Samsung can capitalize on that, especially with the market looking down on the ruling, is something that we’ll only know as time goes on. Their stock hasn’t tumbled any further though so there’s some indication that the initial fine shock might’ve been just that.
Personally I feel it highlights the problems with the USA’s current patent system more than anything else. Instead of them being used to encourage innovation, as was their original intent, they’re now far more likely to be used as weapons in big lawsuits or in negotiations over licensing fees. How we go about solving that problem isn’t something I have a good answer for but until we do we’ll continue to have these kinds of high profile cases which tie up resources that could be put to much better use.
¹I will freely admit that I don’t have anything solid to back this assertion up apart from the countless hours of research I poured into finding the best TV for the right price all those years ago. A cursory search finds threads like this one which echo the sentiment I’m referring to.
In the eyes of corporate IT shops the word virtualization is synonymous with the VMware brand. The reason is this is simple, VMware was first to market with solutions that could actually deliver tangible results to the business. VMware then made the most of this first mover advantage quickly diversifying their product portfolio away from just straight up virtualization into a massive service catalogue that no competitor has yet to match. There’s no denying that they’re the most pricey of the solutions however but many IT shops have been willing to wear the costs due to the benefits that they receive. However in the past couple years or so the competitors, namely Hyper-V and Xen, have started to catch up in features and this has seen many IT shops questioning their heavy investment in VMware.
Undoubtedly this dissatisfaction with VMware’s products has been catalysed by the licensing change in vSphere 5 which definitely gave the small to medium section of the market some pause when it came to keeping VMware as a platform. For larger enterprises it wasn’t so much of a big deal since realistically they’d already licensed most of their capacity anyway. Still it’s been enough for most of them to cast a careful eye over their current spend levels on VMware’s products and seek to see if there’s perhaps a better way to spend all that cash. Indeed a recent survey commissioned by Veeam showed that 38% of virtualized businesses were looking to switch platforms in the near future.
The report doesn’t break down into exactly which platform they’re switching from and to but since the 3 biggest reasons cited are cost, alternative hypervisor features and licensing model (all long time complaints of the VMware platform) it’s a safe bet that most of those people are considering changing from VMware to another platform (typically Hyper-V). Indeed I can add that anecdotally the costs of VMware are enough now that business are seriously considering the platform swap because of the potential savings from a licensing perspective. Hyper-V is the main contender because most virtualization is done with Windows servers and under the typical licensing agreements the hypervisor is usually completely free. Indeed even the most basic of Windows server licenses gives you 1 free virtual machine to play with and it just gets better from there.
But why are so many considering switching from the market leader now when the problems cited have been around nearly half a decade? For the most part it has to do with the alternatives finally reaching feature parity with VMware when it comes to base level functionality. For the longest time VMware was the only one that was capable of doing live migrations between hosts with technology they called vMotion. Xen caught up quickly but their lack of Windows support meant that it saw limited use in corporate environments, even after the support was added in shortly after. Hyper-V on the other hand struggled to get it working only releasing it with Server 2008 R2. With Windows 2003 and XP now on the way out many IT shops are now looking to upgrade to 2008 R2 and that’s when they notice the capabilities of Hyper-V.
Strictly speaking though I’d say that whilst there’s a good few people considering making the jump from VMware to another hypervisor the majority are only doing so in order to get a better deal out of VMware. Like any business arrangement the difference between the retail price and the actual price anyone pays is quite large and VMware is no exception to this rule. I’ve seen quite a few decision makers wave the Hyper-V card without even the most rudimentary of understanding of what it’s capabilities are, nor any concrete plans to put it in motion. There’s also the fact that if you’re based on VMware now and you switch to another platform you’re going to have to make sure all your staff are retrained with the new product, a costly and time consuming exercise. So whilst the switch from VMware may look like the cheaper option if you just look at the licensing there’s a whole swath of hidden and intangible costs that need to be taken into consideration.
So with that all said is VMware staring down the barrel of a inevitable demise? I don’t believe so, their market capture and product lead means that they’ve got a solid advantage over everyone in the market. Should the other hypervisors begin eating away at their market share they have enough of a lead to be able to react in time, either by significantly reducing their prices or simply innovating their way ahead again. I will be interested to see how these figures shape up in say 3/9/12 months from now to see if those 38%ers made good on their pledge to change platforms but I’m pretty sure I know the outcome already.
It’s a sad truth that once a company reaches a certain level of success they tend to stop listening to their users/customers, since by that point they have enough validation to continue down whatever path suits them. It’s a double edged sword for the company as whilst they now have much more freedom to experiment since they don’t have to fight for every customer they also have enough rope to hang themselves should they be too ambitious. This happens more in traditional business rather than say Web 2.0 companies since the latter’s bread and butter is their users and the community that surrounds them, leaving them a lot less wiggle room when it comes to going against the grain of their wishes.
I recently blogged about VMware’s upcoming release of vSphere 5 which whilst technologically awesome did have the rather unfortunate aspect of screwing over the small to medium size enterprises that had heavily invested in the platform. At the time I didn’t believe that VMware would change their mind on the issue, mostly because their largest customers would most likely be unaffected by it (especially the cloud providers) but just under three weeks later VMware has announced that they are changing the licensing model, and boy is it generous:
We are a company built on customer goodwill and we take customer feedback to heart. Our primary objective is to do right by our customers, and we are announcing three changes to the vSphere 5 licensing model that address the three most recurring areas of customer feedback:
We’ve increased vRAM entitlements for all vSphere editions, including the doubling of the entitlements for vSphere Enterprise and Enterprise Plus.
We’ve capped the amount of vRAM we count in any given VM, so that no VM, not even the “monster” 1TB vRAM VM, would cost more than one vSphere Enterprise Plus license.
We adjusted our model to be much more flexible around transient workloads, and short-term spikes that are typical in test & dev environments for example.
The first 2 points are the ones that will matter to most people with the bottom end licenses getting a 33% boost to 32GB of vRAM allocation and every other licensing level getting their allocations doubled. Now for the lower end that doesn’t mean a whole bunch but the standard configuration just gained another 16GB of vRAM which is nothing to sneeze at. At the higher end however these massive increases start to really pile on, especially for a typical configuration that has 4 physical CPUs which now sports a healthy 384GB vRAM allocation with default licensing. The additional caveat of virtual machines not using more than 96GB of vRAM means that licensing costs won’t get out of hand for mega VMs but in all honesty if you’re running virtual machines that large I’d have to question your use of virtualization in the first place. Additionally the change from a monthly average to a 12 month average for the licensing check does go some way to alleviating the pain that some users will feel, even though they could’ve worked around it by asking VMware nicely for one of those unlimited evaluation licenses.
What these changes do is make vSphere 5 a lot more feasible for users who have already invested heavily in VMware’s platform. Whilst it’s no where near the current 2 processors + gobs of RAM deal that many have been used to it does now make the smaller end of the scale much more palatable, even if the cheapest option will leave you with a meagre 64GB of RAM to allocate. That’s still enough for many environments to get decent consolidation ratios of say 8 to 1 with 8GB VMs, even if that’s slightly below the desired industry average of 10 to 1. The higher end, whilst being a lot more feasible for a small number of ridiculously large VMs, still suffers somewhat as higher end servers will still need additional licenses to fully utilize their capacity. Of course not many places will need 4 processor, 512GB beasts in their environments but it’s still going to be a factor to count against VMware.
The licensing changes from VMware are very welcome and will go a long way for people like me who are trying to sell vSphere 5 to their higher ups. Whilst licensing was never an issue for me I do know that it was a big factor for the majority and these improvements will allow them to stay on the VMware platform without having to struggle with licensing concerns. I have to then give some major kudos to VMware for listening to their community and making these changes that will ultimately benefit both them and their customers as this kind of interaction is becoming increasingly rare as time goes on.
I make no secret of the fact that I’ve pretty much built my career around a single line of products, specifically those from VMware. Initially I simply used their workstation line of products to help me through university projects that required Linux to complete but after one of my bosses caught wind of my “experience” with VMware’s products I was put on the fast line to become an expert in their technology. The timing couldn’t have been more perfect as virtualization then became a staple of every IT department I’ve had the pleasure of working with and my experience with VMware ensured that my resume always floated around near the top when it came time to find a new position.
In this time I’ve had a fair bit of experience with their flagship product now called vSphere. In essence it’s an operating system you can install on a server that lets you run multiple, distinct operating system instances on top of it. Since IT departments always bought servers with more capacity than they needed systems like vSphere meant they could use that excess capacity to run other, not so power hungry systems along side them. It really was a game changer and from then on servers were usually bought with virtualization being the key purpose in mind rather than them being for a specific system. VMware is still the leader in this sector holding an estimated 80% of the market and has arguably the most feature rich product suite available.
Yesterday saw the announcement of their latest product offering vSphere 5. From a technological standpoint it’s very interesting with many innovations that will put VMware even further ahead of their competition, at least technologically. Amongst the usual fanfare of bigger and better virtual machines and improvements to their current technologies vSphere 5 brings with it a whole bunch of new features aimed squarely at making vSphere the cloud platform for the future. Primarily these innovations are centred around automating certain tasks within the data centre, such as provisioning new servers and managing server loads including down to the disk level which wasn’t available previously. Considering that I believe the future of cloud computing (at least for government organisations and large scale in house IT departments) is a hybrid public/private model these improvements are a welcome change , even if I won’t be using them immediately.
The one place that VMware falls down and is (rightly) heavily criticized for is the price. With the most basic licenses costing around $1000 per core it’s not a cheap solution by any stretch of the imagination, especially if you want to take advantage of any of the advanced features. Still since the licencing was per processor it meant that you could buy a dual processor server (each with say, 6 cores) with oodles of RAM and still come out ahead of other virtualization solutions. However with vSphere 5 they’ve changed the way they do pricing significantly, to the point of destroying such a strategy (and those potential savings) along with it.
Licensing is still charged on a per-processor basis but instead of having an upper limit on the amount of memory (256GB for most licenses, Enterprise Plus gives you unlimited) you are now given a vRAM allocation per licence purchased. Depending on your licensing level you’ll get 24GB, 32GB or 48GB worth of vRAM which you’re allowed to allocate to virtual machines. Now for typical smaller servers this won’t pose much of a problem as a dual proc, 48GB RAM server (which is very typical) would be covered easily by the cheapest licensing. However should you exceed even 96GB of RAM, which is very easy to do, that same server will then require additional licenses to be purchased in order to be able to full utilize the hardware. For smaller environments this has the potential to make VMware’s virtualization solution untenable, especially when you put it beside the almost free competitor of Hyper-V from Microsoft.
The VMware user community has, of course, not reacted positively to this announcement. Whilst for many larger environments the problems won’t be so bad as the vRAM allocation is done at the data center level and not the server level (allowing over-allocated smaller servers to help out their beefier brethren) it does have the potential to hurt smaller environments especially those who heavily invested in RAM heavy, processor poor servers. It’s also compounded by the fact that you’ll only have a short time to choose to upgrade for free, thus risking having to buy more licenses, or abstain and then later have to pay an upgrade fee. It’s enough for some to start looking into moving to the competition which could cut into VMware’s market share drastically.
The reasoning behind these changes is simple: such pricing is much more favourable to a ubiquitous cloud environment than it is to the current industry norm for VMware deployments. VMware might be slightly ahead of the curve on this one however as most customers are not ready to deploy their own internal clouds with the vast majority of current cloud users being hosted solutions. Additionally many common enterprise applications aren’t compatible with VMware’s cloud and thus lock end users out of realising the benefits of a private cloud. VMware might be choosing to bite the bullet now rather than later in the hopes it will spur movement onto their cloud platform at a later stage. Whether this strategy works or not remains to be seen, but current industry trends are pushing very hard towards a cloud based future.
I’m definitely looking forward to working with vSphere 5 and there are several features that will definitely provide an immense amount of value to my current environment. The licensing issue, whilst I feel won’t be much of an issue, is cause for concern and whilst I don’t believe VMware will budge on it any time soon I do know that the VMware community is an innovative lot and it won’t be long before they work out how to make the best of this licensing situation. Still it’s definitely an in for the competition and whilst they might not have the technological edge they’re more than suitable for many environments.