Virtualization and the slow strangling of proprietary license models
Posted by: admin in Business and PoliticsA friend sent me his thoughts on virtualization and its effects on the software industry. As he sees it, virtualization may well play a role far beyond the operating system vendors, a group I had focused a post on. It could have a deleterious effect on a wide range of business models.
Why do enterprises purchase into virtualization? Primarily to make more efficient use of their existing servers. Most proprietary vendors license their products on a per-CPU basis, and have increasingly shifted to maintenance contracts as a way to boost revenue as upfront licensing costs dwindle in a market that favors spreading out payments via SaaS and open source.
My friend’s insight?
Long-term revenue is a function of the number of CPUs running their products at their customers’ IT shops.
So, as more and more enterprises embrace virtualization to increase the efficiency of the servers they’ve already licensed, maintenance revenue might well plunge with new license revenue.
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