There are different kinds of VARs out there -- there are the VARs tied to the hardware resellers [and those that aren't]. Of the two types, the ones that can have margins cut into are the partners that aren't associated with HP, IBM, Dell or any of the other hardware manufacturers. I can't say that VMware itself is doing anything specifically to address it.
There are many resellers out there that started as hardware resellers, and hardware continues to be their core business. To those resellers, [embedding the ESX hypervisor into hardware] is probably a good thing. For those resellers that don't sell the hardware, they need to really differentiate themselves.
Losing ESX revenue really shouldn't hurt a reseller. The higher-level functions that VMware offers, such as DRS (distributed resource scheduling) and VMware high availability, [are] those types of high-level functions where resellers should really focus their energies. Today, since VMware sits at the core of so many data centers, the hypervisor is just one of the technology enablers.
At some point we're going to see hypervisors really become a commodity item. It's really about all the other high-level functions that bring all the value.
This was first published in January 2008