LAS VEGAS -- As expected, VMware touted new virtualization technology at VMworld 2008 this week, but solution providers at the event said the real money, for them, comes from selling servers, storage and other virtualization support products.
VMware has said that for every one dollar its partners sell in virtualization software licenses, they bring in at least five dollars in additional virtualization support products and services. Most partners report that their typical "drag," as that figure is called, is between five and eight times the virtualization sales price.
"I don't think anyone will argue about the drag factor around virtualization," said Mark Henson, the NetApp practice manager for ePlus Technology, a solution provider in Herndon, Va.
Selling virtualization support products and services has become increasingly important as customers realize the complexity of virtualization technology and want to take full advantage of its business benefits.
"If we're selling virtualization, we're always selling storage and services," said Jack Kaiser, vice president of sales and marketing for International Computerware, a VMware partner in Marlborough, Mass. "Our virtualization strategy has always been that the back end matters. Storage matters."
Many businesses and organizations look to server virtualization technology to help reduce sprawl in their data centers. But server virtualization still creates vast amounts of data that users need to store and manage.
Sensing the opportunity, many major storage vendors have joined the VMware Alliance Affiliate Initiative, which rewards partners for selling VMware and other vendors' products together. Participants include IBM, Hewlett-Packard, Symantec, NetApp, Dell and VMware parent company EMC.
Disaster recovery, business continuity and high availability are also in-demand virtualization support technologies, said Tim FitzGerald, virtualization practice manager for VMware distributor Avnet Technology Solutions. In addition, VMware stresses the opportunity in security. Steve Houck, worldwide channels vice president, told partners this week, "Virtualization drives a lot of ancillary sales, particularly in security."
As solution providers have more success selling virtualization support products, there is less emphasis on the hypervisor -- VMware's bread and butter. Kaiser said the Alliance Affiliate Initiative is a way for VMware to keep partners loyal in the face of new competition from Microsoft's Hyper-V hypervisor.
"If we're going to continue to invest, what's the return?" he asked.
VMware for the past year or so has also tried to get customers locked into multiyear renewals on its virtualization to stem demand for Microsoft's products.
VMware's program also rewards partners for the extra work they have to do to sell virtualization now, Kaiser said. When you're selling a large, end-to-end offering, as opposed to one point product, customers want to see white papers and other materials that show they'll get a good return on their investment. Plus, a bigger sale affects more people at a customer site, so there are more decision-makers to win over in every potential sale.
"We're working harder for our deals," Kaiser said.