Dennis Byron

Microsoft Putting a Dent in the VMware Story

Whoa, catch your breath there Justice! The news that Microsoft had a hypervisor product coming out this year is about three years old! Better go back and ask your friend what his or her real reason was for shorting VMW.

The Short Case on VMWare

...but at least the 3Com shareholders got something. Can't say the same for EMC's

EMC: A Great Way To Profit From VMWare

You would think EMC's market cap would have started reacting as soon as it announced the VMware IPO "spinout" in February, never mind after the actual VMW launch. That's what the theory says. But there are other theories that say something like markets look ahead and markets reflect the cumulative wisdom of the buyers and sellers.

EMC is lanuguishing because those in the know know "virtualization" is a buzzword du jour, today's "dot.com." At an Infoworld conference in NYC yesterday, Stephen Hilton, an IT guy at Credit Suisse (which is doing a big server virtualization project) was asked if virtualization would take over the world in five years. He said the word virtulization "would drop out of the vocabulary in three years." I understood his point to be that this was nothing new and just the way IT infrastructure needs to be built. IBM has had it for 40-50 years on mainframes; it was only a matter of time for it to be used on PCs. It will be built into every type of software.

And the buzz about desktop and application virtualization is equally absurd. We EMC shareholders were screwed because we did not get a piece of VMW right away that we could unload during this "virtualization bubble."

VMware Blasts Off: Lessons and Implications

Paul, you're right, the dot.com era is returning. The bet is on buzz not reality.

In the software space, investors are paying no attention to the outcome-depressing effects of functional convergence (e.g., web servers into app servers during the dot.com era, word processors into office suites before that, virtualization BACK into operating systems in the next few years), SaaS (e.g., the "annunity" way it is accounted for as well as its effect on reducing traditionally- priced software), open source software (basically wiping out the for-profit software development market, which spawns the rest), bundling (what some call appliances), and a litany of other non-technology issues that are turning the IT market of the early 21st century into the auto market of the late 20th from an investment perspective. That's all good news for users but not for investors.

Plus, as I wrote about the VMware IPO a few months ago(software.seekingal... where's the pay off for EMC investors? This thing is going to come down as fast as all the buzzed about bombs of 1999.