Steve Funk

Troubled VMWare's Lowest Close Ever

I have lived through all of the changes that you mention and have dabbled in the different stocks mentioned along the way. Since the beginning of the computer industry it seems that the technology has been over estimated and the business systems behind the companies and the market forces have been greatly underestimated. Microsoft's growing server market share and proven marketing prowess make it dangerous to bet against them with VMWare stock. Besides, VMWare can actually help boost Microsoft Server sales (and Oracle). MS wins either way and lives to try again if they come up short. They have done this over and over again. VMWare probably has peaked in market share.

Instead of technology, you should consider barrier's to entry in the marketplace. Ultimately that is what did in Netscape. If you have enough time and money (as MS does), these software technologies just are not that hard to duplicate and if priced right managers are not going to count CPU cycles before buying a particular technology. It is all about the marketing and I have not seen VMWare be proactive in their marketing plans. I think that EMC cashed out at the right time and investors are now beginning to realize that. This will be just another good software company with good cash flow, low dividends, and constant market threats that make the stock volatile. Not a great investment.

Why Microsoft Will Never Win (Again)

Mr. Ingram has some good insights and interesting history pieces. I do think that he is rearranging these little bits of history in the wrong order and drawing financial conclusions based on the "religious" beliefs of the anti-Microsoft techies.

First, with such high market penetration in the OS and Office market there really is nowhere to go but down in market share. The only question is how far and how fast they will go down. IBM and GM are good studies in this respect. All three have had dominating market postions, then a Justice Department decree, then the struggle to hold on to market share.

No one mentions the fact that Obama has declared that he will strengthen anti-trust enforcement. Any question who is on his target short list? That will have a bigger impact than technology shifts or Google.

All of the "religious" discussions, such as OpenOffice.org, discount Microsoft's impeccable P&L and balance sheet. In the end the one with the most cash and best management to put that cash to good use will win. Unless there are government interventions.