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VMware Price Hike?

There's an old story about economics that I think my dad once told me. It seems that Smirnoff vodka was losing market share to its lower-priced rival, Wolfschmidt, back in the '60s. Instead of slashing its prices to match those of Wolfschmidt, Smirnoff did something no one expected: It raised 'em. All of a sudden, Smirnoff was a premium brand, and sales rose.

Apparently, VMware is the Smirnoff to Hyper-V's Wolfschmidt. Over in Europe, VMware is raising prices, at the exact same time that a nearly free Hyper-V is coming to market.

That may work for a while, but in the long run, VMware is going to have to react to Hyper-V pricing. Look at what happened with Netscape. It kept charging for its browser even as IE was free. Hmm, didn't the Netscape browser business ultimately disappear?

What would you do if you ran VMware? Send your corporate tactics to dbarney@redmondmag.com.

Posted by Doug Barney on 07/17/2008 at 1:15 PM


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