VMware: Identifying Market Opportunities and Customer Needs

About VMware

VMware (NYSE: VMW) is the Global leader in virtualization solutions, enabling cloud computing to businesses from the desktop to the data center. VMware is located in Palo Alto, CA and finished 2008 with revenues of $1.9 billion and more than 150,000 customers and 22,000 partners.

The Bottom up Approach

VMware’s business is mostly aimed at large enterprises, in which layers of management lie between the person making the IT investment decision and the one using the product. Very often, these people report to different divisions in the organization. Since its early days, VMware grew bottom up: it is common to have junior IT professionals installing a virtual machine on their laptops, falling in love with the technology and convincing their managers to allocate money for enhanced solutions. VMware kept expanding based on a growing group of IT people who understood the potential of virtualization and appreciated the quality of VMware’s products. Even today, when VMware is a known brand and investment in virtualization is legitimate, VMware maintains its high-touch approach with end users. Many of its marketing initiatives address end users directly to nurture the bottom up process and help VMware understand them and develop the technology they appreciate.

Be Ahead of the Technological Curve

VMware is able to identify many of the opportunities in the market by realizing the power of virtualization and the extent to which it can benefit businesses. VMware was started as a novel way to use virtualization and it stayed innovative. When no business in the world used virtualization, VMware already developed its next generation virtual machines. When virtual machines were becoming popular, VMware already introduced its virtual server.

The ability to stay ahead of the technological curve allows VMware enough time to evaluate its new technology and shape the face of the industry. VMware does not only understand the users’ needs, but also shapes these needs with its innovation. Unlike other companies’ customers, VMware users often find themselves surprised when features they need were already introduced years ago. Microsoft, on the other hand, started developing its virtual offering years after VMware. Even today, most of Microsoft’s new features are ones that have been offered by VMware two to five years ago.

Know your Competition

VMware invests ample resources in learning the bits and bytes of its competitors’ products. VMware believes that in order to understand the customers’ needs, they need to understand the options the customers currently have. Whenever a new competitors’ product is released, it is evaluated by VMware’s competitive lab and the results of the evaluation are taken into consideration in the development of new products and solutions.

The competitive landscape is also widely taught in the organization. Once VMware’s sales reps meet a customer, they bring a wide knowledge about the market alternatives and can get a clearer idea of the customer needs based on the full set of options he/she has.

Create an Ecosystem

VMware is always on the look for opportunities to leverage virtualization. In order expand its market understanding and expertise, it created an ecosystem of partners, developing applications and appliances based on the VMware platform. This ecosystem allows VMware to benefit from the market understanding of its partners, and allocate resources when needed. For example, if a partner develops a healthcare application, VMware can leverage the knowledge around this application to better understand the attributes of virtualization in the healthcare industry.

Take Constant Customer Feedback

VMware takes customer feedback on a regular basis. From beta programs which are used to incorporate customers’ feedback on new products, through endless focus groups and surveys. In addition, VMware has an ongoing committee of customers that are meeting periodically to give VMware feedback on its products in a strategic level. This feedback is used to analyze the customers’ needs and is taken into account when making decisions about product portfolio.

Try Your Own Technology

VMware always tries its own technology to get direct insight on the product. VMware is an enterprise itself and is similar to its typical customers. Therefore, VMware installs its new products in VMware’s datacenters and tries it before selling it to the market. The internal feedback is valuable and is integrated into the versions. In that way, VMware not only understands the customer needs, but also feels them.