Saturday, October 31, 2009

Failures in Product Marketing: VMWare Fusion 3.0 Upgrade

For the past ten months or so that I've been using VMWare Fusion, I've been pretty impressed with it. To date, the biggest hassles that I've had with it revolved around the Windows installation and registration process. But for the most part, the software has run seamlessly and performed extremely well. So yesterday-ish, I fired up the software and was alerted to an available update -- Fusion 3.0. Normally, this means I go to the site, log in, download, install, and everything is good. This time, my fun began during the install process when I noticed the serial number field didn't pre-populate with the serial number.

Product Launch for Upgrades Goes Horribly Wrong
Instead of simply alerting me to an update, they were also alerting me to a case study in Product Launch gone wrong. Let's start with the positive stuff -- it looks like the demand for upgrade was so overwhelmingly strong that it blew out the new serial number registration system that they decided to implement. I say new because it may have been running for some time, but before yesterday I never encountered it. As a result, I spent half an hour struggling with their site interface, trying to understand why it couldn't find my serial number nor remember that I was a registered Fusion user. Based on comments from other users, I wasn't the only one -- from serial number recognition to activation codes, it looks like the number of people struggling was substantial. On the VMWare Blog, they even posted a 30-day trial serial number so that people could essentially bypass the system, giving VMWare and any of their customers that found their way to the blog a 30-day time-out to resolve the serial number issue.

How Version Upgrade Offers Should Not Work
Searching around the site, I also eventually found some other important data -- the upgrade to 3.0 was going to be a for-pay upgrade. VMWare wanted my wallet, but I was only able to discover that after searching their site. Now it's possible that I missed this information, hidden in the endless stream of conferences and roadshow notifications that they send to me, but regardless of the notifications that I received, when I went through the normal upgrade process, I didn't discover that things were different until I was halfway through the install process.

Pricing on the paid upgrade was surprisingly confusing:
  • For $39, you could download the 3.0 update
  • For $99 $59, you could get the download and a 12-month subscription that entitled you to software updates.
You'll note the strikethrough because apparently the original price was $99, but then they discovered that Amazon was selling a new package for about $65. Yes, for a time it was actually cheaper to order a new copy of the software than to upgrade. As a sidebar for you international site managers, comments posted on the VMWare forums indicate that while they changed the US$ amount, they didn't change the UK£ amount.

Now if you're like me (and a lot of others out there), the terms of this upgrade are quite confusing. Specifically, did getting the 'no updates' version entitle you to updates? On the VMWare message boards, debate on what the difference was between the two went on for a while. Finally, VMWare's Director of Personal Desktop Products weighed in with this clarification.
VMware Fusion 3 comes with free UPDATES to fix bugs and the like. So, VMware Fusion 3.0.1, 3.0.2, etc are ALL free UPDATES with any VMware Fusion 3 full purchase or upgrade. If we were to come out with a VMware Fusion 3.1, that is an UPDATE that would be free to all VMware Fusion 3 customers.

The Subscription offering provides MAJOR UPGRADE protection for 12 months. UPGRADES are major new releases with significant features. So, it will protect you in the event that VMware Fusion 4 is released in the next 12 months you will get that MAJOR UPGRADE for free with valid subscription. So, $20 gives you protection that if VMware Fusion 4 comes out in the next 12 months, you will get it for FREE as part of your valid subscription.

To summarize:
All VMware Fusion 3 customers will get UPDATES and bug fixes for free. If you buy the Subscription add-on, you will get MAJOR UPGRADE protection in the next 12 months.
While that may clear up the difference in the two price options, it doesn't really address the strategy behind the 'upgrade' offer. Specifically, what benefit or loyalty does VMWare provide to existing customers? While I picked up my copy of Fusion 2.0 with my system purchase and a $50 rebate, the list price for the software was about $60-70 list -- and there were a number of discounts and rebates that brought the price down to $40-50. In that way, the base upgrade price is equal to or greater than the initial price that I paid for the software. If this were a mind-blowing update or VMWare had done an exceptional job of building loyalty, an 'upgrade' that cost more than the original might seem like it makes sense, but neither of those are true. Instead, as a 'loyal customer', you start thinking about putting off your purchase until you can just buy new with a discount. Overall, their pricing strategy seems to fall a bit short.

It Gets Worse: Upgrade Insurance
The Upgrade pricing option is even worse. Essentially, what you are doing is paying $20 to VMWare as insurance against them making a major upgrade in the next year. The problem with this strategy is that in this case, the guy your betting with also has control of the results. VMWare controls their roadmap and they decide when they are going to release their next version. And if their next upgrade happens to take more than a year, you just gave them $20 for nothing. In fact, here's something that another poster in their community pointed out:
  • VMware Fusion 1.0 was released on: Aug 6, 2007
  • VMware Fusion 2.0 was released on: September 15, 2008
  • VMware Fusion 3.0 was released on: October 27, 2009
  • So if version 4 follows the same it too will be over a year before it will be released and therefore everyone who buys in this release frenzy will in all likelihood not get the next version and wasted $20!
It looks like the biggest reward from VMWare for being a loyal, early adopter is that the company gets more of your money.

In discussing this issue with one of my colleagues, he noted that many enterprise-grade software packages include a maintenance subscription charge, and that if you aren't current on that ongoing charge, you need to pay to become current before you're entitled to the lower cost upgrade. Since upgrade costs are typically significantly lower than the high initial purchase price, these maintenance subscription prices are just accepted. It makes me wonder whether this aspect of their pricing strategy isn't something that has carried over from their server products. Is this a case of server-room marketing not understanding a desktop consumer audience?

The Bottom Line
The long and short of the VMWare Fusion 3.0 upgrade is that I'm going to wait. While I'm certain that there are benefits to the upgrade, the pricing issues make upgrading anything but a slam-dunk. Meanwhile, in all of my searching through the VMWare forums, the 'sales collateral' that I received the most exposure to was different users posting issues that they were having with the upgrade. Essentially, the process of trying to upgrade let me straight into a word of mouth lion's den -- and one that sold me on delaying instead of purchasing. It's an interesting lesson.

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