Friday, October 03, 2008

Vyatta Announces Comprehensive Network Bailout

Well, the last couple of weeks have seen a complete roller-coaster ride for the economy. Like a true roller-coaster, while there may be intermediate ups and downs, the general trajectory is always down. The mortgage crisis here in the USA will be rippling through the global economy for months and years to come. As I write this, the US Congress is debating various bailout packages. While I'll keep my own personal views on the various bailouts private, what is clear is that you can't trust the same people responsible for the whole crisis to fix it well without going immediately partisan and everybody trying to cover their own tails.

The real question going through the head of everybody that I talk to is, "How is this going to affect us?" For most people, the most immediate personal effect is simply diminished portfolio values if they were invested in the stock market (which may include a lot of retirement portfolios in 401(k) retirement accounts). I think the long-term answer is that we're going to see a tightening of the economy very similar to what we saw back in 2002. This means that companies are going to try to hold on to a lot of their cash because it won't be as easy to get even short-term credit when they need it. Even if companies are not directly involved with the whole financial mess, we can expect a round of budget cuts as executives try to provide cushion for ongoing operations while they asses how they are going to be impacted long-term. Ultimately, this means that you the IT manager are going to be forced to perform with less budget.

Fortunately, Vyatta can help you do that. Each month, over 20,000 network managers download Vyatta so that they can take advantage of "Moore's Law Economics" for their network. With Vyatta, they get twice the performance at half the cost or better. In good times or bad, everyday, that's the Vyatta advantage. In these uncertain economic times, however, we wanted to do a bit more.

Yesterday, we announced a "network bailout package" designed to further ease the pain. For the next month and a half, if you buy five Vyatta appliances or software subscriptions, you get the sixth one free. That's an additional 17% off the already low price. With that, you'll get great technology, awesome service, and the good feeling of know that you aren't throwing gobs of money into the pockets of the fat-cat networking companies.

Let me dwell on that for a moment. If you're new to Vyatta, you might not know what we mean by Moore's Law Economics. Last quarter, Cisco announced a gross profit of $6.6B on $10.3B in sales. That's a profit margin of 64%, one of the highest in the IT industry. That means that 64-cents of every dollar you spend with Cisco is gross profit.

In comparison, the gross profit for Dell (a good representative of the x86 ecosystem) in its last quarter was $2.8B on $16.4B in sales, or 17%. Because Dell exists as part of a competitive ecosystem, not a proprietary near-monopoly, it can't price-gouge for its technology the way Cisco can. Further, it has to innovate quickly in order to remain competitive. That dynamic is what we mean by Moore's Law Economics--more innovation, faster, with competitive pricing.

(By the way, don't think you're going to get a better deal from the other proprietary networking companies. Last quarter, Juniper announced a gross profit of $590M on sales of $879M, or 67% gross margin. While Juniper likes to portray itself as a more cost-effective competitor, Juniper has a slightly higher gross margin than Cisco.)

With Vyatta, your network can take advantage of Moore's Law Economics. With Cisco and other proprietary vendors, you're stuck paying whatever they want you to pay, with profit margins that are three to four times as high as the x86 ecosystem. I'd call that an economic crisis. Fortunately, that's easy to fix and Vyatta is here to help. By making a few good choices and taking advantage of Vyatta's comprehensive bailout program, you can keep more money in your pocket for a rainy day. If you're feeling rich after making the switch, maybe you can loan some of that cash to the rest of us.

1 Comments:

Anonymous Balakrishna said...

This is excellent.

Mon Jan 12, 06:22:00 AM 2009  

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