Egenera's Strategy Shift Is A Good Thing

James
Earlier this week, The Boston Globe reported that Egenera laid off short of 100 employees under the guise of the weakening economy, but there is more to this story. The reduction also reflects a shift in strategy to increase its focus on PAN Manager, its virtualization management software. Originally tied to its unique BladeFrame hardware products, PAN Manager was freed earlier this year and is currently distributed by Fujitsu-Siemens and Dell. As is often the case for hardware companies, Egenera's crown jewels are in this software and PAN Manager is one of the most mature, feature rich and enterprise tested of the virtualization software managers on the market. It has been hardening in investment banks, health care companies and other demanding environments for more than 5 years and supports Xen and VMware and runs on traditional rack or blade servers.

Since software is sold more effectively via the indirect channel (through distributors, OEMs, VARs and resellers) Egenera is able to downshift its more costly direct sales efforts by focusing on software sales going forward.

The company said it certainly isn't abandoning its hardware, as it will continue to fully support and enhance BladeFrame going forward.

The irony here is that the Egenera BladeFrame design is quite prescient. Modern blade systems used in best practice with networked storage, look and act a lot like the Egenera BladeFrame. And with the addition of advanced blade management software like HP Virtual Connect and Virtual Machine Manager and IBM Open Fabric Manager plus Virtualization Manager, these systems are moving towards the level of enterprise RAS capabilities that Egenera has provided for years. It might behoove a smaller blade system competitor to pick up the BladeFrame system from Egenera to better position itself against HP and IBM.

While certainly the economy has some connection to Egenera's cost cutting moves, the underlying strategic change is more telling of the company's leadership, new direction and focus on PAN Manager, which stands a good chance of being a hardware and hypervisor independent virtualization manager worthy of enterprise IT Ops' attention

By James Staten

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