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Virtual Profiles customers endure VMware acquisition of RTO Software

Small companies sell innovation, but they are often gobbled up by market leaders. IT pros share some defensive tips to guard against acquisition-related woes.

RTO Software customers who bought the small company's products prior to its acquisition by VMware are disappointed with the way things are going under VMware ownership -- a common dilemma for customers of small vendors acquired by larger companies.

Jim Moyle, a desktop virtualization consultant and tech blogger, has two clients that bought RTO's Virtual Profiles and renewed their annual subscriptions just before VMware purchased RTO Software in February.

"Both have been told by VMware that as the RTO Virtual Profiles solution is now part of VMware, it will no longer be sold or supported as a standalone item, and that means no updates to the products; not even security patches," Moyle said.

One of Moyle's clients, Tom Norton, an IT manager for an independent school in the U.K., bought RTO's Virtual Profiles product in August 2008. He used it on Windows Server 2003 and was extremely satisfied with the support that RTO provided.

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When Norton's organization planned a Windows Server 2008 upgrade last year, RTO didn't support that version, so he held out on the annual maintenance subscription renewal. In August 2009, RTO came to him with an offer he couldn't refuse: renew immediately for a year of maintenance, and when Windows Server 2008 support became available, it promised to automatically adjust the renewal to one year from that date.

"So, you renew now, it will be through September 2010. If we ship [Windows Server] 2008 VP Support in November 2009, then we extend the maintenance through November 2010," an RTO account manager told Norton via email.

Having haggled for a maintenance rate of $1,590 (U.S.) per year, Norton renewed to avoid losing that price. In January 2010, Norton asked RTO for at least a beta version with Windows Server 2008 support, and an RTO representative said via email that he would get the beta with Windows Server 2008 support in April. A month later, VMware acquired the company, and all bets were off.

"Here it is July, and they still haven't released Windows 2008 support, and since [VMware] said there would be no further development, they never will," he said.

VMware released a document following the RTO deal saying it would support existing RTO contracts until they expire. After that, RTO customers have to buy VMware View and VMware Support and Subscriptions (SnS) to get RTO products.

For customers like Norton, who have no interest in VMware View, their RTO Software investment is now worthless. He had to buy alternative profile management offerings from Citrix and AppSense.

And even RTO customers that planned to use View won't get it packaged in the next version as expected, becauseVMware isn't bundling RTO with View 4.5 due to Windows 7 support issues. RTO technologies may be available as an add-on, but only with Windows XP support, according to sources.

VMware did not respond to request for comment.

Acquisition nightmares all too common
Plenty of IT pros have seen deals go sour when software vendors they liked got chewed up and spit out in unrecognizable form.

Mike Nelson, a virtual desktop infrastructure (VDI) consultant and co-founder of IT consultancy NelMedia, was a PlateSpin customer for about a year before Novell bought the software company in 2008.

Nelson used PlateSpin's PowerConvert tool for physical-to-virtual machine migrations and workload management, and he said he received excellent service and support.

"We could order and activate our licenses without so much as a hiccup, and whenever we called for support, we always got directly to an engineer," Nelson said. "During one support incident, the engineer conferenced in one of the actual developers because he wanted them to be aware first-hand of the issue we were dealing with."

After Novell bought them, things changed, he said. Allocating and managing licenses now requires multiple sites, and support involves "a triad of never-ending, nonhuman phone prompts, scripted questions from a nontechnical person, and the feeling of pulling teeth to get to a real, knowledgeable engineer," Nelson said.

"I miss the old days," He added.

Small vendors worth the risk -- if you negotiate a good contract
The risk of acquisition shouldn't deter a company from using a start-up, because there are many benefits, and smart contract negotiations can help customers avoid some acquisition-related issues.

Many IT pros like working with small vendors because of their malleability. Start-ups have no problem tweaking technologies to meet a customer's specific needs and will often provide the same or better products than bigger competitors at lower prices.

That's why Lyle Worthington, CIO of Horseshoe Bay Resort in Texas, passed on Citrix and VMware in favor of Sychron. Austin, Texas-based Sychron provided a VDI product that had management features that Worthington said he liked better than what is included with XenDesktop or VMware View for far lower cost.

"A small company can turn on a dime to work with us," Worthington said, adding that they are quick to innovate. "These guys were doing stuff before View and XenDesktop ever existed that those companies are just starting to do now."

As Nelson pointed out, start-ups offer great service to their customers because they want to keep the few clients they have extremely happy.

Service is one of the reasons why Nigel Fortlage, a CIO at a large Canadian international trade service provider, chose a small, software company called Imanet to provide the primary application for his core business.

"We were considered a major client for Imanet, so we received a lot of attention, and issues were addressed quickly," Fortlage said.

Unfortunately, Descartes Systems Group Inc. acquired Imanet in April, and Fortlage's organization is a small potato to the Waterloo, Ontario-based company, which has over 6,800 customers in 60-plus countries. "We aren't getting the same warm and fuzzies from them," he said.

As a result, Fortlage has to employ smart contract-negotiation techniques to minimize the acquisition's affect on his business.

He said it's a good idea to include an "out" in case the new company abandons a critical product or service. "I'm putting my feet in the ground so they give me six- to 12-month notice instead of the 30 days they proposed if they decide to leave our market segment, along with an exit strategy requirement," Fortlage said. "That way, I'll at least need to have time to plan and transition."

And when signing on with a small vendor, Worthington of Horseshoe Bay Resort said he always makes sure there is a clause stating his contract remains valid through an acquisition. "That doesn't mean it always works, but it at least gives us some power," he said.

Let us know what you think about the story; email Bridget Botelho or follow @BridgetBotelho on Twitter.

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