VMware heading in the right direction: analyst

Peter Dinham
Sunday, 29 January 2012 16:32

VMware has got a tick of approval from one market analyst for its fourth quarter financial performance last year and the take-up of its core product offerings, including cloud-based products and services, but its also predicted that the company wil face increasing competition for marketshare from IBM and Microsoft.

In its market commentary, analyst firm Technology Business Research (TBR) says that VMware's recent results - 4Q11 revenue growth of 27% year-to-year and 2011 annual revenue increases of 32% year-to-year - show that customers across segments and geographies 'have bought in to the company's core 2011 narrative defining virtualisation as fundamental to cloud deployments.'

According to TBR analyst, Elizabeth Hedstrom, VMware's track record of success in delivering what customers need - both right now, and within the visible near-term - has 'reinforced its trusted brand, driving install base loyalty and increased investment as customers make their own migrations from converged infrastructures to efficient cloud-driven environments.'

Hedstrom says that TBR believes VMware will face increasing near-term competition from both IBM and Microsoft as its 'increasingly end-to-end virtualisation, cloud, and now management-capable portfolio takes aim at both competitors' core strengths in orchestration and integration.'

Hedstrom also says that by balancing its ecosystem investments and core product advances, VMware can drive near and long-term performance momentum in 2012 and 2013, and that VMware's announced alliance expansions with Telefónica, Verizon Wireless, and NVIDIA opens up new access to mobile workers seeking enterprise-grade performance. 'Expanded deployments of VMware technology into mobile devices including Androids and Kindles reinforces VMware's strategic engagement with the end-user - as a means to further support core IT managers in creating an end-to-end experience that stretches beyond the enterprise data centre,' Hedstrom says.

TBR also believes that the depth with which VMware executives have linked core hypervisor technical strengths to its integrated cloud portfolio lets the company position itself as an appealing choice for customers concerned with maximising investment and cost-efficiency - letting VMware fuel near-term growth with share-of-wallet increases from its install base. However, Hedstrom cautions that 'long-term challenges to VMware's monetization of cloud and management growth initiatives are likely, centred in the open-source community and headlined by OpenStack.'