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VMware Continues Cloud and Network Virtualization Build-out

By Sean Michael Kerner (Send Email)
Posted July 23, 2014


VMware is growing its cloud network footprint and still sees lots of opportunity in the years ahead. That's the key message coming from VMware executives during the company's second quarter fiscal earnings call.

For the quarter, VMware reported revenue of $1.46 billion, for a 17 percent year-over-year growth rate. Net income was reported at $167 million, down from $245 million in the second quarter of 2013. Moving forward, VMware provided third quarter guidance for revenue to be the range of $1.42 billion to $1.52 billion, up 15 to 18 percent year-over-year.

A key driver for growth is VMware's NSX network virtualization platform which was first announced in August of 2013. VMware CEO Pat Gelsinger said during his company's earnings call that NSX has more than 150 paying customers.

Carl Eschenbach, President and COO of VMware, added that the current run rate for NSX is now $100 million in total annual sales.

"This is a decade plus opportunity for VMware," Eschenbach said about NSX. "In contrary to what you may have heard from other vendors, this momentum is real and traction is occurring right now."

While some have seen VMware's NSX as being competitive with solutions from Cisco, Gelsinger doesn't quite see it that way.

"We love Cisco gear and we don't need them to lose and many NSX customers are using it (Cisco)," Gelsinger said. "So we really see this as an opportunity for customers to take advantage of a new technology, network virtualization and we are out to win in that game, and do it on the best gear that’s available in the industry."

Momentum is also growing for VMware's cloud efforts. Gelsinger noted that by the end of the year he expects the VMware-operated cloud will be available in over 75 percent of the world's cloud market.

"With approximately 4,000-service provider partners a VMware cloud will be available in essentially every market on the planet," Gelsinger said. "We are not stopping there. We are committed to the continued expansion of our global footprint for hybrid cloud services and to provide our 500,000 customers the best and fastest path to an enterprise class hybrid cloud."

The path to the cloud will also extend through VMware existing standalone server virtualization business.

"Our cloud management penetration has risen to 12 percent of our installed base, leaving us plenty of room to grow," Eschenbach said. "While standalone vSphere sales continue to ship to the suite, our strategy is working. VMware Solutions, such as vCloud Automation Center are becoming an industry standard for cloud automation and management."

Sean Michael Kerner is a senior editor at Datamation and InternetNews.com. Follow him on Twitter @TechJournalist

Originally published on Datamation.
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