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VMware Sees OpenStack as an Opportunity as Revenues Grow

By Sean Michael Kerner (Send Email)
Posted April 24, 2013


VMware sees a bright future ahead as its server virtualization technologies evolve to enable the cloud. VMware's optimism is fueled both by new products that are set to debut as well as its leveraging of OpenStack to grow the company's market position.

VMware reported first quarter fiscal 2013 earnings late Tuesday, with revenue at $1.19 billion, for a 13 percent year-over-year gain. Net income was reported at $174 million, or $0.40 per share.

Looking forward, VMware provided second quarter guidance for revenue to range from $1.21 billion to $1.24 billion, representing growth of between approximately 8 percent to 10 percent.

Pat Gelsinger, CEO of VMware, said during his company's earnings call that growth priorities for VMware remain the software-defined data center (SDDC), hybrid cloud and end-user computing.

"We're on a multi-year journey as we guide our customer’s technology and business transformation," Gelsinger said. "We believe this IT transformation presents VMware with a $50 billion total addressable market opportunity by 2016."

On the software-defined data center front, Gelsinger noted that VMware recently announced its intention to create a new product line called VMware NSX. The NSX platform will merge the VMware vCloud networking product line with the Nicira network virtualization platform into a single product family.

"We're also set to further deliver against the software-defined data center architecture in the second half of the year with broader software-defined storage solutions for standalone products and within the vCloud suite," Gelsinger said.

VMware is also planning on launching its Cloud Hybrid Services offering on May 21st.

Carl Eschenbach, President and COO of VMware, noted on the call that additional product updates are coming later this year.

"These new products include the next generation of vSphere, vCloud Operations Suite, Horizon Suite as well as VMware NSX for network personalization, vSOM for storage virtualization, and vCloud Hybrid Services," Eschenbach said. "All of which are in customers’ hands now with beta versions."

OpenStack

While in some respects the open source OpenStack cloud platform that is being championed by multiple vendors, including IBM, HP, Dell, Cisco and Intel, is competitive to VMware, it is also complementary in many respects.

"The large majority of our customers simply want an integrated solution and for that the VMware stack overall remains the choice of the vast majority of our customers," Gelsinger said. "However, what we do see is the emerging framework of OpenStack for customers to assemble their own cloud infrastructure, for those who want to build their own."

OpenStack is a framework platform including compute, networking and storage components. Gelsinger said that it is VMware's intention to enable its best of breed, networking compute, storage, and management technologies into the OpenStack environment.

"We see this as expanding the addressable market for VMware and further providing additional choice, the key value of VMware to our customers," Gelsinger said.

The core OpenStack Nova compute module can use any number of different virtualization hypervisor technologies, including KVM, Xen, Hyper-V and now VMWare ESX vSphere as well.

"Now we are delivering vSphere as a preferred solution inside of that OpenStack environment," Gelsinger said. "And this presents additional monetization opportunities for our paid-for compute networking storage management software technologies into that OpenStack environment."

Sean Michael Kerner is a senior editor at ServerWatch and InternetNews.com, the news service of the IT Business Edge Network, the network for technology professionals. Follow him on Twitter @TechJournalist.

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