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VMware OpenStack Customers Growing Faster than Overall Business

2014 was a big year for virtualization vendor VMware, but CEO Pat Gelsinger is not going to let his company rest on its laurels anytime soon.

VMware reported its full year fiscal 2014 and fourth quarter fiscal 2014 financial results on January 27, showing growth in multiple areas of the business. For the fourth quarter, revenue was reported at $1.70 billion, for a 15 percent year-over-year gain.

For the full fiscal 2014 year revenue was reported at $6.04 billion, Server Virtualization for a 16 percent gain. Net income for the fourth quarter was reported at $326 million, while net income for the full year came in at $866 million.

Looking forward, VMware provides guidance for 2015 revenues to be between $6.64 billion and $6.76 billion, up 10 percent to 12 percent year-over-year.

"In summary, our business is growing," Gelsinger said during his company's earnings call.

OpenStack a Key Component in VMware's Future Growth

Some areas of VMware's business are growing faster than others. Most notably, Gelsinger called out his company's OpenStack efforts, which he referred to as being a good business for VMware.

"We've seen OpenStack customers growing faster than our overall business," Gelsinger said.

VMware announced its own OpenStack distribution in August of 2014. Gelinsger said that the market will be hearing more this quarter about the VMware OpenStack product and he's very excited about what's coming.

"As we discuss our OpenStack offering with customers, it becomes a very compelling offering," Gelsinger said.

The offering is compelling in Gelsinger's view because VMware customers often have large footprints using VMware's technology. OpenStack becomes a very easy way for those customers to extend their offerings to their internal developer teams or other application developers.

Gelsinger explained that customers can leverage OpenStack APIs as a way to consume infrastructure without having to alter their underlying networking compute, management and security requirements in any way.

"So we are quite excited about bringing that to market and we believe that based on our beta customer feedback that it's going to be an extraordinarily well received offering on the part of our customers," Gelsinger said.

The OpenStack embrace is all part VMware's continued move to expand its position with customers beyond just traditional server virtualization.

"License bookings beyond standalone vSphere are now greater than 55 percent of total license bookings, up from greater than 30 percent just two years ago," Jonathan Chadwick, VMware's CFO and COO, said.

NSX Network Virtualization Also Poised for Growth

Another key area of future growth for VMware it with its NSX network virtualization solution. Gelsinger said that VMware has seen a rapid increase in NSX production use with more than 400 paying customers, up 60 percent quarter-over-quarter.

VMware still has a few more things coming in the pipeline that will not be publicly disclosed until next week.

"Next week we will be hosting over 20,000 customers at our biggest launch event for the year when we unveil some exciting new products and services and cover updates through our hybrid cloud strategy," Gelsinger said.

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

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This article was originally published on January 28, 2015
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