Virtualization software maker and all-round cloud computing giant VMware is betting that its stock could be worth a buyback. Yesterday the company announced its given authorization for as much as $700 million in share buybacks, with the shares available for purchase between now and the end of 2015. Transactions can take place either on the open market, or else through private dealings, the company said.

The Wall Street Journal, which first broke the news, said that VMware’s decision is part of its ongoing efforts to offset price dilution from equity programs. Previously, the firm approved $250 million worth of buybacks in November 2012, taking the total to $950 million. As of last night, VMware shares were trading at $85.39.

The move comes at what many observers perceive to be a challenging time for VMware, with the company said to be facing an unprecedented threat from cloud competitors as the server virtualization market matures. For years, Vmware and its hypervisor have been at the centre of the virtualization industry, but its leadership in this market has been threatened by the emergence of new commoditation trends with enterprises shifting focus to OpenStack in particular, as well as other cloud computing solutions that are looking to reshape the data centre.

VMware remains a gargantuan beast of course – its most recent quarterly earnings report comfortably beat analyst’s expectations, recording second quarter earnings of $244.1 million or $0.57 per share, up from $191.7 million in the same period 12 months ago. Even so, the growth of new technologies like OpenStack is a serious threat to its core business, and worried executives have been looking to diversify VMware into new segments in order to cling onto its spot as the virtualization marketplace leader.

“There’s kind of a gaining buzz around the industry that server virtualization is really becoming a commodity. VMware’s days of really owning the market place and being dominant with huge market share numbers are over,” said Wikibon analyst Stu Miniman on yesterday’s edition of NewsDesk.

“What I would caution is that, while VMware is definitely doing well and from all checks that I have and users that I’ve talked to, is people like them. VMware is going through a lot of challenges.”

Even so, Miniman added that the company’s overall position is remains an extremely strong one, and one that it’s attempted to bolster with the launch of its new vCloud Hybrid Service, an Infrastructure-as-a-Service (IaaS) solution meant to compete with rival offerings from Amazon Web Services and Microsoft Azure.

See more of Stu Miniman’s analysis on NewsDesk here:

VMware recognizes the size of the challenges it’s facing, and today’s buyback option announcement can be seen as an attempt reinforce its investor’s confidence as it tries to meet them . This kind of tactic is typically used by companies in order to maximize the value of investor’s shares. Essentially, it amounts to taking more shares “off the table”, which means that each stock represents a fractionally larger slice of ownership in the company. The announcement is timely, given that the company’s share price is currently down 9.6% from this time last year, something that could tempt more than a few investors to bite.