Market Shifts May Open New Doors for VMware

VMware made a strategic acquisition yesterday, perhaps in hopes of regaining investor faith after cutting expectations for 2013.  While VMware reported record earnings for the last quarter, the virtualization market leader cut its guidance for the first quarter of 2013. The firm has acknowledged that the competition is finally starting to bite away at the comfortable lead in the server virtualization market.

Analyst firm Wikibon believes that VMware must diversify in order to maintain its competitive edge in the virtualization market.  Senior analyst Stu Miniman says that the company must hold onto its cloud business, and points at three segments that VMware could exploit in order to take full advantage of fresh market opportunities, all for which the virtualization giant is well suited:

  • Converged infrastructure has virtualization as a core tenant; even VCE will support other hypervisors
  • The “Post PC” world of mobile and virtual desktops remains a strong focus for VMware. VDI has seen strong upticks over the last 6-12 months and VMware has been closing the functionality gap with Citrix
  • VMware acquisitions of DynamicOps and Nicira position it for expanding control to heterogeneous environments where the benefits of the full VMware product suite can be strongly positioned.

Despite the recent murmurings of a breakdown, VCE, the joint venture between EMC, VMware and Cisco, offers cloud building blocks that are being increasingly used by large enterprise customers. That’s good for VMware under EMC’s umbrella, maintaining the important enterprise market while exploring other potential opportunities.  Meanwhile, 80 percent of companies are currently using or considering VDI for a wide variety of reasons, including improved maintenance and faster deployment.

Mid-sized businesses have shown the greatest interest in implementing virtualized desktops, and nearly 85 percent of IT pros agree that VDI will become critical for operations. End users are less excited about the technology, but that is quickly changing.

You’ll also note that VMware has made some earlier acquisitions in order to expand its market opportunities, which fits well with the virtualization firm’s latest buy: Virsto.  SiliconAngle founder John Furrier has already identified a new opportunity in the software-defined datacenter (software-defined storage) as a result of this deal, given Virsto’s existing compatibility with Citrix products, further closing that gap Miniman mentioned above.

As with many tech companies today, VMware is riding the wave into the post-PC era, a movement that’s impacted everyone from the enterprise to the end user.  And even with a head start on the virtualization trend, VMware must fight to maintain its lead and venture into new opportunities during this era characterized by transition.