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VMware Grows Revenues with OpenStack

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The demand for cloud and virtualization technology continues to grow and VMware is growing right along with it. That growth is built on continued momentum for VMware’s virtualization technology and its limited embrace of OpenStack.

VMware reported its second quarter fiscal 2013 results late Tuesday, showing continued momentum for its Software Defined Data Center (SDDC) strategy and end user computing initiatives. For the quarter, VMware’s revenue came in at $1.24 billion, which is an 11 percent year-over-year gain. Net Income for the second quarter was reported at $244 million, up from $192 million in the second quarter of 2012.

Moving forward, VMware provided third quarter guidance for revenue to range from $1.270 billion to $1.300 billion, representing growth of 12 to 15 percent. For the full year, VWware is now forecasting revenue to be in the range of $5.120 billion to $5.260 billion, which represents year-over-year growth of 11 to 14 percent.

“Our continuing goal is to power people and organizations by radically simplifying IT through virtualization software,” VMware CEO, Pat Gelsinger said during his company’s earnings call. “We intend to realize that goal by focusing on a combined $50 billion addressable market opportunity across three strategic growth priorities; software defined data center, hybrid cloud, and end user computing.”


Some in the industry have seen the open source OpenStack cloud platform as rival and a risk to VMware. Gelsinger has a different view. For VMware’s CEO, OpenStack represents an opportunity.

OpenStack celebrated its third anniversary last week. The effort now has over 231 member companies including some of the biggest names in technology with HP, IBM, Dell, Cisco, Intel, AT&T and Comcast.

Gelsinger said that OpenStack has been a topic of conversations with many VMware customers.

“VMware’s goal is to be the cloud infrastructure software leader and we’ve also made clear statements that we are building a strategy that will support OpenStack in a very effective way,” Gelsinger said. “We call it our component strategy where we are embracing the OpenStack APIs, adding them to our product and then selling our best in class common technologies into this OpenStack framework.”

Gelsinger added that it’s still early for the OpenStack market, and he sees it as an incremental opportunity with large scale internet providers and service providers. He noted that VMware’s core vSphere and networking suite products already embrace an OpenStack modular strategy.

For those customers that have publicly made statements about OpenStack support, Gelsinger said that his company’s business with them grew faster than the rest of VMware’s business.

“We’ve seen that our customers really are embracing this strategy and we’re having great success in selling the component strategy into OpenStack,” Gelsinger said.


While VMware is working its way into the OpenStack market, the company’s positioning against Microsoft’s virtualization strategy is somewhat different.

Gelsinger said that when VMware goes head to head with Microsoft on competitive deals, VMware rarely loses.

“We tend to see them compete at the low end of the marketplace where we have offerings and more limited vSphere conditions or product line additions at the lower end of the marketplace,” Gelsinger said. “As we focus more and more in the differentiation of the complete software-defined data center as we’ve been doing, we see the differentiation that we have been more substantial in increasing compared to Microsoft or other competitors.”

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

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