I just returned from the annual VMworld event in Barcelona. The two-day event included the typical mix of presentations between growth and portfolio enhancements but also interesting Q&A rounds with top management and partners. My personal highlight was a round table discussion over lunch with clients including DB Systel. The key message which came through the event is that VMware is driving on a healthy growth curve by aiming to become the defacto standards for optimized infrastructure in IT. Here is my take:
Core network infrastructure – will VMware become the new Cisco? As network service providers finally start to transform their core network infrastructure, VMware is positioning itself as the partner of choice for resilience, scalability and continuity. The Palo Alto company adds a broad virtualization portfolio, the commitment to innovation and a strong standing in the enterprise market to its strength. With these ingredients, VMware could become equally strong in its market as Cisco was in 2004-2005 when MPLS based routing was the technology of choice. Despite strong competition and a more open level playing field, this could be a route to offset declining revenue growth from the enterprise markets.
VMware is becoming one of the key cloud players by taking the lead in infrastructure virtualization. As much as your computer is empowered by an Intel chip, your SAN and storage environment is likely to contain VMware technology soon. Particularly since many service providers adopt VMware for their core cloud offering and increasingly their network infrastructure. VMware is standardizing the virtualized cloud portfolio even further through its alliance with Amazon Web Services for the provision of cloud infrastructure consumable and billable on an hourly basis.
The digital workspace offering is still in its development phase. VMware has gone a long way to integrate its own portfolio with AirWatch. Whereas the stories of AirWatch and VMware were not really aligned in 2015, this event showed a different picture. The portfolio covers modular components from MDM to unified endpoint management with a clear pricing logic. Just the naming of AirWatch, WorkspaceOne and Horizon seems a little confusing. VMware clearly has some trouble placing its very strong MDM brand into its portfolio communication strategy. With some very large AirWatch customers being in the early stage on the journey to the digital workspace, care must be taken not to deemphasize the focus on its core capabilities.
VMware risks channel conflicts with its partners. On my question how to deal with the fact that IT partners are fiercely competing with each other on cloud and desktop services, CEO Pat Gelsinger replied that he pictures VMware as neutral Switzerland where everyone can have an account. But the Amazon-VMware deal did not go down well with IBM executives for fear of losing the first-mover advantage partnering with the virtualization giant. Michael Endres, cloud portfolio manager from Atos, voiced a clear expectation to develop joined innovation with VMware for the benefit of Atos clients only. VMware executives must tread a careful path between doing everything possible to increasing sales and to develop strategic relationships.