VMware’s ongoing reinvention

Virtualization mainstay VMware wants to build and manage multi-cloud infrastructure and so much more.

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Four years ago, when the in-house electronic medical records system was pushing the company’s SAN to the limit, Alicea switched to a VMware vSAN. Latency dropped from seconds to microseconds and the company realized a nearly 50 percent reduction in storage-hardware-acquisition costs. “Everybody was wowed,” Alicea says, and he was given the green light to develop and implement a five-year plan that included deployment of a full software-defined data center.

On the networking front, Alicea began re-designing the core network, moving from Cisco gear to white-box switches running the Cumulus Linux OS, boosting the network backbone from 10Gps to 40Gps and adopting a spine-leaf architecture for increased resiliency.

The next step was adding VMware’s NSX, which integrated with the storage- and server-virtualization systems to provide a single view of the entire data-center stack. In addition, NSX provided network micro-segmentation for security, as well as load balancing. “It all made sense,” Alicea says.

He is working with VMware in other areas as well, implementing virtual desktop infrastructure with VMware’s Horizon View technology on NSX clusters. But he’s also sticking to the best-of-breed approach. For example, after evaluating VMware’s SD-WAN technology, he decided to stick with his current implementation.

VMware's Dell EMC connection, future plans

No discussion of VMware can be complete without mention of its somewhat convoluted ownership situation. Storage vendor EMC bought VMware in 2004 for $625 million and sold 15% of the company to the public via an IPO. In 2016, Dell, which was then privately held, borrowed $67 billion to buy EMC in a deal that stands as the largest ever in the industry. As part of that transaction, Dell issued something called “tracking stock,” a separate stock based on VMware’s performance. Then, in December of 2018, Dell announced it was going public again and bought back the VMware tracking stock.

None of these machinations seem to have had much impact on the ground, according to both analysts and customers. Any efforts by Dell to increase synergies between the companies can only be good for customers, and these corporate changes haven’t slowed down VMware’s continued push into new markets. For example, Dell just announced an aggressive product roadmap for its HCI product line that features VMware’s VxRail technology.

And at the latest VMworld conference, the company announced several new initiatives. Project Dimension is a managed service that will bring software-defined data-center infrastructure- and hardware-as-a-service to on-premises and edge locations. Project Magna is aimed at leveraging artificial intelligence and machine learning to build self-optimizing virtual infrastructures. And Project Concord is VMware’s blockchain initiative. 

But there is always a concern that if debt-laden Dell hits a few rough quarters, it might scale back new -echnology investments at VMware.

So far, however, the overall strategy seems to be working. Revenue for the latest quarter was $2.2 billion, up 14% from the same quarter of the previous year, and the company increased its full-year revenue projections to nearly $8.9 billion. Quarterly earnings of $1.56 a share beat analyst estimates. And VMware stock, which dipped to a low of around $50 a share in 2016, is now above $150 a share.

Industry analysts are impressed. Forrester listed VMware’s HCI offering as one of the leaders in the fast-growing “data center in a box” market. IDC says VMware is the market leader in cloud management software at more than $900M in annual revenue, and is the market leader a new category called IT automation and configuration management. And Gartner puts VMware in a leadership position in WAN edge technology.

Wolf, not surprisingly, is bullish on VMware’s future:

“We will be global leaders in infrastructure, networking, data management, end-user computing, and we will revolutionize how applications and data are secured. We will empower customers to take open source projects into production, providing the reliability, scalability and operational consistency they require. Finally, we expect to continue to be a major force in cloud operations and management.”

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