By Charles King, Pund-IT, Inc. September 6, 2017
IT vendors, at least the ones that know what they’re doing, are in a relatively constant state of change. Partly that’s due to the nature of technology itself – vendors’ solutions and services have to keep up or risk being left behind. But successful organizations and the markets they inhabit also evolve. Vendors that fail to understand and adjust to those changes actively court disaster.
How and how well vendors pursue this process are typically highlighted at their annual customer and partner conferences. That was certainly the case at VMworld 2017 last week in Las Vegas. While the company faces some challenges, the news VMware shared and its future outlook are pretty darned bright. Following are a few thoughts on what I heard and saw during the event.
A past powered by virtualization
Most vendors’ present circumstances are shaped significantly by their past. In VMware’s case, the company rose and prospered due to the success of its commercial virtualization solutions for x86-based hardware. Those efforts consumed the company’s first half decade until its acquisition by EMC in early 2004 (which took possession of about 80% of VMware’s shares, now owned by Dell EMC) and continued to drive public perception of VMware.
In 2008 a number of events shook VMware, including the firing of CEO/co-founder Diane Greene, the resignation of Greene’s husband and company co-founder/chief scientist Mendel Rosenblum, and EMC’s purchase of Pi, an early-stage cloud computing company. In July of that year, Pi’s founder/CEO, Paul Maritz (a former Microsoft EVP) was appointed as VMware’s new CEO.
During Maritz’s tenure, VMware’s strategic focus shifted significantly toward the cloud, and embraced an ever-widening range of use cases across the IT infrastructures of the company’s customers, including virtual networking. The company also invested substantially in open source and developer-focused projects, including the Cloud Foundry platform as a service (PaaS) system.
When Maritz left VMware in September 2012, he was replaced by Pat Gelsinger, president and COO of EMC’s Information Infrastructure group, and a former SVP and CTO at Intel. Gelsinger successfully guided VMware through a challenging period, including the launch of its vCloud Air hybrid cloud service and a significant restructuring (that included the sale of vCloud Air to OVH in April 2017) related to Dell’s acquisition of EMC.
From hybrid cloud to “multi-cloud”
Under Gelsinger, VMware has continued to expand its business well beyond its traditional virtualization roots to other areas, including hybrid cloud. In fact, during VMworld 2017, a company executive shared a slide detailing the steady growth in company revenues apart from its core vSphere virtualization platform. In 2013, the first year of Gelsinger’s tenure, just 45% of VMware’s bookings came from businesses outside of vSphere.
By 2016, non-vSphere solutions constituted 70% of the company’s bookings, and the company has also enjoyed steady, related financial success with Gelsinger at the helm. In FY 2012, VMware drove $4.61B in total revenues and $745M in net income. In FY2016, those figures had grown to $7.09B in total revenues and $1.19B in net income.
The company has considerably broadened its view of cloud. As I noted in last week’s Pund-IT Review, at VMware’s 2008 launch of its vCloud initiative, then-CEO Maritz focused on the ability to centrally and seamlessly manage IT assets across cloud-enabled data centers. He also posited a future of hybrid cloud deployments joining IT assets and data in customers’ on-premises data centers and in the public cloud infrastructures they employed.
At VMworld 2017, CEO Gelsinger, other company executives and Dell founder and chairman Michael Dell all focused on the role VMware will play as an agnostic “multi-cloud” vendor. That is, the company will continue to develop partnerships with a wide range of public cloud partners and cloud and managed service providers (CSPs/MSPs). That also reflects its customers’ preference for engaging with multiple cloud providers for different services.
In fact, multi-cloud concepts, solutions, goals and partnerships dominated the announcements at VMworld. Those included a new VMware Cloud service and (with help from Dell EMC) data protection solutions on AWS, new strategic partnerships with DXC Technologies, Fujitsu, HP and Pivotal, and notable success stories from VMware clients, Cardinal Health, Century Link and iland.
The move to multi-cloud makes great sense practically and strategically for VMware, and harkens both to the company’s successful past and the imperatives of Dell EMC. An example: though vCloud Air cast a positive light on how the company’s technologies could support end-to-end cloud deployments, it also placed it on a collision course with some partners. Dell followed a similar path in 2013, eventually scotching plans to develop an IaaS service based on Open Stack and VMware’s vCloud.
So along with these broader strategic points, how did things look at VMworld 2017? Overall, the mood seemed significantly more buoyant than it did during the previous two conferences. I believe that was partly because of uncertainties related to Dell’s EMC acquisition, and how that might affect VMware’s executive corps. Those issues, if they existed in the first place, appear to have been resolved satisfactorily.
That said, some specific points continue to be problematic for VMware, especially related to the company’s messaging. Like other engineering-driven IT companies, technologists tend to be deeply involved in VMware’s go to market efforts, including product promotion. That’s fine when other technologists are the primary target but tend to falter when those vendors attempt to communicate with broader audiences, including some folks in the media.
Besides that, VMware and its customers and partners seemed ready to enjoy the conference despite Las Vegas’ 100F+ temperatures. If the company’s evolution in the coming year reflects what it has achieved during the past half-decade, VMworld 2018 should be one hell of a party.
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