Beyond The #’s: VMware Q1 2011 Earnings

The most relevant business, product and technology takeaways from VMware earnings:

  • Very strong quarter…driven by ELA’s (22% of Q1 bookings), including 5 deals of $10m or more, and strong international demand
    • “have disproportionately invested in international geographies over the last few years”
  • “Virtualization is mainstream within datacenters”…customers moving along virtualization journey to more mission critical apps
  • Service provider domination…>3500 partners in service provider program (VSPP), providing hosted IT services based on VMware
    • Softbank joined vCloud service provider program, standardizing cloud offering on VMware, other major participants now include Colt, Verizon, Terremark, Singtel, BlueLock, CSC
  • On Mozy…strategy here still not 100% clear to me, VMware will continue to run Mozy service on behalf of EMC, little revs or operating margin impact in Q2 or 2011, revs from EMC will be an offset to the cost of running the business
  • On hiring…see much opportunity right now, expanding operating margin at this point is “fundamentally the wrong approach”…”will continue to hire at a brisk pace thru 2011 to take advantage of opportunity”
  • On Cloud Foundry…called it open source PaaS, actively broadens programming framework support and promotes portability across clouds
    • Strategy is “first and foremost about appealing to developers”, if they can get developers support it will open up opportunities to sell infrastructure, data fabrics and management products down the lin
    • 2011 about building momentum in developer space, hope this pays off in 2012 and beyond
    • >13k developers requested to join trial service since launch
    • VMforce will be an instantiation of CloudFoundry, encouraging everyone else that would like to build on this to do so
  • Beyond vSphere…vSphere still dominant product, will continue to be for forseeable future, trying to encourage customers to adopt the other 3…vShield, vCloud Director, vCenter Operations…encouraging the sales force here as well
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