Despite the economic disruption of 2020, the year has shaped up to be a pretty good one for VMware Inc. It is 2021 that poses some uncertainty for the enterprise IT services giant.
VMware’s most recent quarterly earnings beat Wall Street forecasts and reflected solid growth in subscription and software-as-a-service revenue. However, plans by Dell Technologies Inc. to spin off its 81% stake in the company next year in an effort to reduce debt and bolster its credit rating are just one of the subplots surrounding VMware as it holds an all-virtual VMworld starting today.
“VMware is Dell’s piggy bank,” said Dave Vellante, co-host of theCUBE, SiliconANGLE Media’s livestreaming studio. “Dell, as we know, is using VMware’s cash flow to restructure its balance sheet to go public. The big question is if Dell is going to continue to squeeze VMware’s research and development, will it be able to execute on the translation of engineering into product and customer value? R&D is the lifeblood of innovation, so that’s something we are going to have to watch very closely.”
Vellante spoke with John Furrier and Stu Miniman, co-hosts of theCUBE, during the keynote analysis as part of theCUBE’s VMworld event coverage. They discussed the status of VMware Cloud on AWS, the company’s future role in cloud native, and opportunities to strengthen enterprise security in the stack.
Challenges in the channel
In addition to uncertainty around the spin-off of its stake in VMware by Dell, there are also questions around the impact of VMware Cloud on AWS. VMware executives acknowledged last month there have been “challenges” originating from channel conflict between their company and Amazon Web Services Inc.
The concern is around loss of millions in revenue for VMware channel partners from enterprise cloud migration deals when AWS direct sales teams become involved in during negotiations.
“While AWS is a big partner for VMware and very important, how many people will get to VMware Cloud on AWS and maybe scale back their VMware estate?” Miniman asked. “Cloud is a double-edged sword for many players. You need to partner as closely as you can to keep that momentum going forward, but VMware is also getting cut by some of those deals.”
Despite channel conflict and questions around R&D investment, VMware has positioned itself to be a central player in the evolution of enterprise cloud native technologies. In recent weeks, the company added cloud native support to its 5G telco portfolio and selected cloud native storage provider MinIO Inc. to run stateful cloud native applications on VMware infrastructure.
“Companies are building on clouds that are building on top of clouds,” Furrier said. “You are starting to see this new interconnected cloud native landscape. This is huge, and VMware is a big part of it.”
Along with the opportunities provided by the cloud native movement, VMware is also positioned for a key role in the evolving security landscape. Last year, VMware unveiled a set of new products to provide intrinsic security in the stack.
“I think security is the really interesting opportunity for VMware,” Vellante said. “Do you go after these point products like Okta, CrowdStrike, Zscaler, and SailPoint, who are really doing very well right now in the market? Or do you want an integrated stack that can be good enough? That is a huge opportunity for them because security just keeps getting more critical.”
Watch the complete video interview below, and be sure to check out more of SiliconANGLE’s and theCUBE’s coverage of VMworld.
Image: VMware Inc.
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