VMware: OpenStack Is Immature

by Sean Michael Kerner

VMware's CEO emphasizes his company's strength in both private and public cloud infrastructure as revenues continue to grow.

VMware is continuing to grow revenues and market share and isn't afraid of new open source competition either. That's the message coming from VMware's CEO, as the company reported its first quarter fiscal 2012 revenues late Wednesday.

For the quarter, VMware reported revenue of $1.06 Billion, which is a 25 percent year-over-year gain. Net income rose to $191 million, or $0.44 per share, which is up from $126 million, or $0.29 per share, for the first quarter of 2011. Moving forward, VMware is providing second quarter guidance for revenues to be within a range of $1.10 Billion to $1.12 Billion and year-over-year growth of approximately 19.5 percent to 21.5 percent.

During the company's earnings call, CEO Paul Maritz was asked about competitive challenges and in particular about OpenStack. OpenStack is an open source cloud platform that now enjoys the support of IBM, AT&T, Cisco, Dell, Yahoo and HP among other big name tech vendors.

"At this point, we're certainly aware of OpenStack and aware that there's a fair amount of interest in it from various parties in the industry, which is not surprising given the importance of this fundamental trend where customers are trying to move to operating in a cloud-like manner, both in their internal data centers and the public data centers," Maritz said. "So it is highly unlikely that we would be left alone to have that opportunity all to ourselves."

Despite the strong industry support for OpenStack, Maritz isn't worried.

"OpenStack at this point compared to the vSphere environment is still relatively immature," Martiz added. "And we continue to believe that our greater, nearer-term challenge will probably come from Microsoft."

Even though Maritz is dismissive about the short-term competition from OpenStack, he points out that VMware will be continuing to innovate to stay a step ahead. OpenStack is also currently thought of as a cloud substrate for public cloud operators such as Rackspace, although it can be used for private cloud deployments as well. Similarly, VMware is positioned for both public and private cloud deployment.

"Clearly, our greater strength today is in the private cloud space, but on the other hand, I think it's underappreciated how successful we are being in the public cloud space at this point in time," Maritz said. "We have a special license that public cloud providers can operate off, which is more of a rental license where we get paid as they get paid."

To date, VMware has over 1,500 service providers who are actively transacting off that public cloud license.

More Than Just Virtualization

As virtualization becomes commonplace, VMware is also positioning itself to be more than just a virtualization vendor.

"We actually see ourselves as really participating in a broader opportunity, which is data center automations," Maritz said. "So we see both our vSphere products and our management products as addressing a common underlying need, which is to fundamentally automate operations in the data center."

Sean Michael Kerner is a senior editor at InternetNews.com, the news service of the IT Business Edge Network, the network for technology professionals Follow him on Twitter @TechJournalist.


This article was originally published on Thursday Apr 19th 2012
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