Virtualization and Cloud Computing VMware giant will announce its Q2 2014 earnings on 22 July, the company reported an increase over the previous year (yoy) in its two sources of income – Revenue from product licenses (15%) and services income (14%) – in the previous quarter.Software license gross margins of the company have in recent years improved from 87.7% in 2009 to over 90% in 2013, continuing the trend, gross margins for software licenses rose to over 91% for the first quarter of 2014 – in line with the company’s expectations. VMware expects its margins maintained at a level nearly Q1 forthe full year.
Mentioned VMware management that three main focus of the company are data centers, software-defined, the hybrid vCloud suite and end-user computing. Software-Defined Networking storage and software defined both are integral to the vision of VMware SDDC articulated. The company saw a positive response from customers, both NSX VMware, the virtualization platform of the network and the virtual network recently SAN (VSAN) defined in the first quarter storage platform software. Increasing competition from rivals virtualization and cloud providers Amazon, Cisco, Microsoft and Citrix central concern remain for the company in the coming quarters. We have an estimated price of $ 100 for the shares of VMware, which is slightly higher than the current market price.
High Expectations From Network Virtualization
VMware has dominated the market for server virtualization in recent years, with a market share of 55-60% in this segment. However, competitors such as Microsoft’s product offering and Citrix have to compete with VMware developed and gained market share by offering competitive prices in the last years with him. Since server virtualization is a mature market, VMware has shifted its focus to develop technologies such as network virtualization and software-defined memory in the new market. VMware introduced the NSX a software-defined networking platform customized end 2013, to settle in the fast-growing segment. The company said there is a breakthrough in the last quarter by signing agreements with major customers, including a number of large companies in the financial, banking and telecommunications. SDN Management expects to follow a similar company as server virtualization path in 2009.
Judging by this 2014 estimate should be a very productive year for the company, as SDN has begun to gain traction among buyers.In June, VMware announced that it has started selling licenses NSX through channel partners. VMware already has more than 10 partners on board, and look for the company to add more in Q3. The company plans to launch a channel-NSX-competition program at the VMworld conference in August to explore other channel partners. The enhanced security feature in the NSX could be more popular in the long term, the company expects the most significant contributions of network virtualization in the coming quarters (see VMware and Cisco to fight In The Sand SDN). A central concern here is VMware Cisco approach open to the SDN architecture that could be cut into the market when it gains popularity VMware code.
Other Areas Of Growth
VMware introduced its virtual SAN storage defined by software that is fully compatible with vSphere virtualization platform, at the end of the previous quarter. This converged infrastructure targets both large companies and small and medium enterprises. The company had a virtual SAN licensed for sale only two weeks in Q1 and saw a strong reaction by the product. Management mentioned that the company has already signed an important agreement for a Q2 dealer in the same quarter.
VMware vCloud Suite was largely responsible for driving sales in the second half of 2013. The company recorded strong growth (nearly 18%) in service revenue in 2013. Trend continued in the first quarter with a company services income increased 14% over the same quarter last year. VMware Service Department is likely to continue to take advantage of your offer as a service hybrid cloud hybrid vCloud gaining popularity among buyers of the crop. The company has expanded to the U.S., in Asia, with Japan in the third country and the United Kingdom, where VMware deploy its hybrid solution. The company also signed an agreement with China Telecom, hybrid cloud service, which will be ready next year to build.