VMware is on fire. The company recently reported year-over-year growth at 49%, ending FY2010 at $2.9 billion. Included in that top line is 95% increase in operating income. Q111 revenue is 33% higher than Q110.
In UC, VMware is everyone’s buddy. Mitel has committed heavily to VMware, and all of its core products can be virtualized and managed via vCenter. Mitel’s recent Business Partner conference featured Carl Eschenbach, Co-President Customer Operations as a keynote speaker. In that keynote, Paul quoted a recent Gartner finding on CIO priorities: #1 Cloud, #2 Virtualization, and #3 Mobility.
Virtualization (and VMware as the undisputed category leader) is a current UC darling. Not just at Mitel, I was at a Siemens-Enterprise event featuring VMware staff, NEC Advantage covered their support of VMware, and ShoreTel claims numerous viritualized customer wins as well.
But the problem with high-growth companies like VMware is they are expected to continue in their high-growth. If you are already the market share leader, that can difficult. The solution is acquisitions. But how long can you do acquisitions without narrowing your market? The issue is if you buy company A, company A’s competitors will become your competitors. Those competitors may be current customers.
I think it is reasonable to assume VMware will get directly into UC sometime in the near future. It makes sense as VMware is moving into applications and voice is a big one. But right now it has most of the UC players pushing and supporting its core product that it doesn’t make sense to alienate that market. Or does it? VMware and Microsoft are already fierce competitors, but channel partners manage to make it all work together.
VMware bought Email and collaboration provider Zimbra and that didn’t send shockwaves in Zimbra’s ecosystem – at the time Zimbra had 200 channel partners and was embedded into products like Oracle’s Beehive. Zimbra makes collaboration tools, and that hasn’t stopped the likes of IBM or SEN from supporting VMware.
VMware doesn’t make acquisitions for current markets. VMware assesses how computing is changing and is making acquisitions to support its future virtual (cloud) stack. There is a general shift toward private clouds running scalable, web-based applications – and that is where VMware intends to rule. VMware also has its sights on virtual desktops, note there no softphone on the market that works under a VMware virtualized desktop TODAY.
Voice could be a strategic expansion area for VMware – and Mitel seems to have a bit of advantage there. Mitel has virtualized its MCD core product, most of its MAS application suite along with management integration into vCenter. Mitel and VMware co-exhibit in multiple shows. At VMware Europe last Fall, check out this excerpt form the VMware program:
In a partnership made in data-center heaven, Mitel® and VMware® have cracked the final frontier of voice telephony: virtualization. It took the combined forces of Mitel, a company in a voice telephony league of its own, and VMware, the leader in virtualization, to solve a previously unmanageable problem. The partnership attacked the chasm between voice telephony and virtualized software, and succeeded. Now, mission-critical voice applications have been virtualized alongside other enterprise business applications in the mainstream data center.
Should VMware jump directly into UC, there will be ramifications. It will move the Integrated Solution vs. Best of Breed discussion to a lower level. Microsoft plays this card with Lync and Windows Server 2008 R2 Hyper-V. Lync virtualization is not supported on any other technology than Microsoft’s.
CORRECTED: Lync is supported on VMware ESX 4.0
Check out VMware’s acquisition yearning:
VMware, Inc. M&A; History