With Lauren Nelson

We recently attended VMworld 2016 Europe in Barcelona. The event, which attracted about 10,000 visitors, has established itself as an important destination for anyone with an interest in virtualization-related topics. In many respects, the event was over-shadowed by the VMware-AWS partnership. However, the event also provided us with several additional impressions. We felt that there were several encouraging signs pointing to how VMware is progressing as a business within Dell Technologies, in particular, VMware is:

  • Developing its ecosystem of partners. The event was a good example how large VMware’s ecosystem has grown over the years. Most major systems integrators, IT firms, software houses, and telcos were present. In discussions with management, it was obvious that VMware fully understands the need to partner with a wide range of providers to address the business requirements that enterprise customers have. We expect VMware to further strengthen its ecosystem activities.
  • Addressing the telco opportunity. VMware’s CEO Pat Gelsinger recognizes the momentum in the telco sector to embrace the virtualization opportunities, observing that “Telcos generally don’t move fast, but when they move, they move as an army”. Telcos are fast discovering the benefits that virtualization can deliver for their network infrastructure activities and their operational agility. To avoid confusing its customers and to build the necessary ecosystems in the network infrastructure space, VMware ought to define its relationship with network equipment vendors like Nokia, Huawei, and Cisco.
  • Redefining the scope and its opportunity in external cloud. VMware came out with a big announcement several years ago regarding its intention to join the public cloud market. Post-Dell/EMC/Virtustream announcements, VMware honed their external cloud story. They’ve resized the team and investment to vCloud Air, targeting Developer Center extensions, outsourcing, and disaster recovery, while also focusing on developing its vCloud Air partners. Many of these partners also choose to use VMware’s vCloud Air data centers as its own Disaster Recovery solution for its customers. New this year are services deployed on vCloud Air such as NSX-as-a-service.

However, there are several aspects that we feel VMware needs to address more acutely in order to remain successful in the future. In our opinion, VMware ought to do more to:

  • Overcome its limited brand recognition outside of IT. Tech decisions and spending aren’t limited to their traditional buyer any longer.But the level of brand awareness among developers, executives, and business decision-makers is still limited. It is encouraging that VMware ran CIO events at VMware. But there needs to be more messaging to non-technologists. If VMware wants to target areas up the stack, this must change. However, this pivot isn’t easy. AirWatch and its IoT story certainly push VMware the furthest. However, Photon and Kubernetes-as-a-service run the risk of targeting primarily the IT buyer rather than the developer. The messages for these respective target audiences is not entirely clear yet. VMware has refocused its external cloud story. At some point, VMware must figure out the scope of its future go-to-market approach and its ability to sell to new users within the enterprise. If VMware decides to go up the stack, they must address business-process specific outcomes as part of the customer commitment.
  • Deepen its understanding of business requirements. VMware’s market messaging remains fairly removed from the customer experiences that its technology helps to support, often as part of an ecosystem of providers. Although its main buyer group still sits in the operational teams, VMware needs to begin to translate the benefits of certain technology features to drive certain business outcomes. This is essential, if VMware wants to reach those business leaders who increasingly influence technology decision making. As part of this shifting product and service positioning, VMware needs to become more process focused.
  • Shift budgets and resources. Over the past six years, VMware has rapidly expanded its products and services portfolio. They added external cloud, end-user computing, network and storage virtualization, an OpenStack distribution, Photon, alternative container solutions – and now IoT. Embracing and driving this change is commendable, but executing on these activities translates into a significant business pivot – in a short period of time. Success for each of these markets is far from guaranteed. VMware will need to communicate more clearly its funding allocation, team compositions, and emphasis on each of these extensions on an ongoing basis. This approach could undermine early customers’ confidence about their own long term investments in these categories.  
  • Explain more clearly its position in the IoT space. VMware is part of an impressive IoT ecosystem partnership, alongside vendors like IBM, HP, Deloitte, GE, SAP, and Bosch. However, we feel that VMware needs to become more specific about which aspects of IoT it addresses, including those services that are provided through its AirWatch division. Moreover, given that connected assets generate large amounts of data, VMware ought to outline how it aims to facilitate cloud-based data management of IoT solutions.