Focusing on every product and service
To boost its product sales, VMware (VMW) is aiming to build specialty sales capacities. The company believes in the theory that every dollar invested in R&D (research and development) should be well spent in terms of selling and marketing expenses. Such an aggressive marketing strategy could drive new customer growth for the company.
The company deals with every product separately, be it vSphere, vSAN (virtual storage area network), and NSX for software-defined data centers (or SDDC), vCloud Air and VMware Cloud Provider for cloud computing, or AirWatch and Horizon for end user computing. Every product in its portfolio has the capacity to contribute to its revenue growth. Hence, dedicated specialty teams are assigned to NSX, storage, end user computing, and application management.
R&D and sales and marketing expenses are witnessing growth
In the graph above, we can see the R&D growth for VMware over the last five quarters. During the period, it increased at a CAGR (compound annual growth rate) of 7.8%. The company ended fiscal 2018 with nearly $1.8 billion in R&D expenses, a rise of 17% YoY (year-over-year). Likewise, in the same period, the company’s sales and marketing expenses also expanded at a CAGR 10%.
In order to boost its security features within the cloud, the company has teamed up with IBM (IBM). The partnership is delivering enhanced security offerings to its clients. VMware is also offering Amazon’s (AMZN) Amazon Web Services platform to its customers. VMware believes that each business category has the capacity to generate ~$1 billion in revenue.