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Here’s the Key Driving Force behind VMware’s Success

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Sep. 12 2018, Updated 8:00 a.m. ET

Diversified product portfolio

VMware (VMW) seems to be gaining a strong foothold in the network virtualization space, driven by its strong product portfolio. Key products such as NSX (Network Virtualization), Workspace ONE, and vSAN (virtual storage area network) licenses are making a strong contribution. Companies are embracing VMware product licenses, which, in turn, are driving VMware’s license business.

In the above graph, you can see the license revenue growth for VMware in the last five quarters. During the period, it grew at a CAGR (compound annual growth rate) of 4.8%. License revenue for fiscal Q2 2019 was ~$900 million, up 20.7% YoY (year-over-year).

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Factors that help establish a strong market platform

VMware has increased its market penetration through an innovative marketing strategy, which includes better pricing and increasing promotion of its popular products. Its go-to-market approach has further allowed the company to boost subscriber growth. VMware completed its fiscal Q2 2019 with 7,500 NSX customers. It has also witnessed revenue growth across all its geographic locations and secured 13 contracts worth ~$10 million. It’s enjoying a commendable position in the server virtualization market.

The company’s mobility, networking, and security solutions seem to provide the right digital mix for its customers when they migrate workloads from on-premise data centers to the public and hybrid cloud.

VMware’s partnership with Amazon’s (AMZN) AWS (Amazon Web Services) cloud platform is also helping it distribute its products in various geographic areas around the globe.

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