Huge investments from telecom players create more opportunities
VMware’s (VMW) network virtualization capability makes it an ideal choice for telecom operators. The CSPs (communications service providers) incur huge capital expenditure driven by the rollout of 3G, 4G, and now the upcoming 5G services.
Thus, the adoption of VMware’s virtualization features may help these telecom players in network modernization, cloud transformation, and 5G services. It also offers enhanced customer management and detailed billing methods as well. In 2017, Vodafone (VOD) also selected VMware’s virtualization service. Vodafone Germany implemented VMware vCloud for the NFV platform to boost its voice over long-term evolution (or VoLTE) services. The networks of most telecom operators are not completely virtualized. It may take ten to 15 years to virtualize the entire network, which could create more opportunities for VMware in terms of longer business cycles.
Useful tools for CSPs
VMware’s MEC (multi-access edge computing) platform provides shared infrastructure to CSPs, which boost automation and delivery across core and edge data centers. Moreover, the launch of NFVI operations management and service assurance for advanced troubleshooting in Telco Distributed Cloud environments could further enhance cost management.
Thus, the launch of such key products targeting the telecom operators may drive the company’s licensing revenue. From the graph above, we can see the revenue growth of VMware in the last five quarters. During the period, the revenue grew at a CAGR (compound annual growth rate) of 3.5%. In Q2 of fiscal 2019, the licensing revenue of the company increased 14.9% YoY (year-over-year) to $900 million.