At this year’s VMware Multi-Cloud Industry Analyst Summit 2023, CEO Raghu Raghuram and the VMware team shared progress on VMware strategy. Across the portfolio, we’ve learned how offerings are aligning with the company’s go-to-market approach.
With 4% year-over-year growth and revenue of $13.35 billion, VMware subscriptions grew 25% year-over-year. SaaS annual recurring revenue increased 30% year-over-year. This growth is in line with industry expectations and the move to a subscription business is well underway. Additionally, subscription revenue growth has doubled in the past three years.
But where VMware is seeing growth in customer environments is where customers are getting the most into distributed environments, including increased investment at the edge. VMware sees itself uniquely positioned across multi-cloud infrastructure, platforms, and deployments. The two main areas of growth and focus for VMware are multi-cloud services and providing a full set of infrastructure offerings.
As VMware is expanding its next chapter, it is focused on being the multi-cloud leader, as well as simplifying the business and moving to a more SaaS-based enterprise.
As VMware is expanding its next chapter, it focuses on being the multi-cloud leader, as well as simplifying the business and pivoting to be more of a SaaS-based company. This also includes the partner ecosystem as an integral part of the VMware strategy.
Play offense and defense
VMware sees the market in two ways: digital innovation on offense and cost optimization on defense.
The cloud-smart approach provides an answer to the challenge of digital innovation, or crime. It’s a promise to accelerate application delivery, accelerate cloud migration, and empower employees to productively access the growing SaaS universe. VMware says the fastest way to speed up your cloud migration is to move from an on-premises VM to a VM in the cloud. This makes sense, as not all applications need to be refactored. By encapsulating the Heritage application, you enable seamless movement from different locations.
As a cost-optimization, or defense approach, VMware aims to reduce cloud spending, modernize with a hybrid infrastructure, and provide zero-trust protection. Focus on an organization’s platform engineering, cloud team (public/hybrid), and end-user computing teams will help realize this vision.
VMware Cross Cloud Services
VMware Cross-Cloud Services offer a differentiated multi-cloud portfolio. With the evolution of applications from PC to web to mobile, and now powered by artificial intelligence, organizations are looking to use the appropriate technology stack to achieve business goals and objectives. VMware is striving to be best positioned to help customers thrive across multi-cloud, data center, edge and device apps.
VMware is striving to be best positioned to help customers thrive across multi-cloud, data center, edge and device apps.
To simplify execution, VMware wants to simplify execution, simplify the portfolio with Cloud Packs and improve the customer experience. VMware customers are moving from a cloud-first approach to a cloud-smart approach; therefore, streamlined execution becomes important to grow clients across the portfolio. However, not all clients are ready for the full portfolio. To accelerate adoption, VMware plans to serve three customer segments:
Strategic. Customers with a large VMware footprint, diverse technology stack, and modern cloud apps represent approximately 2,000 VMware customers.
Corporate. Customers with a strong VMware footprint looking to achieve faster time to value and early adopters of cloud and modern apps don’t just include SMBs. The business segment is positioned to execute carefully. This is more of a land and expand strategy with lead offerings, expanding co-selling opportunities, and co-delivering into the partner ecosystem.
Commercial. This segment consists of customers with simple use cases. The commercial segment is about maintaining scaling with partner-led movements to increase volume in the partner ecosystem.
Watch out for the skills gap
The skills gap is a real concern for organizations, as it is a challenge to acquire and retain talent. VMware is implementing Cross-Cloud Managed Services programs to support this challenge. Partners building the offering are available with co-selling, as selling incentives and managed services is the solution to this challenge. This also aligns with TechTarget’s Enterprise Strategy Group (ESG) research, which found that the majority of cloud-native spend is focused on staffing and collaborating with service delivery partners, and that organizations prefer cloud-native services managed to overcome staff skills shortage issues. VMware Cross-Cloud Managed Services is an attempt to shift the focus from offerings to results.
Other advances to streamline your wallet include the following:
Continue to invest and deliver modern app solutions with Tanzu for Kubernetes Operations (TKO), Tanzu Application Platform (TAP), Aria Guardrails, and Aria Cost.
Private and hybrid cloud services to reduce current 180,000 SKUs. (VMware Cloud Pack has only 20 SKUs.)
VMware Cloud Packs, which include Compute with Advanced Automation to enhance on-premises workloads with cloud services, Hyperconverged Infrastructure (HCI) for cloud and storage, HCI with Advanced Automation for HCI in a multi-cloud environment, and VMware Cloud Foundation for a complete private stack offering for private and hybrid clouds.
Deliver end-user computing with Workspace ONE and Horizon.
Paul’s point of view
VMware continues to innovate. The future roadmap and direction are clear, and even with the uncertain times leading up to Broadcom’s upcoming oversight, it is clear that VMware continues to listen to customers and provide answers to organizational challenges. VMware’s approach also aligns with our 2023 cloud-native ESG research, which closely matched many of VMware’s internal datasets. VMware is on the verge of having a market momentum. It is also clear that the forked business of infrastructure and development is merging.