Cloud giant VMware’s financials impress as Dell shift begins

27 Oct 2016

Clouds. Image: detchana wangkheeree/Shutterstock

Upheaval at Dell and EMC means VMware’s next financials aren’t due until May, but its final issuing of 2016 may be impressive enough to fill the gap.

With sales of $1.78bn (up 6pc), driven largely by its service business ($1.09bn, up almost 20pc), VMware’s non-GAAP net income of $485m was higher than estimated.

The numbers impress and show at least one of the reasons behind Dell’s acquisition of EMC.

Future Human


Changing times

In September, Dell’s 11-month pursuit of EMC and its array of subsidiaries was concluded. It cost $67bn and resulted in new owners for VMware, one of the latter’s prized possessions.

Along with the likes of RSA Security, Pivotal Software and Virtustream, VMware’s position under EMC’s umbrella meant the huge acquisition made plenty of sense to Dell.

This is helped by the growing interest in cloud, with the business shift notable in recent weeks in particular.

Microsoft CEO Satya Nadella recently told a Microsoft Ireland tech gathering that the company’s cloud investment in Europe now stands at $3bn.

This includes Microsoft’s massive pair of data centres in west Dublin that are understood to have contributed around $1bn of this investment.

Last week’s news of Azure public cloud revenues rising 116pc year-on-year means Microsoft has been vindicated in its vision for tech.


“We are building our cloud as a global hyper-scale cloud. We now have over 30 regions across all parts of the globe making sure there is access to the cloud,” he said.

“In Europe, we have data centres in Ireland, Amsterdam, the UK, [and] Germany and this week, we are announcing an expansion in France. We cover more regions than any other cloud provider in Europe.

“We have invested over $3bn in Europe to deliver a global scale cloud.”

Meanwhile IBM said that “strategic imperatives” like big bets on cloud are beginning to offset revenues from slower units.

Cloud revenues came in at $12.7bn for the last 12 months. Cloud as a service revenues were $7.5bn during the quarter, up 66pc on last year.

Private v public

Elsewhere OpenStack, while still a minor player in comparison to VMware or Amazon’s AWS, has such predicted growth by the end of the decade that it’s giving strong hints as to where the cloud industry is headed.

According to a new report from 451 Research, companies working to commercialise OpenStack’s service will generate total revenues of $1.8bn this year, $2.5bn in 2017 and over $5bn in 2020.

This all shows that the space VMware operates in is on the up, and it is perfectly placed to capitalise.

“Our very good third-quarter financial results reflect VMware’s strength in delivering strategic value to our customers,” VMware CEO Pat Gelsinger said in a statement.

“We are helping customers run any application across their private, public and hybrid clouds with our new Cross-Cloud Architecture, the industry’s most complete and capable hybrid cloud offering.”

Gordon Hunt was a journalist with Silicon Republic