Tuesday, July 24, 2012

VMware Joined SDN Olympics

First off, congratulations to my long time friends at VMware and Nicira -- they certainly made the SDN space a lot more interesting and deserve some reward after delivering some key milestones.

Some asked if the price is too high -- the fact is this type of strategic deal is valued at the size of the dream not the size of the revenue, it is a good deal as long as the dream is both bold and real enough.  Given Nicira is quite comparable to Insieme (*), the valuation seems to be very reasonable.  It is the beginning of a vendor war of physical versus hypervisor switches and VMware just fired the first shot.

With this deal, customers wonder why neither Cisco nor VMware bridges the gap between network admins and server admins but instead they each encouraged more silos between the two camps (VMware is saying physical network is merely a dumb pipe and Cisco is selling the value of their physical boxes)?   At the end of the day, both companies have to match their products with their business model.

Despite the short-term constraints they have, they did earn a spot on the SDN bandwagon with the money spent, they validated the SDN space, and they both have said it is only the very beginning! :)

I'm excited about the SDN opportunity ahead!

(*) Here is my comp table, the opinion here does not necessarily represent my employer.

Thursday, July 19, 2012

Moore's Law on VMware's stock price?

Congratulations to Paul Maritz and Pat Gelsinger for their new roles!

I got a bunch of emails wondering whether VMware's stock has peaked given the virtualization market is quite saturated.

There is no question VMware will need to find the next cash cow at some point, but the virtualization business journey is no where to close to a saturation point in my opinion.

I think VMware's revenue and stock price has the _potential_ to track the blue line in the Gartner chart below -- hey, Moore's Law in play? :)

The bottom line is that hyper growth for virtualization ain't over yet, but the challenge for VMware is other players especially Microsoft are not standing still in the market share battle!