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TBR Event Perspective - VMWare 2014 End-user Computing Summit

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End-user computing is the capstone to VMware’s ‘data center to device’ vision

End-user computing is the capstone to VMware’s ‘data center to device’ vision

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  • 1. TBRT ECH N O LO G Y B U SIN ESS RESEARCH , IN C. TBR EVENT PERSPECTIVE End-user computing is the capstone to VMware’s ‘data center to device’ vision VMware: 2014 End-user Computing Summit Boston, March 19, 2014 Authors: Elizabeth Hedstrom Henlin, Senior Analyst (elizabeth.hedstromhenlin@tbri.com) Krista Macomber, Analyst (krista.macomber@tbri.com) TBR Perspective VMware is committed to both growing its End-user Computing (EUC) business and also expanding wallet share across the data center through capitalizing on adjacent market opportunities. VMware showed at its March 2014 End-user Computing Summit that it has the executive leadership, innovation pipeline, messaging and ecosystem support to position EUC as a meaningful pillar to long-term, diversified top-line growth. VMware’s acquisition of AirWatch will add mobile-market credibility to VMware’s brand and serve as a strategic growth driver. VMware is accelerating end-user computing investments to simplify IT administrators’ management of mobile users. VMware will invest in streamlining end-user computing management and orchestration capabilities through acquisitions and organic-led R&D to help IT customers support an increasingly mobile workforce. CY14 investments, underpinned by innovation, ecosystem support and new executive leadership, will focus on enabling joint sales forces and channel partners to drive cross-sales in CY14. Integration of AirWatch’s mobility assets into VMware’s desktop-virtualization-oriented offerings will compound VMware’s EUC portfolio value and help drive revenue growth. VMware will target acquisitions of complementary technologies, rather than application-driven ventures, that add functionality and scope to Horizon Suite products to support the growth of VMware’s emerging end-user computing business. Executive appointments will supplement EUC General Manager Sanjay Poonen’s efforts to take VMware’s technological strengths outside the data center.
  • 2. www.tbri.com TBR Impact and Opportunities TBR believes VMware’s centralized messaging of its EUC portfolio strategy in relatively intimate executive keynotes emphasizes the company’s confidence in the portfolio’s direction. The give-and-take between executives and influencers was relatively unstructured and very candid. TBR believes the January appointments of Citrix Vice Presidents Bob Schultz (desktops and applications) and Sumit Dhawan (enterprise mobility) to lead EUC chief strategy and the desktop business, respectively, validate VMware’s EUC business among strategic Tier 1 channel partners. Internal promotions (e.g., Kit Colbert as EUC chief technology officer) will complement outside hires by merging technical knowledge and best practices to enable the EUC specialist sales force and channel to deliver a compelling, business-led suite. Poonen’s team understands the end-to-end complexity of infrastructure deployments as well as the messaging needed to ensure executives and IT alike see VMware as a trusted adviser in this segment. The potential for this team and its portfolio to deliver new growth opportunities for VMware customers and partners presents a potentially transformative opportunity for VMware to reinvent its brand in multiple markets and find the “next act” the company has sought for nearly two years. VMware notes significant opportunity to ramp up its EUC business by enabling a secure virtual workspace that is unified across the desktop and mobile platforms as well as across social, identity and data markets. VMware reported at its summit approximately 50% penetration of EUC offerings within its base of 500,000 customers and an expected 20% CAGR to the EUC marketplace to $8 billion. VMware’s full end-user portfolio and solidified messaging give it the ability to manage the device through the data center. The ability helps to accelerate business outcomes by delivering more holistic management capabilities. Evolving from its technologist DNA will help VMware increase its appeal to emerging line-of-business buyers without losing its standing with customers in IT departments. TBR expects VMware to make channel-focused announcements for joint partners to capitalize on portfolio integrations that exist following its acquisition of mobile device management (MDM) market leader AirWatch in 1H14. Hybrid and public cloud capabilities coupled with ecosystem engagement position VMware’s desktop portfolio for growth during 2014. VMware will spend the year focusing on enabling hybrid cloud delivery models for agility and flexibility, while increasing channel leverage, to extend its desktop market reach. TBR sees VMware as having achieved VDI scale with its acquisition of Desktone. VMware will build on differentiation, which centers on integration of its VDI and hypervisor capabilities, by extending integration across the data center — setting the stage for broader portfolio alignment of vertical-centric solutions that will improve its connections to customers that seek accelerated business outcomes. Over the next 12 months, VMware will lean on newly acquired and organically developed assets (notably Desktone and VMware Hybrid Cloud Service, respectively) to drive toward elastic service capabilities for desktop and applications that enable a lower, more predictable cost structure for customers through greater choice and flexibility. Integration of Horizon Suite and VMware Hybrid Cloud Service will make VMware’s desktop portfolio more appealing to service providers, expanding its addressable customer base and foothold in public and hybrid cloud environments. The acquisition of Desktop as a Service (DaaS) provider Desktone enhances VMware’s capabilities as an enabler of end-user computing. AirWatch’s mobility technologies, customer base and workforce will complement VMware’s EUC group and provide a strategic route to capture opportunities in CY15. Desktone has proven success in globally
  • 3. www.tbri.com TBR enabling service provider partners such as Dell, Fujitsu and NEC to deliver DaaS. Consequently, TBR sees the integration of Desktone’s desktop virtualization platform into VMware’s Horizon View platform as key to accelerating VMware’s and its channel partners’ delivery of desktops and applications as a cloud-based service. TBR believes VMware’s acquisition of AirWatch will enable VMware to use mobility as a corporate revenue growth driver in 2015. By acquiring AirWatch, VMware’s specialist EUC sales force can deliver a full stack for managing, securing and virtualizing end-user devices. To promote AirWatch’s continued success in the enterprise mobility space, VMware will maintain both the AirWatch brand and organizational structure, with former AirWatch CEO John Marshall reporting directly to Poonen. VMware will additionally allocate its mobile assets (e.g., mobile virtualization platform) and net-new mobile R&D spending to AirWatch. AirWatch’s customer base exceeds 10,000 firms, a number of which also deployed VMware’s desktop virtualization tools. In addition to compounding value for joint customers, portfolio integrations will open customer bases for VMware and AirWatch to congruently capture cross-selling opportunities. While TBR anticipates some of these sales will be joint sales, we see compounding EUC returns being realized upon additional portfolio integrations and EUC sales force training. AirWatch’s focus on establishing itself as the one-stop shop for enterprise mobility management (EMM) capabilities that underpin and enable next-generation applications provides a strong foundation for accelerated growth through integration into the broader VMware EUC portfolio and ecosystem. VMware is dedicated to carefully integrating AirWatch into its corporate culture and portfolio and go-to-market frameworks, evidenced by Marshall reporting that no AirWatch employees have left the company as a result of the acquisition. The two companies will find areas to collaborate, such as around APAC go-to-market efforts so AirWatch can benefit from VMware’s comparatively larger presence in the region. However, VMware will keep AirWatch honed in on the mobile space to maximize its effectiveness and opportunities within that space. TBR believes VMware’s sales fleet will be challenged to balance the targeted desktop focus of the company’s legacy EUC business with AirWatch’s mobile focus while integrating overarching outcomes-focused messaging. Notably, channel partners will be critical to accessing customers and aligning market messaging with customers’ particular pain points; while AirWatch notes that a maturing market for EMM has created the opportunity to drive channel sales, VMware indicates that its roster of 75,000 partners “can’t wait to get their hands on” AirWatch technologies. Security is an important thread that weaves across the EMC corporate federation, of which VMware is a key component, and AirWatch extends that critical value proposition. AirWatch’s engagement with Intel for Device Protection Technology integration provides a framework for partnerships in the space, which TBR anticipates AirWatch will seek to build on from a longer-term perspective by collaborating with RSA, EMC’s security division, as Airwatch seeks to enable holistic security capabilities that move backward from device to data center. Event Overview VMware hosted influencers at the Four Seasons Hotel in Boston on March 19. Erik Frieberg, vice president of marketing for VMware’s EUC Division, launched the event before introducing Poonen, who delivered the keynote address. Poonen outlined VMware’s end-user computing strategy to date, with particular attention to the positive impact of both the Desktone and AirWatch acquisitions. He was then joined for portfolio-specific context throughout the day by executives including Dhawan, vice president and general manager, Desktop Solutions; Shankar Iyer, vice president of Products, EUC; Colbert; and Marshall.
  • 4. www.tbri.com TBR Technology Business Research, Inc. is a leading independent technology market research and consulting firm specializing in the business and financial analyses of hardware, software, professional services, telecom and enterprise network vendors, and operators. Serving a global clientele, TBR provides timely and actionable market research and business intelligence in a format that is uniquely tailored to clients’ needs. Our analysts are available to further address client-specific issues or information needs on an inquiry or proprietary consulting basis. TBR has been empowering corporate decision makers since 1996. For more information please visit www.tbri.com. ©2014 Technology Business Research Inc. This report is based on information made available to the public by the vendor and other public sources. No representation is made that this information is accurate or complete. Technology Business Research will not be held liable or responsible for any decisions that are made based on this information. The information contained in this report and all other TBR products is not and should not be construed to be investment advice. TBR does not make any recommendations or provide any advice regarding the value, purchase, sale or retention of securities. This report is copyright-protected and supplied for the sole use of the recipient. Contact Technology Business Research, Inc. for permission to reproduce.