Morningstar | VMware Continues Cloud Strength by Being the Networking Commonality
VMware, a pioneer of virtual machines, dominates the maturing data center server virtualization market. Private and public clouds are becoming ubiquitous among enterprise networks as on-premises server virtualization apexes. After shedding its cloud provider business in 2017, VMware created a robust cloud provider partnership portfolio, which we think helps the firm handle the changing market landscape. VMware's next wave of growth should stem from software solutions for hybrid clouds, hyperconverged infrastructures, and network virtualization.Our view of cloud networking, akin to VMware's assessment, is that most enterprises will utilize hybrid cloud solutions. Public clouds can precipitously augment network growth but enterprises face integration complexities among on-premises networks and private and public clouds. Beyond hyperscale cloud provider partnerships, VMware's Cloud Provider Program offers thousands of cloud partners collaborating with VMware software. In our view, this allows VMware to remain ingrained in networks while becoming the commonality between private and public clouds.Perhaps the biggest VMware investment risk lies within its ownership structure, as Dell Technologies owns 81% of the combined firm. VMware's $11 billion one-time special dividend helped finance Dell's buyout of its VMware tracking stock, or DVMT. A different possible outcome was a Dell and VMware combination, and although this didn't happen, we cannot rule it out in the future. Our take is that VMware's operations can be viewed outside of Dell's balance sheet, but an underlying risk remains.VMware's vSphere and ESXi hypervisor are virtualization gold standards, and its hybrid cloud platform creates a consolidated view across multicloud environments. We believe VMware's hyperconvergence, network function virtualization, digital workspace and end-user computing products should keep VMware as a trendsetter. VMware's Kubernetes embracement and Dell's Pivotal ownership can provide growth with containerization. We think software cohesion across on-premises and clouds along with nascent networking products should give VMware sustainable growth.VMware is engaged in the development and application of technologies with x86 server-based computing, separating application software from the underlying hardware. The company's product and service solutions are organized into three main product groups: Software-Defined Data Center, which is designed to transform the data center into an on-demand service that addresses application requirements; Hybrid Cloud Computing, which is comprised of VMware Cloud Provider Program and VMware Cloud Services; and End-User Computing solution, which consists of VMware Workspace ONE, its digital workspace platform, that includes Unified Endpoint Management and VMware Horizon application and desktop virtualization.
Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. The company offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors.
Morningstar provides data on approximately 530,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 18 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries and had approximately $185 billion in assets under advisement and management as of June 30, 2016.
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