Growing vmware

Growing

Ashwin BijaniAlison Gray

JT KletteCurt Nickisch

Eric SondhiNatesh Thangarajan

December 4th, 2012

2

Then, now, next

3

@ a glance

4

At VMware’s Core

5

Competitive Landscape Virtualization Industry:

ROIC

2007 2008 2009 2010 20110.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

70.00%

VMware Microsoft Citrix IBM

Potential changes in value chainVMware First Mover

6

Forward Integration

IAAS (Cloud Infrastructure) PAAS SAAS

CPU

Virtual Machine

Unrelated Horizontal

diversification

Big Data Grolsch BeerVMware Virtual

Simulation

Related Horizontal

Diversification

Desktop Virtualization

Server Virtualization

Storage Virtualization

Strategic Growth Directions

7

Growth Challenges Aggressive Fragmented Acquisition Strategy Before Aug 2009: All 6 VMware Acquisitions Related to Virtualization After 2009: Over 20 Acquisitions - all over the map

1. Core Business: Security, Datacenter Virtualization 2. Vertical: SaaS, S/W Dev3. Horizontal: Operations, Big Data

Dec-08 Jul-09 Jan-10 Aug-10 Feb-11 Sep-11 Apr-12 Oct-12

ZimbraSlide Rocket

DigitalFuelSocialcast

ShavlikTriCipher NeoAccel

ShavlikFastSaclenLayers

Intergrien

GemStone WaveMaker

Spring Source

RabbitMQ

iTHCMozy

Dynamic OpsWanova

ServiceMgrIonix Config

Micira

Mozy

Core

Security

S/W Dev

Operations

SaaS

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Cloud Services:Forward Integration?

Hardware

OSVirtualization

SoftwareSaaS

IaaS

PaaS

9

Big Data: Unrelated Diversification ?

10

Related Horizontal Diversification

MARKETING OF

INNOVATION

GROWTH THROUGH

PARTNERSHIP

ENTERPRISE CLASS

R&D

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Priority adjacency: Mobile

Mobile comprises ginormous growing market

Extend server/device management to mobile platforms

Seamlessly integrate mobile into existing Virtualization Infrastructure

12

Marketing Innovation: New Use

13

Innovating New Use Cases

Paging Dr. Ipad

Mobile Creativity

App Happy

14

Professor Porter Agrees

“Yes, yes, and yes!”

Meets Three Tests

Booming mobile industry is attractive

VMware is better off◦ Preempts competition◦ Increases WTP◦ Economies of scope

Leveraging R&D mitigates costs of entry

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Bringing in Action…

Leverage R&D expertise, build the technology because they are the industry leader◦ Partner with hardware vendors to integrate hypervisor into mobile

devices. Repeatable which is what they did with Intel to ARM.

Leverage partnerships with mobile OS providers to integrate the VMware Technology.

Repeatable marketing innovation by partnering with mobile service providers hence reaching customers – Learning effect

Desktops

ServersData Centers

Mobile

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Challenges moving forward… Avoid exclusivity while forming partnerships with

OS providers such as APPL, MSFT or Android (Linux).

Avoid exclusivity while formingpartnerships with hardware vendorssuch as ARM.

Mobile Market is not mature for Virtualization.

Add value/features for high margins like in their server industry such as high availability, security, reliability.

Customers may become competitors.

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In the Race…

Microsoft• Replicate mobile virtualization

• Fast followers• Pre-empt distribution by bundling

with OS or partnering with mobile service providers

IBM• Acquire mobile software

company• build mobile virtualization

technology

Citrix or Parallel Inc.

• Replicate mobile virtualization technology

• Not a fast follower

New Entrants - Google, Apple

• Build virtualization technology • Can bundle with mobile OS

• Target SMBs instead of Enterprise

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Increased WTP◦ Added Value with more services such asSecurity, Agility, QoS, Reliability etc.◦ Leverage Brand name in Virtualization Industry

Lower Opportunity Cost◦ Economies of scope from desktop, servers & Data center

virtualization◦ Repeatability◦ Technical know-how◦ Learning from R&D, Marketing & Distribution of innovation –

Cannot Imitate

Avoid Hold-up◦ Partner with OS &mobile service providers

Sustaining longer…

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Focused strategic growth◦ Mobile virtualization industry

Focus on Core competencies◦ Enterprise class R&D◦ Marketing of innovation◦ Distribution

Core business◦ Continue with same growth◦ Should not suffer◦ Should not stretch far away from

core business Sustain first mover

advantage

Summary

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Questions