Published in News

VMWare cuts jobs on cloudy results

by on27 January 2016

Looks like the sky really wasn’t cloud’s limit

While the Cloud is supposed to be the savour of big computing, VMWare, which should be doing well is actually suffering.

VMware is cutting about 800 jobs saying it is transitioning from its traditional products to newer, emerging technologies.

CEO Pat Gelsinger said in an earnings conference call the company has been facing challenges in its software business as its customers are increasingly using public cloud providers like Amazon Web Services and Microsoft Azure.

While public cloud providers provide VMware, the newer, cloud workloads are opting for containers or even OpenStack which doesn't require what's considered expensive VMware licenses.

VMware reported that its total revenue for 2015 was $6.57 billion, an increase of 9 percent from 2014, or up 12 percent year-over-year on a constant currency basis. The company forecast that 2016 revenue will be up to $6.935 billion, an annual rise of up to 4 percent from 2015.

In addition to its cloudy problem, the company is worried about weakening economies like Russia, Brazil and China.

Gelsinger said during the conference call that the company recognizes that its blockbuster compute products are reaching maturity, and will play a decreasing role in the business. But the company expects newer emerging products will pick up the slack.

This means extending customers' private cloud workloads into the public cloud via vCloud Air Network and vCloud Air. The outfit’s vCloud Air cloud computing service will have a narrower focus, providing specialized cloud software and services distinct from other public cloud providers. This means that VMWare has no interest in taking on the big players in a commodity cloud business smackdown.

But it is not all bad. In 2015, NSX, a network virtualization and security platform for the software-defined data centre, grew over 100 percent year-over-year, bringing the total annual bookings run-rate to over $600 million, while in the fourth quarter of 2015, its Virtual SAN business grew nearly 200 percent year-over-year, with a total annual bookings run-rate of over $100 million.

However tell that to the 800 people being let go.

Last modified on 27 January 2016
Rate this item
(3 votes)

Read more about: