Thursday, 31 January 2013
Latest Move by VMware Says A Lot
VMware, one of the world's first names in virtualisation software, recently announced the loss of 900 jobs due to poor financial results for the last quarter of 2012. In announcing the job cuts, the company said plans were in place to restructure their business and refocus on core priorities. One of those core priorities is expanding their data centre business.
The news comes as no surprise to those who have been following VMware for the last year or so. The company previously announced plans to transition some 600 workers out of cloud application infrastructure and into a new project known as the Pivotal Initiative. The project is a spin-off that is set to become its own company later this year focusing on cloud applications, mobility and big data.
All of this points to one obvious conclusion: VMware and parent company EMC do not see a viable future in some of their non-core products. The company's weak performance over the last several years is a testament to that. At the same time, they know the data centre industry is expanding at a rapid rate. Focusing their energies on their two strongest lines, data centres and virtualisation software, should help the company rebound nicely in 2013 and beyond.
Acknowledging as much, VMware has stated they plan to add an additional 1,000 jobs this year. How many of those will be data centre jobs remains to be seen, but it's quite likely a good number of them will be. If all goes well, company officials expect revenue growth of about 15% for the year.
If you had asked companies like VMware 10 years ago whether data centres would be vitally important to their success, you may have been met with some doubts. Before the advent of the cloud the data centre was deemed as something necessary but not worthy of the attention of high-end technology companies. All that has changed drastically.
Advances in technology have made the modern collocation and data centre the heart of data communications all over the world. It has also changed the way data centre customers think about hosting, cloud computing, managed services, etc. So much so that enterprise level customers who would have purchased their own hardware just a few years ago are now either already contracting out, or seriously considering doing so.
How ironic, then, that virtualisation software, like VMware, has provided much of the impetus that has led to today's data centre paradigm. Without virtualisation and the cost-related benefits it provides, we would not be witnessing the data centre explosion we are seeing today.
In a nutshell, the big world of data services has come full circle over the last 30 years. It is no longer cost-effective for companies to try to maintain their own servers and IT services by purchasing hardware and hiring a dedicated staff. Outsourcing to data centre companies and IT service providers is much better for the bottom line. That's good for companies like VMware -- as long as they're not distracted by non-core products and services.