VMware Earnings and the Value for Partners

Today (April 22) VMware announced 1st quarter earnings. The company did quite well and surpassed analyst expectations. Overall the company did $438 million in revenue for the quarter. What really gets me excited about this is the opportunity for the 14,000 partners out there selling VMware solutions. Every day I go to customers with partners or go to partner sites to do training. Whenever I'm with a partner they always want to know what's in it for them. Why should they be selling VMware when they're also Citrix and Microsoft partners and both of those companies have virtualization solutions. Here's my take....

There are a lot of reasons partners go and sell VMware. I've heard everything from "we own stock" to "there's a lot more drag (extra services and hardware) with VMware". The earnings call today put another point out there - potential for license revenue. Citrix has set expectations for revenue from XenSource to be around $3 - 5 million in the first quarter. I'm based in the US so lets just say half of the XenSource revenue and half of VMware's revenue lands in the US (we'll assume the same for Citrix). Now let's say you're a smaller partner and only cover the Southeast US so only 1/4 of the revenue in the US lands in your territory. Keeping up with the numbers we're now at a $54.75 million opportunity for VMware and a $625,000 opportunity for Citrix. Not only is there more opportunity selling VMware licenses but Citrix has more partners going after that MUCH smaller piece of pie.

It seems I'm not the only one that's caught onto this. Ashlee Vance from the Register just wrote one of his infamous posts about what's really going on.

So there you have it - the opportunity for VMware partners is real and it's continuing to grow. If you're a Citrix or Microsoft or VMware partner I'd love to hear about your view on the industry from the street and what kind of opportunities you are seeing in your accounts.