VMware 2012 Annual Report Download - page 6

Table of Contents
PART I
Overview
VMware, Inc. is the leader in virtualization infrastructure solutions utilized by organizations to help transform the way they build, deliver
and consume information technology (“IT”) resources. We pioneered the development and application of virtualization technologies with x86
server-based computing, separating application software from the underlying hardware. The benefits to our customers include lower IT costs,
cost-effective high availability across a wide range of applications and a more automated and resilient systems infrastructure capable of
responding dynamically to variable business demands. Our broad and proven suite of virtualization technologies addresses a range of complex
IT problems that include cost and operational inefficiencies, facilitating access to cloud computing capacity, business continuity, and corporate
end-user computing device management. Our solutions enable organizations to aggregate multiple servers, storage infrastructure and networks
together into shared pools of capacity that can be allocated dynamically, securely and reliably to applications as needed, increasing hardware
utilization and reducing spending. Once created, these internal computing infrastructures, or “clouds,” can be dynamically linked by our
customers to external computing resources that run on a VMware virtualization platform. This results in a computing cloud of highly available
internal and external computing resources that organizations can access on demand. Our customers' deployments range in size from a single
virtualized server for small businesses to thousands of virtual machines for our Fortune 1000 enterprise customers.
In 2012, we articulated a vision for the software-defined data center (“SDDC”), where increasingly infrastructure is virtualized and
delivered as a service, and the control of this data center is entirely automated by software. Traditional data centers are loose collections of
technology silos where each application type has its own vertical stack consisting of CPU and operating system, storage pool, networking and
security, and management systems. Over time, the data center environment has become increasingly divergent, leading to higher complexity and
driving the need for more and more resources to manage and keep infrastructure up-to-date, which ultimately drives a significant amount of
expenses for customers. The SDDC, by abstracting the services that are required from the underlying hardware, pooling them, and automating
them, is designed to turn the data center into an on-demand service that can take on the shape and size of application requirements. This
promises to dramatically simplify data center operations and lowers costs. The VMware vCloud Suite is our first integrated solution toward
realizing the SDDC vision, based upon our VMware vSphere virtualization platform. The VMware vCloud Suite addresses virtualization of not
only CPU and memory but also networks and associated security services. In addition, the vCloud Suite delivers a new approach to management,
leveraging policy-based automation. VMware vCloud Suite is engineered for hybrid cloud computing so that it federates with other pools of
infrastructure. Since it is an integrated suite of products, all the components are updated and revised together, eliminating the need for customers
to perform the work themselves.
We believe that as organizations look to operate their IT systems in a more cloud-like manner, they will seek to spend less time, effort and
money on underlying infrastructure and devote more resources to transforming their businesses. Our strategy, focused on the SDDC, hybrid
cloud computing, and client management capabilities for the post-PC era, provides customers an extended suite of software to address the
integration, automation, and management capabilities they need. Our solutions are based upon our core virtualization technology and are
organized into two main product groups:
In 2012, we acquired Nicira, a pioneer in network virtualization, which expands our network virtualization capabilities into heterogeneous
environments. In December 2012 we launched the Pivotal Initiative with EMC Corporation (“EMC”), and plan to commit technology, people
and programs from both companies focused on Big Data and Cloud Application Platforms.
We work closely with more than 1,900 technology partners, including leading server, microprocessor, storage, networking, software and
security vendors. We have shared the economic opportunities surrounding virtualization with our partners by facilitating solution development
through open application programming interface (“APIs”) formats and protocols and providing access to our source code and technology. The
endorsement and support of our partners further enhances the awareness, reputation and adoption of our virtualization solutions.
We have developed a multi-channel distribution model to expand our presence and reach various segments of the market. We derive a
significant majority of our revenues from our indirect sales channel, which includes distributors, resellers, system vendors and systems
integrators. We believe that our partners benefit greatly from the sale of our solutions through additional services, software and hardware sales
opportunities. We have trained a large number of partners and end users to deploy and leverage our solutions.
We incorporated in Delaware in 1998, were acquired by EMC in 2004 and conducted our initial public offering of our Class A common
stock in August 2007. EMC holds approximately 79.6% of our outstanding common stock, including 41
4
ITEM 1.
BUSINESS
•
Cloud Infrastructure and Management; and
• End-
User Computing