The Top 10 Biggest VMware Stories To Watch In 2022

From just how far VMware will spread its swings from Dell Technologies as an independent company to what type of acquisitions it will make, here’s ten of the most important stories to watch for in 2022 from VMware.

The ‘New Era’ Of VMware Begins

The “new era” of VMware has officially begun, said CEO Raghu Raghuram in late 2021 after Dell Technologies spun off its majority stake in the virtualization superstar.

This year marks the first year VMware will make decisions and strategic moves as an independent company since 2004. The Palo Alto, Calif.-based company has new leadership and a vision in 2022 to begin its march towards becoming the hybrid and multi-cloud worldwide leader.

Looking ahead into 2022, VMware will likely form new alliances and make strategic moves unlike anything we’ve seen in years as it’s no longer directly tethered to Dell Technologies.

“If you think about multi-cloud, what we really are saying is that we want to be the Switzerland of the industry. So if you want to be the Switzerland of the industry, then you want to be a standalone independent company, and that’s where we are headed,” Raghuram told CRN in late 2021. “It will allow partners that previously were competitors of Dell to now look at VMware with new life and say, ‘Hey, we can do strategic things with VMware.’ But at the same time, we have a fantastic relationship with Dell who we do tremendous amount of business with.”

Here are the ten most important things VMware channel partners, customers and investors need to watch for in 2022, including just how far VMware will spread its wings from Dell as an independent entity.

10. What Hybrid And Multi-Cloud Acquisitions Lie Ahead In 2022?

Raghuram told CRN in September that his company is poised to make some acquisitions following its spin-off from Dell in November to accelerate VMware’s goal of becoming the multi-cloud software leader.

“So now there is a broader shareholder base and it also gives us flexibility to use equity, along with cash to do M&A,” said Raghuram.

VMware’s CEO said he expects the “frequency” of smaller acquisitions around the company’s multi-cloud strategy to pick up because VMware’s capital structure will become more flexible.

“Where we are today in our evolution is we are building out this multi-cloud portfolio that we’ve talked about. We will continue to acquire companies that fit into this portfolio,” said Raghuram in an interview with CRN. “So that’s where I expect the bulk of our [M&A] activity to come from. I expect continued activity with respect to small, tiny tuck-ins of companies as we see fit.”

This year, keep an eye out for VMware pulling the acquisition trigger on small hybrid or multi-cloud cloud specialists as well as potentially Software-as-a-Service (SaaS) vendors.

9. How Big Of A Role Will VMware’s Chairman Michael Dell Play?

Although VMware will no longer be tethered to Dell Technologies, its founder and CEO, Michael Dell, will still be heavily involved with VMware.

Michael Dell still remains the Chairman of the Board at VMware in 2022 with no plans on stepping down anytime soon.

“Look, I’ll continue to be the chairman of both companies and the largest shareholder of both companies,” Michael Dell told CRN in late 2021. “Dell and VMware are going to partner super closely together.”

Additionally, following Dell’s spin-off of its 81 percent majority stake in VMware to Dell Technologies shareholders, Michael Dell is currently the largest stakeholder in VMware.

After the spin-off, Michael Dell received 155,005,746 shares of VMware Class A Common Stock, according to a Dell filing with the U.S. Securities and Exchange Commission. In total, Michael Dell holds a roughly 40 percent stake in VMware, making him the largest single shareholder of the company by far.

Michael Dell had a great business and personal relationship with VMware’s former CEO Pat Gelsinger and has touted Raghuram’s hiring.

In 2022, it will be interesting to see just how big of a role Michael Dell will play—both publicly and privately—in VMware as the company forms new partnerships and makes acquisitions that could potentially compete against Dell.

8. Where Will Sanjay Poonen Land?

When VMware’s poplar CEO Pat Gelsinger unveiled that he would be leaving the company in 2021 to become CEO of Intel, many people believed VMware’s Sanjay Poonen would take over the leadership role.

Poonen was VMware’s chief operating officer of customer relations at the time who was responsible for leading sales, marketing, services, support and alliances. He had been with VMware for eight years and spoke on stage at VMware’s largest events.

However, after VMware named Raghu Raghuram as Gelsinger’s successor, Poonen announced his departure from the company. It is key to note that Raghuram and Poonen still hold a tight friendship even after Poonen’s departure.

In an interview with CRN last year, Poonen said he still has “a lot of gas in my tank” to become the leader of a company.

“Going forward, I’ve got a few things brewing,” Poonen told CRN as he departed the company August. “I will be joining a Fortune 500 public company board this fall. But, I’m not going to just be a board member and investor. At this stage of my life, I still have a lot of gas in my tank to run something operationally, whether it’s a small or big company.”

“A few CEOs of some larger companies have reached out to me for my consulting help - because with my background at SAP and VMware. … There are a few great ideas I am considering investing in too. So the opportunity landscape is large,” Poonen added.

Since leaving VMware, Poonen has become a board member of application and developer security standout Snyk.

This year, Poonen will likely make a decision on where he will take his talents in the IT landscape. It will be interesting to see if the highly poplar IT veteran will take a CEO role or another position potentially within a red-hot startup or more mature industry market leader.

7. Just How Deep Will VMware Go With AWS?

VMware isn’t shy about plans to double down on its partnership and investment in public cloud titian Amazon Web Services. If VMware wants to become the hybrid cloud software leader, it needs AWS, and vice versa.

AWS is VMware’s preferred public cloud partner for all vSphere-based workloads. The two companies have jointly co-engineered several offerings including VMware Cloud on AWS, Amazon RDS on VMware, VMware Cloud on AWS Outposts as well as even recently a new work-from-home offering that ties together VMware’s SASE security with Amazon’s Eero Wi-Fi systems.

AWS’ CEO Adam Selipsky said at VMworld 2021 that Amazon and VMware will continue to build and expand on its “deep and trusted relationship.”

“We’ve got some really good and innovative services that we built together, but I honestly feel like we’re just getting going together.” said Selipsky. “I think that VMware Cloud on AWS was a great start. I think evolutions that we’ve just recently announced like Outposts— VMware on the AWS Outposts—is really the exciting next steps on that journey together.”

VMware’s CEO said VMware and AWS are “very well aligned” to drive sales around their joint customers digital transformations strategies in 2022 and beyond.

“Our companies are very well aligned to meet our customers transformations, not only today, but well into the future. Like you, I look forward to a very continued and successful partnership for a long time to come,” said Raghuram, during a session with Selipsky at VMworld 2021.

It will be interesting to see in 2022 just how deep VMware goes in with AWS around VMware Cloud on AWS Outposts as well as potentially launching new solutions.

6. Will Sales Growth Continue?

The nearly $13 billion virtualization and software standout witnessed strong sales growth quarter after quarter in calendar year 2021. The company reported, on average, a roughly 10 percent revenue increase compared to the same quarter the year prior.

By The Numbers:

VMware generated sales of $3 billion in its first fiscal quarter 2022, representing an increase of 9 percent year over year.

The company captured $3.14 billion in revenue in its second fiscal quarter, up 9 percent year over year.

For its most recent third fiscal quarter, VMware sales hit $3.19 billion, an increase of 11 percent year over year.

VMware recently provided financial guidance for its current fourth fiscal quarter, expecting $3.51 billion in sales which would represent an increase of 8 percent year over year.

In total, VMware expects total revenue to increase by 9 percent to $12.83 billion for its current fiscal year 2022 which ends Jan. 28.

VMware has yet to hit any major significant financial hurdles related to the global COVID-19 pandemic and continues to be bullish about sales growth in 2022. If VMware continues a similar 9 percent sales growth this year, VMware will add another $1.15 billion to its total revenue in 2022.

Partners and investors should watch if VMware continues to hit its high sales growth expectations this year or if any major speedbumps deter its growth trajectory.

5. What Will VMware’s New President Bring To The Table?

One of VMware’s largest executive moves in years came with selecting Sumit Dhawan as its new President in 2021. Since becoming President, Dhawan has hit the ground running and has been in the spotlight at major events and news announcements alongside CEO Raghuram.

Dhawan now leads the company’s go-to-market functions including worldwide sales, marketing, customer experience and success, and VMware’s strategic alliances.

Sumit previously served for one-year as VMware’s chief customer experience officer, managing global teams responsible for professional services, technical support and customer success. He also served as the general manager of VMware’s End-User Computing business from 2013 to 2018, establishing VMware’s strategy in mobile and unified endpoint management and desktop virtualization. He did a brief two-year stint as CEO of Instart, a web application performance and security services startup, in 2018 before rejoining VMware in 2020.

As VMware’s new No. 2, it will be interesting to watch what Dhawan brings to the table this year with VMware now being independent from Dell.

4. Will SaaS And Subscription Account For More Of VMware’s Total Business?

VMware is striving to shift more and more of its deals and sales toward subscription and Software-as-a-Service (SaaS) versus enterprise license agreements (ELA). In calendar year 2021, VMware was somewhat successful in its mission as SaaS and subscription sales soared, although its percentage in terms of VMware’s total revenue hovered around 25 percent.

By The Numbers:

VMware’s third fiscal quarter 2022 subscription and SaaS revenue reached $820 million, up 21 percent year over year, accounting for roughly 26 percent of VMware’s total revenue. Comparatively, VMware subscription and SaaS revenue accounted for 24 percent of its total revenue in third quarter 2021.

In VMware’s first fiscal quarter 2022, subscription and SaaS revenue was $741 million, up 29 percent year over year, accounting for roughly 25 percent of VMware’s total revenue. For its second quarter, subscription and SaaS sales hit $776 million, up 26 percent year over year, accounting for approximately 25 percent of VMware’s total revenue.

VMware expects total subscription and SaaS revenue for fiscal year 2022, which ends Jan. 28, to be approximately $3.2 billion.

Investors and channel partners should keep a keen eye on whether VMware is able to transition more of its sales via SaaS and subscription or if it still is hovering around 25 percent of total sales by the end of the year.

3. Any Big Tanzu Launch In 2022?

VMware’s sole acquisition in 2021 was its purchase of cloud-based application security startup Mesh7 in a move to boost its Tanzu and micro-services capabilities.

One of the company’s most important goals in 2022 is to innovation and boost Tanzu market traction.

“Our Tanzu portfolio is now one of the most comprehensive in the industry for both Kubernetes operations and developer experience,” said Raghuram during VMware’s third quarter earnings conference with media and analyst.

In 2021, VMware unleashed several new offerings into its Tanzu portfolio including a free VMware Tanzu Community Edition that allows customers to run and manage Kubernetes-based containerized applications at no cost in multi-cloud environments, as well as new support for Nvidia AI Enterprise Software.

“I‘d say customer adoption, even though early stage, tons of interest in both vSphere 7, as well as Tanzu Community Edition, which gives us great promise for potential growth in the Tanzu portfolio over time,” said Raghu.

There could be a big new Tanzu offering in VMware’s future in 2022. It will also be interesting to see if VMware reveals any sales figures or stats around VMware Tanzu this year as the portfolio matures.

2. What Type Of Public Figurehead Will Raghu Raghuram Be?

Now that the honeymoon of being the new CEO of VMware is over, Raghu Raghuram will begin to show his true colors in terms of how he wants to be perceived as the leader and the public figurehead of VMware.

Raghuram is a true engineer and technology innovator at heart. The 18-year VMware veteran doesn’t shy away from the spotlight, but also isn’t a boisterous technology leader when it comes to things like social media which many CEOs are leveraging more and more.

Raghuram holds an enormous wealth of knowledge about VMware from both a products and innovation standpoint as well as culture, having first joined the company in 2003 overseeing VMware’s ESX and vSphere. Over the past 18 years, he helped grow the core virtualization business, drove VMware’s software defined data center strategy, constructed and guided VMware’s cloud computing business and SaaS transformation efforts, as well as played a pivotal role in the company’s M&A strategy.

VMware is in Raghuram’s blood and his vision for the company is sound.

One major thing to watch for in 2022 is how Raghuram presents himself to employees, customers and partners in the public spotlight. As an independent company now, this is the year when Raghuram will show what type of figurehead he will be as CEO of VMware.

1. What Partnerships Will VMware Double Down On And How Close Will It Keep Dell?

The great unknown in VMware’s future is just how close of a relationship it will keep with Dell Technologies in the coming years and what types of new partnerships it will form or double down on.

In 2022, VMware will likely form some new strategic partnerships with cloud vendors, but more interestingly, the company could also double down on some hardware partners who compete directly against Dell—such as with Hewlett Packard Enterprise and Lenovo.

“You are going to see us absolutely doubling down with VMware,” Vladimir Rozanovich, Lenovo’s senior vice president and president of North America told CRN in November. “You’re going to start seeing us working more opportunities together. In the past, they were always working on opportunities with us, but there was always that thing in the back of everybody’s mind of, ‘Hey, are they engaging just to get them more customer information so that they give it over to their server counterparts?’ I think it’s going to be a level of trust that’s going to up-level now between how we work together moving forward.”

It is key to note that prior to the Dell Technologies spin-off of VMware, the two companies signed a five-year commercial agreement stating their commitment to continue innovating together and keeping its go-to-market synergies intact.

“If you think about multi-cloud, what we really are saying is that we want to be the Switzerland of the industry. So if you want to be the Switzerland of the industry, then you want to be a standalone independent company, and that’s where we are headed,” Raghuram in late 2021. “It will allow partners that previously were competitors of Dell to now look at VMware with new life and say, ‘Hey, we can do strategic things with VMware.’ But at the same time, we have a fantastic relationship with Dell who we do tremendous amount of business with.”

As CRN previously reported, Dell’s CEO Michael Dell is the largest shareholder of VMware and is the chairman of the company.

However, it remains to be seen just what type of pull Michael Dell will have when it comes to VMware making new strategic deals, partnerships and customer opportunities with competitors in 2022.

VMware and Dell Technologies held a highly successful partnership over the past several years in terms of sales synergies, go-to-market and channel partner success.

The biggest story for VMware in 2022 will be how it handles that partnership and its joint customer relationships with Dell as it spreads its wings as an independent company.