A pioneer in virtualization and cloud infrastructure,
) recently acquired a three-year old startup named CloudVolumes.
Nothing relating to the financial details of the deal was revealed.
The company also did not shed any light on whether CloudVolumes
will function as standalone entity after the closure of the deal
Headquartered in Los Altos, CA, CloudVolumes, previously known as
SnapVolumes, was founded in early 2011 by virtualization,
datacenter and security personnel from VMware, Citrix, Symantec,
), Oracle (
) and Virident. It was formed with an intention to provide
enterprise information technology (IT) solutions for instant
With this acquisition, VMware expects to deliver a mobile app store
like experience to any device, which in turn will reduce costs. We
believe that this will attract more users to VMware's
virtualization service offerings, thereby driving growth in the
Moreover, the addition of CloudVolumes to its portfolio will also
enable VMware to build real-time application delivery across all
three of its prime focus areas including software-defined
datacenter, end-user computing and hybrid cloud computing.
VMware has made acquisitions in the past too in an attempt to boost
its offerings. In the year fiscal 2014, AirWatch was acquired by
VMware for a sum of $1.54 billion. In fiscal 2013, it had acquired
two companies (Desktone and Virsto) for a total sum of about $289.0
Per IDC, the virtual client computing market is expected to
increase to $3 billion by 2015. According to ABI Research, the
global market for virtual desktops is projected to grow to nearly
$5 billion in 2016.We believe that VMware can immensely benefit
from this opportunity.
We believe that a sluggish IT spending environment and intensifying
competition from its peers such as Microsoft Corp., Hewlett Packard
) and Citrix are primary headwinds for VMware. Moreover, VMware's
continued investments in the emerging markets, product innovations
and acquisitions are expected to weigh on margins in the near term.
However, recognition of the company by IDC as the #1 in both
worldwide cloud systems management software and worldwide data
center automation software reflects the strength of VMware's
product portfolio. The company continues to win contracts. Robust
international sales and the acquisitions of Desktone and AirWatch
will also add to the top line in the long run.
Currently, VMware has a Zacks Rank #3 (Hold).
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