In a bid to strengthen its desktop virtualization segment,
) is set to acquire Wanova Inc., a cloud-based desktop
virtualization solutions provider. The financial details of the
deal were not available.
Privately-held Wanova Inc. has its headquarters in Silicon
Valley, California, and has a research facility in Netanya, Israel.
The Wanova acquisition will expand VMware's end-user computing
product portfolio. With the combination of Wanova's Mirage and
VMware's View, clients will get an integrated desktop
virtualization solution in a cost-effective manner.
Desktop virtualization essentially eliminates the location-based
access problems, as employees in an enterprise can access and
manage required business data that are lodged in their respective
desktops remotely from multiple devices (PC, Laptops and Mac).
According to ABI Research, the global market for virtual desktops
is projected to grow from about $500 million in 2009 to nearly $5
billion in 2016.
Another study by IDC reveals that the virtual client computing
market is expected to increase from $2.3 billion in 2011 to
approximately $3 billion by 2015. Incidentally, the centralized
virtual desktop market is expected to account for nearly a third of
the estimated amount.
According to a recent study by
Citrix Systems Inc.
), the demand for desktop virtualization should increase manifold.
Thereby, Citrix as well as VMware can immensely benefit from this
opportunity, as the two companies together account for nearly 80%
of the total desktop virtualization market.
) has 15% market share in the aforesaid domain. We believe that the
acquisition will expand VMware's customer base and market share, as
demand from the enterprises inflates going forward.
We believe that VMware's strong and innovative product pipeline
along with its strategic acquisitions will enable the company to
drive its top-line growth over the long term. Moreover, the
company's continued strong performance in international markets and
focus on emerging markets will also be a crucial factor over the
long term, in our view.
Enterprises that are shifting to the cloud need the kind of
infrastructure that VMware has on offer. We therefore expect VMware
to benefit from increased adoption of virtualization and
cloud-computing technologies going forward.
However, we believe that the sluggish European market and a
relatively weak IT spending environment are the near-term
We have an Outperform recommendation on VMware over the long
term. Currently, VMware has a Zacks #2 Rank, which implies a Buy
rating on a short-term basis.
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