VMware Looks to Clouds in 2010

VMware reports its first-quarter results next week and is expected to announce a new deal with Salesforce.com.
Publish date:

PALO ALTO, Calif. (


) -- Virtualization giant


(VMW) - Get Report

, which reports its first-quarter results next week, is well-positioned for the

tech spending rebound

as virtualization is expected to be one of

the key trends of 2010


Analysts surveyed by Thomson Reuters expect VMware, which is majority-owned by storage giant



, to post revenue of $591.92 million and earn 27 cents a share after market close on Tuesday, up from $470.3 million and 25 cents a share in the same period last year.

Virtualization lets users divide physical hardware into multiple "virtual" chunks and has grown in popularity among users looking to juggle myriad operating systems and applications. With companies also struggling with budget pressures, VMware and rival


(CTXS) - Get Report


pushing virtualization

as a way for firms to reduce the amount of server and storage hardware within their data centers.

Earlier this week VMware also launched a Web site,


, advertising a

mysterious Web cast on April 27

featuring VMware CEO Paul Maritz and


(CRM) - Get Report

chief Marc Benioff.

The Web site heralds a "joint product announcement on the future of cloud computing" and there has already been speculation about the exact nature of the pact.

"We see two likely avenues for this partnership," wrote Pat Walravens, an analyst at JMP Securities, in a note released this week. "We see the first possibility as VMware potentially powering an infrastructure-as-a-service offering for Salesforce.com, and we see the second as VMware potentially helping Salesforce.com to support Java in its platform-as-a-service offering."

Walravens, who maintains his market perform rating for VMware, explains that all-in-one IT infrastructure services and platforms for app development are both experiencing "hypergrowth" at the moment.

VMware, of course, is no stranger to partnerships, and has already teamed up with


(CSCO) - Get Report

and parent company EMC around

cloud computing


Earlier this year VMware also

clinched a deal




to acquire its


email division, a further attempt to bolster its cloud story. A direct competitor of


(MSFT) - Get Report

SharePoint and


(IBM) - Get Report

Lotus Notes, Zimbra heightened the rivalry between VMware and Microsoft.

Cloud services, which offer compute power or data storage via the Internet, have been

gaining momentum

recently, with companies such as


(AMZN) - Get Report

, Microsoft and IBM all


the technology as a way for firms to avoid the upfront costs of hardware and software.

VMware supremo Maritz highlighted the massive


of cloud computing in a recent interview with


, citing users' desire to reduce the IT infrastructure within their businesses.




tough 2009

, the company gave a

rosy first-quarter outlook

earlier this year, and investors will be closely monitoring its first-quarter numbers.

VMware shares rose 80 cents, or 1.42%, to $57.23 on Friday, outpacing the broader advance in tech stocks that saw the Nasdaq dip 1.23%.

-- Reported by James Rogers in New York

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