VMware Lands Two Customer Deals Over $20 Million Each - InformationWeek
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4/24/2009
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Bob Evans
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VMware Lands Two Customer Deals Over $20 Million Each

Despite overall slumping revenue from first-quarter enterprise license deals, VMware said it booked two of the largest such deals in its history with a major outsourcing vendor and another in the defense sector. The company also released some stats on the number of virtual machines some of its biggest clients are now managing.

Despite overall slumping revenue from first-quarter enterprise license deals, VMware said it booked two of the largest such deals in its history with a major outsourcing vendor and another in the defense sector. The company also released some stats on the number of virtual machines some of its biggest clients are now managing.At a presentation to securities analysts, VMware CFO Mark Peek described the $20-million-plus deals as proof that "in those sectors where spending is still strong," businesses "continue to show confidence in VMware and our products."

The problem, it would appear, is that the number of "those sectors where spending is still strong" is quite small, with the federal government being one of the primary examples. Describing the overall soft market for capital expenditures, VMware CEO Paul Maritz singled out the federal government as one of the only active buyers:

"While there are some people promising signs of renewed life in the United States, customers are keeping a very tight reign on any new spend," Maritz told the analysts. "If there is a bright spot anywhere, it is likely to be confined in the very near term to the federal sector."

The $20-million-plus deal from the defense sector is about as mission-critical as it gets, as it "will be used to increase the mobility and flexibility of forward trip deployments," Peek said.

In the other megadeal signed in the first quarter, the VMware's outsourcer customer will use the new virtual capabilities to provision resources for its clients, VMware said.

Peek also offered some details on overall customer adoption of VMware's products and services, noting that in a survey of 350 major customers, 70% have made VMware their standard for virtualization. Among those, Peek said, a large percentage are now managing more than 5,000 virtual machines "and many of them are heading to 10,000 and beyond."

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