Extensive SWOT Analysis of VMware – An American Cloud Computing Company

Quick Stats on VMware

Founders	Mendel Rosenblum & 4 Others
Year Founded	1998
Origin	California, U.S.
No. of Employees	34,000+
Company Type	Public
Market Cap	$46.32 Billion (2021)
Annual Revenue	US$11.767 Billion (2021)
Net Income/ Profit	US$2.05 Billion (2021)

 

Products & Services by VMware

VMware has been in the Software industry for more than a decade and deals in

• VMware vSphere
• VMware ESXi
• VMware Fusion
• VMware Player
• VMware ThinApp
• VMware View
• VMware Infrastructure

Competitors of VMware

VMware competes on a global level with many cloud-computing and networking companies. The top 7 competitors of VMware are:

• Microsoft
• Citrix
• Red Hat
• Oracle
• Nutanix
• SUSE
• Virtuozzo

As now we have a better understanding of VMware, let’s look into the SWOT Analysis of VMware.

SWOT Analysis of VMware

A SWOT analysis identifies a company’s strengths, weaknesses, opportunities, and threats. A proven and true management paradigm that allows VMware to compare its business and performance with competitors and the industry as a whole.

So let us go ahead and first have a glance at the strengths of VMware from the SWOT analysis of VMware.

Strengths of VMware

As one of the leading companies in the industry, VMware, Inc. It has numerous strengths that make it stand out in the market. These strengths not only help protect your market share in existing markets but also help you penetrate new markets.

• Strong Free Cash Flow: There is a strong free cash flow that puts resources into the hands of the company to expand into new projects. 
• Good ROI: It is relatively successful in new projects and provides a high return on capital expenditures through the creation of new revenue streams.
• Strong Brand Portfolio: Over the years VMware has invested in building a strong brand portfolio. This brand portfolio can be very useful if an organisation wants to expand into new product categories. 
• Outstanding Performance in New Markets: VMware has accumulated experience to enter new markets and achieve success. The expansion has helped organisations create new revenue streams and diversify business cycle risks in the markets in which they operate. 
• Highly Skilled Labour: Highly skilled workforce through successful education and training programs. By investing enormous resources in the training and development of VMware employees, they not only create highly qualified employees but also motivate them to achieve more. 
• Mergers and Acquisitions: A track record of successfully integrating additional companies through mergers and acquisitions. Over the past few years, he has successfully integrated several technology companies to optimise operations and establish a stable supply chain.

Weaknesses of VMware

Strategy is all about choices and weaknesses are areas where companies can improve through SWOT analysis and leverage their competitive advantage and strategic positioning.

• More Investment is Needed in New Technologies: Given the scale of the expansion and the multiple geographic regions in which the company will expand, VMware’s overall integrating processes require more money to be invested in technology. Current investments in technology are not aligned with the company’s vision. 
• Financial Planning is Not Being Performed Properly and Efficiently: The liquid asset ratio and liquidity ratio indicate that a company can use its cash more efficiently than it currently is. 
• High Labour Outflow: Higher dropout rates compared to other organisations in the industry, VMware, and have to spend significantly more on employee training and development than their competitors. 
• Not Very Successful in Integrating Companies with Different Work Cultures: As mentioned earlier, VMware is successful at integrating small companies. It has its share of failures to merge firms that have different work cultures.
• High Competition: The daily stock is high compared to its competitors, so the company has to raise more capital to invest in the channel. This could affect the long-term growth of VMware.
• Product Marketing: Although the product is successful in terms of sales, its positioning and unique selling proposition are not clearly defined, making it vulnerable to attack from competitors in this sector.

Opportunities for VMware

Opportunities are potential areas for companies to focus on to improve results, increase sales, and ultimately profit.

• New Environmental Policy: New opportunities will create a level playing field for everyone in the industry. This is a great opportunity for VMware, Inc. to realise the benefits of new technologies and gain market share in new product categories.
• New Taxation Policy: New tax policies can have a significant impact on the way VMware does business and open up new opportunities for them to increase its profitability.
• Open New Markets Through Government Agreements: New technology standards and government free trade agreements provided to VMware opens up opportunities for VMware to enter newly developed markets. 
• New Customers Through Online Channels: The company has invested huge amounts of money in its online platform over the past few years. This investment opened up a new sales channel for VMware. Over the next few years, companies will be able to seize this opportunity by better understanding their customers and meeting their needs through big data analytics.
• Economic Recovery: Economic recovery and rising consumer spending after years of recession and slow industrial growth are opportunities for VMware to attract new customers and increase market share.

Threats to VMware

Threats are environmental factors that can harm a company’s development. Here are some of VMware’s threats:

• Legal Actions: The Company may face legal action in other markets given the continuing fluctuations in different laws and product standards in those markets.
• Fierce Competition: Strong profitability has increased the number of players in the industry over the past two years, putting downward pressure on overall revenue as well as profitability.
• Liability Laws: Vary from country to country VMware may face a variety of liability claims as a result of these market policy changes. 
• Quantitative Increases in Commodities: This could jeopardise VMware’s profitability. A shortage of skilled labour in certain global markets threatens VMware’s continued earnings growth in the market.
• Operates Globally: Because the company operates in many countries, it is exposed to currency fluctuations, especially given the unstable political environment in many markets around the world. This may face some challenges in the market and may result in some losses as well.

This ends our extensive SWOT analysis of VMware. Let us conclude our learning below.