VMware Warns of Market Coalescence, New Competition
VMware’s entrance into enterprise security solutions market coincides with coalescence of once distinct end markets.
March 31, 2021
VMware (VMW), a provider of hybrid cloud, multi-cloud, networking, security, and digital workspaces, is warning investors that its enterprise security solutions segment is facing intense competition as once clearly defined end markets converge to provide better protection from cyberattacks. In its 2020 10-K, VMware includes new language warning that:

“New trends such as Secure Access Service Edge (SASE) and Zero Trust Network Access represent the coalescence of formerly distinct markets, such as identity management, secure web gateway, SD-WAN, network firewall, and cloud access security brokers.”

End market convergence, according to VMware, is transforming partners into competitors. In the prior year’s annual report, VMware does not name the two new competitors it does in its current annual report:

“These trends may bring existing partners such as Zscaler and Okta, into a more competitive position with Carbon Black, VeloCloud and other distributed network security offerings from VMware.”

Dell owns approximately 80% of VMware’s outstanding shares and appears ready to cash out as it is considering spinning off its stake to existing Dell shareholders. Simultaneously, it appears as if VMware is planning to lever up and provide Dell with a farewell dividend. VMware disclosed it’s looking to pay a special cash dividend to VMware shareholders. The dividend is likely to be paid for, in part, by taking on additional debt.
Related: OKTA, ZS, CBLK
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