How Much Can The Partnership With Amazon Contribute To VMware’s Top Line?


The logo of Amazon Web Services Inc (AWS) is displayed on a sign at a pop-up office ahead of the World Economic Forum (WEF) in Davos, Switzerland, on Monday, Jan. 21, 2019. Photographer: Jason Alden/Bloomberg© 2019 Bloomberg Finance LP

VMware announced a partnership with Amazon’s AWS a few years back, as the companies jointly developed the VMware Cloud on AWS offering. Per AWS’s website, the offering delivers “a highly scalable, secure and innovative service that allows organizations to seamlessly migrate and extend their on-premises VMware vSphere-based environments to the AWS Cloud running on next-generation Amazon Elastic Compute Cloud (Amazon EC2) bare metal infrastructure.” The unique selling point of this partnership is that VMware is facilitating the development of a hybrid cloud for its customers, with the cloud side being AWS and the on-premise as an open system. While the partnership is mutually beneficial, given that VMware’s overall revenue is much lower than AWS’, the impact of the partnership is likely much more significant for VMware than Amazon. Below we take a look at how much this partnership impacts VMware’s revenue and valuation.

How Much Revenue Does The Partnership Drive For VMware?

While VMware does not break out the revenue contribution from AWS within the broader ‘Hybrid Cloud and SaaS’, we estimate that the AWS partnership currently accounts for a low single-digit percentage of VMware’s total revenue (likely in the ~2% range). Our interactive dashboard on the VMware – AWS Partnership Revenue outlines our estimates for the impact to VMware’s revenue from this partnership. You can modify any of the key drivers to visualize the impact of changes, and see all Trefis technology company data here.

Our estimates are based on management commentary about incremental growth from AWS and on the commentary across the last few quarters around VMware’s relationship with AWS and the traction in the partnership. We believe, given the current adoption momentum, by 2020, this partnership may contribute ~4% to VWware’s total revenue. For reference, this would imply estimated 2020 revenue of around $400 million from the partnership.

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