The Pentagon’s $10 billion JEDI contract is a “significant opportunity” for VMware, which partners with both of the finalists — Amazon Web Services (AWS) and Microsoft Azure — for the lucrative cloud deal, said VMware CEO Pat Gelsinger on the company’s first quarter fiscal 2020 earnings call.
During his prepared statements, Gelsinger noted that VMware Cloud on AWS is in the approval process to operate at a “FedRAMP High Baseline” level for highly sensitive, unclassified data in cloud computing environments.
Later, when asked if he saw an opportunity for VMware to participate in the JEDI contract because it has hybrid cloud partnerships with both AWS and Microsoft, Gelsinger said yes.
“We’re now in the FedRAMP approval process to achieve our ATO, or authority to operate,” he said, according to a transcript. “That’s a critical milestone for us…we are getting our offering ready to be able to be a cloud provider to government. And I’ll also point out that our installed base with the federal governments with defense with the various military intelligence communities is very high. So we see this as a significant opportunity and one that is an extension of our VMware cloud offering as quite critical to us.”
VMware Q1 Earnings
In addition to discussing VMware’s JEDI prospects, Gelsinger reported that revenue for the quarter increased 13% year over year to $2.27 billion. License revenue also grew to $869 million, an increase of 12% from the first quarter of fiscal 2019.
But apparently Wall Street expected better, and by close of market on Friday VMware’s shares fell 7.4%.
Gelsinger also touted VMware’s partnerships with AWS, Microsoft, and Dell Technologies (Dell also owns an 81% stake in VMware) on the call.
And immediately after VMware’s earning’s call, Dell held its call with investors and reported weak server and storage sales, which sent its shares down 10.2% by Friday afternoon.
Dell Q1 Earnings
Dell Technologies’ first quarter fiscal 2020 revenue was $21.9 billion, up 3 percent year over year. But its Infrastructure Solutions Group revenue declined 5% year over year to $8.2 billion. This included a 1% drop in storage revenue to $4 billion and a 9% decrease in server and networking revenue to $4.2 billion.
Dell Vice Chairman of Product and Operations Jeff Clarke blamed slower demand, particularly in China and among some large enterprise customers, for the weak server sales. But he sounded upbeat about new server products announced at Dell Technologies World last month including Dell Technologies Cloud and Data Center-as-a-Service, as well as the new hybrid cloud partnership with Microsoft that allows customers to extend their on-premise VMware Cloud environments to Microsoft Azure.
“All of these solutions represent breakthroughs in cloud innovation that enables a flexible range of IT and management options with tight integration and a single vendor experience for purchasing, deployment, services, and financing,” Clarke said, according to a transcript. “They provide customers an operational hub for their hybrid clouds on-premise with consistent cloud infrastructure across all cloud types.”
They also rely heavily on VMware’s software stack — and Dell’s tight integration with the virtualization giant. In fact, Dell’s revenue from VMware and hyperconverged infrastructure was the primary highlight of its first quarter. In addition to VMware revenue of $2.3 billion, VxRail, Dell’s HCI product jointly engineered with VMware, grew triple digits again during the first quarter.