Avnet Technology Solutions, a subsidiary of IT software distribution company Avnet (NYSE:AVT), recently announced that it has expanded its distribution agreement with VMware (NYSE: VMW). Avnet Technology Solutions will now offer VMware’s complete portfolio of virtualization software to its value-added reseller (VAR) partners in Ireland. Avnet Technology Solutions has been VMware’s distribution partner in the U.S. since 2007 and has expanded the partnership across Europe to France, Romania, Turkey, Poland, Hungary and the Czech Republic during this period.  This is good news for VMware as it seeks to maintain leadership in the virtualization space, which is seeing stiffer competition with major technology companies like Microsoft (NASDAQ:MSFT), Oracle (NASDAQ:ORCL), and SAP (NYSE:SAP), looking to gain market share.
We have a $111 Trefis price estimate for VMware, about 15% above the market price.
Virtualization Software Worth 90% of VMware stock
We estimate that VMware’s virtualization software contributes nearly 91% of our $21.21 Trefis price estimate for VMware. As a pioneer in this field, the company has historically enjoyed a major share in the fast growing virtualization market. However, with increasing competition VMware’s share in the virtualization market has declined consistently and now stands at under 50%.
We forecast VMware’s share will continue to decline in the future as the market expands at a rapid rate, offering enough opportunities for other players to exploit. However, expansion into new and existing markets should help VMware continue growing its top-line and maintaining its lead in the virtualization space.Notes: