Virtualization software leader, VMware, Inc. is considering a strategic partnership with rival Amazon.com’s (AMZN Quick QuoteAMZN - Free Report) Amazon Web Services (AWS), according to a report by Fortune. The report states that Amazon will likely announce the partnership on Thursday, citing sources familiar with the matter.        

It appears that the contract will enable users to run VMware software on the Amazon cloud apart from the internal servers.

The move comes at a time when VMware is strengthening its place in the virtualization server market. It is expanding its expertise from just servers to now include networking and storage as well. Enabling the software support on cloud is a positive as many enterprises now prefer public cloud platforms like Amazon, Microsoft and Alphabet’s (GOOGL Quick QuoteGOOGL - Free Report) Google over internal servers to optimize costs while maximizing flexibility.

In Feb 2016, VMware entered into a similar deal with International Business Machines Corporation (IBM Quick QuoteIBM - Free Report) . The contract enabled VMware’s VSphere customers to initiate workloads on IBM SoftLayer cloud infrastructure.

With such partnerships, VMware is placing itself well to benefit from the increasing adoption of cloud-based solutions. Per a Gartner report, global spending on cloud technology is expected to increase 25% annually over the next few years, which will result in higher demand for virtualization capabilities.

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