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VMware Offers Fusion @ $9.99
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ShareA leading provider of virtualization infrastructure software solutions VMware Inc. (VMW - Snapshot Report) has launched a limited period VMware Fusion upgrade program for users of Parallels Desktop, Macintosh version, for $9.99.
Under the program, Parallels Macintosh users will be able to switch over to VMWare Fusion 3 for only $9.99, thereby saving $30.00 from a usual VMware Fusion upgrade or a $40.0 from upgrading to Parallels Desktop 6. VMware Fusion 3 costs $79.99 for a new license and $39.99 for an upgrade from previous VMware Fusion 2 and 1.
In our view, there is pent-up demand for both Macintosh and Windows, as information technology (IT) spending recovers. According to research firm Gartner, in the second quarter ending June, Apple Inc. (AAPL - Analyst Report) sold nearly 3.5 million Mac computers, a 33% year-over-year increase, exceeding the growth rate of overall personal computer market. Microsoft Corp.’s (MSFT - Analyst Report) Windows also posted strong results in the second quarter, selling more than 175 million licenses.
With the availability of the Fusion at such a low cost, we believe VMware will significantly broaden its customer base, especially large enterprises that are adopting virtualization and cloud computing technology.
VMware Fusion software was developed for Apple’s Macintosh series of personal computers with Intel Corp. (INTC - Analyst Report) processors based on X86 architecture. VMware Fusion enables its users to run guest operating systems (OS) such as Microsoft Windows, Red Hat Inc.’s (RHT - Snapshot Report) Linux, NetWare and Solaris simultaneously with the host Macintosh OS.
VMware Fusion 3 offers more than 80 new features, including 5 times better 3D graphics and 35% faster end-to-end performance.
Recently, VMware released Fusion 3.1.1, a maintenance update to the virtualization software for Intel Macintosh. The update enables users of VMware Fusion to run VMware vSphere 4.1 as a guest OS on a Macintosh computer. We believe this is a significant update as vSphere is immensely popular among the cloud computing users.
However, we are also of the opinion that VMware Fusion will continue to face stiff competition from Parallels Desktop for Mac 6 version going forward.
Recommendation
We have a Neutral rating on VMware on a long-term basis (for the next 6 to 12 months) primarily due to concerns regarding European macroeconomic conditions as revenues from large markets such as Germany and the U.K. were down sequentially in the second quarter.
Moreover, VMware also competes with Citrix Systems Inc. (CTXS - Analyst Report), Microsoft Corporation, International Business Machines Corporation (IBM - Analyst Report) and the privately held PARALLELS International GMBH.
However, we believe VMware has a strong product pipeline and loyal customer base that will boost its profitability in the long term.
Currently, VMware has a Zacks # 3 Rank, which implies a short-term Neutral rating (for the next 1−3 months).
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