VMware (NYSE:VMW) reported earnings earlier this week, and the company has had another stellar quarter. It reported 18% year-over-year revenue growth and $333 million in free cash flow. A particularly impressive part of VMware's performance is that as the company seeks to diversify its offerings, its new initiatives all seem to be turning to gold. Let's take a look at these new businesses and see whether there is anything that can curb VMware's growth in the future.

What else can be virtualized?
After dominating computer virtualization, VMware is now turning its attention to virtualizing the other parts of the data center, namely storage and networking. VMware believes that the virtualized storage and networking markets are worth $8 billion each, and also that they are opportunities that will last for years.

NSX, VMware's networking product, was released two years ago. It already has 150 customers and is on track to earn $100 million this year. VMware believes that NSX is the only shippable product in the category, though it will eventually compete with Cisco's (NASDAQ:CSCO) ACI platform. When asked about this, CEO Patrick Gelsinger generously responded that Cisco makes good networking gear, suggesting that Cisco should stay in the hardware business while VMware wins with software.

VMware's virtual storage product, vSAN, was only released in March, but since then it has racked up 300 customers. This is particularly impressive considering that virtual storage is a more established market with more competition, and it shows how significantly VMware can leverage its dominance in computer virtualization.

Gaining share in end-user computing
Through its Horizon platform, VMware has also been branching out to end-user-computing services such as application and desktop virtualization. It also entered the mobile-device-management business at the beginning of the year through its acquisition of market leader Airwatch.

According to management, end-user computing grew double digits in the quarter and took share from the competition, meaning primarily Citrix Systems. While Citrix continues to lead in this space, the latest version of Horizon, which was released in June, includes several key features, such as remotely hosted applications, that are helping close the gap with Citrix.

Can anyone stop VMware?
While VMware has been successfully expanding into new markets, a couple of big players are making moves on VMware's home territory. In particular, Amazon.com (NASDAQ:AMZN) recently released a tool that allows VMware virtual machines to be easily imported into Amazon's AWS. However, it seems that this is not a major threat to VMware at the moment, as many enterprises will not be willing to fully embrace the public cloud or to be locked in with Amazon. 

A more serious threat might come from Redmond. Microsoft (NASDAQ:MSFT) has been improving its virtualization tools, and the Windows Server Datacenter edition license includes the right to run an unlimited number of virtual machines on up to two processors. This makes for an attractive proposition, and according to Gartner, Microsoft has been gaining ground in virtualizing new workloads. So far, VMware's management remains unconcerned, stating that VMware rarely loses any business to Microsoft.

The bottom line
VMware had a great second quarter. Its initiatives to expand into new markets such as virtual storage, networking, and end-user computing have been highly successful and are taking share from more established market players. While Microsoft and Amazon are moving in on VMware's core virtualization business, for the moment it seems that VMware remains the dominant player here. It's likely that it will continue to leverage this position to achieve even more growth.

Srdjan Bejakovic has no position in any stocks mentioned. The Motley Fool recommends Amazon.com, Cisco Systems, and VMware. The Motley Fool owns shares of Amazon.com, Microsoft, and VMware. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.