VMware CEO Pat Gelsinger talks up new hybrid cloud strategy, SDN, OpenStack,
partnering with Google and competing with Amazon and Microsoft
VMware is shifting its cloud computing engine into high gear this week with a
series of product updates, including new versions of its vSphere virtualization
software and VSAN storage platform, plus a distribution of OpenStack and
integrations of its NSX software-defined networking tool with its vCloudAir
public cloud. This follows a partnership announcement last week with Google in
the cloud. VMware CEO Pat Gelsinger - former COO of EMC and CTO of Intel - sat
down with IDG Enterprise Chief Content Officer John Gallant and Network World
Senior Editor Brandon Butler to discuss all the activity, what it means for
customers and how VMware will compete with Amazon and Microsoft in the cloud.
John Gallant (JG): Pat, VMware has had a lot of news between last week and
today. What is the single most important thing you want customers to understand
about your announcements?
Pat Gelsinger (PG): If there's one phrase that we're asking people to get
from this it’s: One cloud, any app, any device. This is a view that there is a
foundation for one cloud, and vSphere and what we're announcing in networking
and storage gives us this unique position for a unified cloud architecture that
can be on and off premise. As we bring that to market, it's in response to what
we hear customers saying. It's an increasingly liquid world, it's tumultuous. We
see restructuring of traditional players and established players are being moved
aside. And we definitely see this unique opportunity for VMware. People are
increasingly relying on software at the application layer and they increasingly
need a software-defined infrastructure to enable the level of speed, agility and
flexibility to respond to that. That's where we see this set of announcements,
the products that we're bringing being really a very foundational launch for us
as we start 2015.
Brandon Butler (BB): At your VMworld keynote address you spoke a lot about
VMware’s software defined data center vision. Where do you see these
announcements fitting in with that strategy? And also, where is VMware along
that journey to achieving the software-defined data center? It seems like VMware
has a strong presence in the private cloud and virtualization markets. But
things like public cloud and NSX are still relatively nascent.
PG:When we think about software-defined data center (SDDC), we think of the
management of compute, network and storage as common ingredients that we apply
both on premise and off premise, and that's truly what the hybrid cloud is -
it’s the ability to tie those two together. In vSphere we have 650 new features,
including key breakthroughs for the size for mission-critical workflows like big
Hana databases and Hadoop workflows that are supported. We'll have new
performance benchmarks that come out, high availability improvements and
resiliency features that allow us to attack mission critical workloads. So the
simple message is: Any workload can and should be virtualized. And VSAN is a
foundational component of the SDDC, too. VSAN has major improvements in data
formats, performance, size, data features and snapshots. VMware Integrated
OpenStack is a set of technologies that can be consumed through our traditional
APIs as well as through increasingly open APIs. And finally, and to me maybe
most importantly, is the hyper-networking. When you talk about moving a VM from
my on-premises data center to a public cloud resource, typically moving the
compute piece is tricky. Standards will be fairly well established, but moving
the network, that's hard - all of the [Layer 2 and 3] network features required.
That's why the hybrid networking aspect of this announcement is really I'll say
the magic that allows this true on- and off-premise ability of the hybrid cloud
to function. So taken together, this is the SDDC with a complete set of
ingredients, major advancements on all fronts, and now the ability to consume
them in new and powerful ways.
BB: You recently announced a partnership that will make aspects of Google’s
cloud platform available to customers in VMware’s vCloudAir public cloud portal
(Read more about that Google-VMware deal here). How do you envision customers
using this new functionality and why was this an important partnership for both
VMware and Google?
PG: At the highest level, we think of this as a win-win. It will combine the
presence VMware has with the enterprise customer and the unique offering that we
have to deliver hybrid services with the scale Google has with regard to
analytics services, storage services and the database, which it hasn’t in any
meaningful way been able to bring to the enterprise customer. So what they have
so complements what we have and bringing those together through the vCloudAir
service we think brings our customers the services that can allow them to
significantly extend the workloads and opportunities they have for using cloud
services.
JG: Who do you see as your primary competitor in the hybrid cloud? It would
seem to us that it's Microsoft, because they're trying to create a similar
enterprise hybrid cloud play.
PG: Whenever I talk about cloud, I always say the four companies that matter are
VMware, Amazon, Google and Microsoft. The two that have a legitimate position to
deliver a hybrid value proposition are Microsoft and VMware. We have such a
foundational leadership position on premises, our 80+ percent share of the
on-premise virtualized environment gives us the foundational position of great
leadership versus Microsoft or anybody else. And the networking component is
really unrivaled. That fundamental leadership, huge on premise, 50 million
virtual machines plus networking, we think gives us a highly differentiated
position versus Microsoft or anyone else.
BB: How will this partnership with Google impact the competitive dynamics in
the IaaS cloud market with Microsoft and Amazon?
PG: It’s going to enhance the unique differentiation we provide. This combines
the best of public cloud - these incremental services that Google brings - with
the best of private cloud with unique hybrid capabilities. If you now compare
that foursome, now you have VMware and Google partnering to further enhance
those unique differentiations that we bring. Compared to Microsoft or Amazon, or
really anybody else, this really emphasizes the unique aspects we’re able to
bring as a hybrid service offering to the enterprise customer.
PG:The pricing and our business strategy are tied together here. Because the
first is we're going to leverage the SDDC technologies. We're going to use those
quite effectively to have a very cost-effective infrastructure, and that's what
the SDDC is all about. And our announcements that we have today with vSphere and
the improvements in performance and capacity, virtual SAN and its capabilities
and networking really allow us to use industry-standard infrastructure to very
effectively deliver enterprise-class services. Further, when we think about the
cost dynamics for service providers, they have the lowest cost of capital and
huge international networks built out, and increasingly the network is the cost
driver of clouds. If you look at the bundled delivery cost to an enterprise
customer, those networking costs are critical. And again, we're leveraging the
largest investments in that area on the planet. Further, we do think that as we
go forward here, this is a big boy's game, and as such, smaller players will
dissipate on the edges. That's how we see things playing out and we are ready,
willing and are making the investments necessary to take our business, plus our
partners' business, forward effectively. If you listed all the partner
announcements that we've done, that's a very formidable force.
BB: When will the features you’re talking about be available to customers and
where are you on rolling out the platform to enable the hybrid cloud? Is there
still a lot of innovation going on or is this the platform that we're going to
see moving forward for the foreseeable future?
PG: We have all the components in the market, period. We have networking, we
have storage, we have compute, we have management; they're all there. What we're
doing now is tying those together with the on-demand capacities of our vCloud
Air. So I'll say all the foundational bricks are in place and now we're building
on those components. I use ESX as a reference: Essentially the hypervisor was
introduced in 2002 and in 2010 we crossed 50% install; in 2012 we hit 70%. It's
those kinds of numbers that we're going to see, but it took about a decade for
those things to play out. That said, for virtual networking, this is maybe year
2005 of ESX? Storage, we're in year 2004 of ESX.
There's an enormous amount of innovation that still sits in front of us as we go
execute on the hybrid cloud. And I think some of these other technology areas
around the SDDC and the hybrid cloud will have somewhat shorter adoptions
because we're able to build on that hypervisor footprint that we have with
vSphere. So, I think that we will be able to go faster, but we're still talking
about years of innovation in front of us as we build out these new capabilities.
For a technology-oriented company like VMware, we are just thrilled. The stuff
that we do at the infrastructure level and the innovations that we do in terms
of networking and automation and telemetry, and the ability to operate with new
policy-driven mechanisms against these workloads, this is stuff that gets us
excited. I mean, I've got thousands of engineers that get out of bed every
morning, if they even went to bed, specifically for these kinds of assignments.
BB: I see that OpenStack is an important part of this announcement. Why has
that been an important technology for VMware to embrace and adopt?
PG: Our embrace of OpenStack in the VMware Integrated OpenStack (VIO) offering
really is recognizing the bubbling cauldron of activity in the industry around
OpenStack. And what we looked at is that most of that value is at the higher
levels of the stack. People are asking: How can I consume, interact and program
API-driven provisioning of infrastructure? As we looked at those technologies,
it became a straightforward answer for us to add those OpenStack components to
our best-of-breed technologies, like ESX, NSX and VSAN.
BB: What would you say to a customer who might wonder if VMware is the best
company to work with OpenStack on? Would it be better to work with a company
like Red Hat, given its Linux background, or one that has a deeper background in
open source?
PG: I will point out to that customer that probably almost all of the Red Hat
footprint is already running on VMware. Somewhere between 30 to 40 pecent of all
the VMs that we run are RHEL (Red Hat Enterprise Linux) or some other Linux
variant already. So even though the OS layer might be using RHEL, the virtual
machine layer is almost always based on VMware and the relevant KVM from Red Hat
is a really trivial market share comparison. It's just not robust to that
infrastructure level.
Further, even if you're just diehard and everything has to be open source, you
say -- Boy, there just aren’t any of those components available at the
management layer that fully support some of those networking functions. There is
nothing like NSX available and all of those environments at the component level
are still being embraced into those environments as the only significant
available production worthy version. So every one of these rock-hard scalable
world-class components is available in those open source/Openstack environments,
and it's really bringing the best of those two worlds together. We don't view
this as an "either/or" world, we view it as an "and" world, because it really is
combining the best of those technologies to accomplish the most resilient
scalable mature infrastructure for enterprises to operate, but also to innovate.
JG: Pat, I wanted to follow up on an original question from Brandon. I think
the software-defined data center strategy has had some really important
announcements that have moved that strategy along. But how are you measuring
customer adoption of this? What are the benchmarks you have and can you tell us
a little bit about what you're seeing from customers on the uptake of the
overall vision?
PG: Some of the public data that we talk about is on the earnings call, but I'll
expand from that just a little bit. Some of the things that we look at would be
management adoption inside of the large footprint of vSphere customers, and what
we've said on our earnings call so far is that we have 14% adoption. We're also
carefully monitoring how many of our customers are taking three or four of the
legs of the software-defined data center. So 14% now take management and we're
now saying -- how many of our customers take vSphere management and networking?
vSphere management networking and storage? And that's one of the metrics that
we're monitoring very closely.
So how many of those customers have we taken into full production using all legs
of the software-defined data center. And obviously something like that starts as
a trickle, turns into a stream, and finally it's a full-blown river of adoption.
We're seeing all of the right trends with regard to NSX adoption, the storage
adoption and the adoption of those in conjunction with each other. And that to
us is when we have the full-meal deal.
Note: In the earnings call last week, VMware reported it has 400 paying NSX
customers, up 60% quarter-over-quarter. NSX bookings doubled in the second half
of 2014 compared to the first half and the product has over a $200 million
annual booking run rate. VMware reported it had 1,000 paying customers using the
VSAN storage platform.
BB: You've talked about NSX as a real differentiator for VMware. Do you get the
sense that customers are ready to adopt that technology? And also, what would
you say is the focus for NSX now? At VMworld it seemed like you were talking
about NSX a lot more from a security standpoint compared to the software-defined
networking standpoint that it had been defined as before. How do you define NSX
with customers now and do you think they're ready to adopt this cutting-edge
technology?
PG: If there's any doubt on that question, look at our earnings call and the
adoption numbers we're seeing, the momentum we're seeing with customer pick-up,
the revenue acceleration we're seeing. So unquestionably, we're crossing that
point on the curve in adoption. The two primary use cases are application
agility and micro-segmentation or security. Nominally they're 50-50'ish for
customers to date. And one is the fast road and one is the complete road. The
fast road is micro-segmentation: You walk into the customer and you say - do you
have any assets that are less protected than you'd like them to be? And if the
CIO doesn't say yes to that question, you know he's not going to be there a long
time anyway, right?
Everybody has their most critical assets that are the best protected, and with
NSX you start to lay out how you can quickly bring micro-segmentation as an
additional layer of protection into those environments. You don't change the
network architecture, you don't even necessarily need to invite the network
admin to the meeting. It's a software overlay technology, you have the CISO and
the vAdmin all on board very quickly. And after they've begun isolating some of
their highest valued assets and getting some operational experience with it,
then you would like the network admin because now we're ready to have a
conversation about how we fully deploy the value of network virtualization.
The other question is really one about transforming the network operations so
that applications can be deployed with all of their incumbent firewall
provisioning, routing, and rules in a fully automated way. That takes
application deployment times from weeks to hours or minutes. Those are the
transformational use cases that we've seen at places like eBay. And those are
the two drivers. Both of those are going extremely well with customers. The
reason we've ended up talking a lot more about micro-segmentation and security
is it's just so easy for customers to adopt it and deploy it in a very targeted
and highly beneficial way.
JG: I wanted to follow up on NSX: In order to make this hybrid VMware vCloud Air
service work, does that mean you're working in conjunction with carrier partners
and that they're deploying NSX as well?
PG: There are multiple pieces to that. Does the customer have to deploy NSX on
premise? Does the carrier have to deploy NSX? And is the cloud service deploying
NSX? What we announced is that vCloud Air has now implemented NSX and is making
those services available to customers. That was the key piece of the
announcement.
From a service provider, from the network provider perspective, they don't need
to do anything, because it really is about getting my pipe connected up to
vCloud Air across whatever network service I have. However, we're increasingly
finding those service providers enhancing their service offerings via NSX.
They're offering those as differentiated VPN services or MPLS connectivity for
their enterprise customers. So they don't have to, but increasingly they're
seeing that they can differentiate their service offerings to enterprise
customers by adopting and deploying NSX as part of their network offering.
On the customer side, they don't need to do anything other than access those
services through standard protocols like OSPF and BGP and others. Now, if they
have deployed NSX internally, there's more elegant things that they can do with
it, but it begins by a simple onramp, the standard protocols that they're
already deploying and using today.
JG: So a customer doesn't have to commit to NSX, they can just take advantage of
its benefits?
PG: Correct. Just access those services through standard network protocols and
services that they've most likely already deployed and are highly mature on.
Over time, we'll do more if they have put NSX in place, but that's round two of
the discussion. Round one is -- can I now start to view the vCloud Air service
as a segment, a compatible extension of my data center, that's entirely network
compatible without modifying any of my security, firewall, rules, anything else?
And that's now this absolutely unique capability that we're offering in the
marketplace.
BB: I want to ask about EMC's federation strategy. There's been a lot of talk in
the market about whether EMC might break up its federation of EMC storage,
VMware, RSA, Pivotal and now VCE. Activist investors Elliott Management Group
have been pushing for that. Where do you stand on that? Would you like VMware to
spin out from EMC? And as a follow-up to that, there’s been some discussion
about EMC Chairman Joe Tucci’s potential retirement. Would you ever want to
replace Joe Tucci as chairman of the EMC federation?
PG: We're very pleased that the truce was announced with Elliott and EMC, the
agreement is in place and we're happy with that. And the reason we're happy is,
as I've gone on record and said a number of times, we think that the federation
model is the best model in this period of high tumult change, etc. in this phase
of the industry.
We think being bigger and more strategic as a federation is an asset for the
companies, for EMC as well as VMware as well as Pivotal, and we believe at this
phase of our journey that it's absolutely the best way to go and we expect that
to continue for years to come. We do, in many, many circumstances, find that
customers simply say -- I want you guys to work together, partner together,
deliver me more value together into my environment, and I want to view the
federation as one company. And we are getting that strong response from
customers and some of our biggest Q4 wins were a direct result of the federation
partnership.
So we're very comfortable and happy that this came together as it did and
pleased that at least that's been taken off the table for at least 2015. With
regard to me personally, those decisions are made by the board, of course, and
I'm thrilled and excited by what I'm doing at VMware and hope to do it for many
years to come.
JG: Are there any other aspects of the announcement, or anything else that you
would like to touch on or want readers to know about?
PG: We talked about the vSphere 6, which is a huge announcement. We didn't spend
a lot of time talking about virtual SAN and virtual volumes, the storage
technologies, but we view those as very, very substantive technology
improvements. I think you guys got it with respect to VIO, and we covered that
pretty effectively. And then I'll say there is this profound differentiation of
the hybrid network, and taken together, SDDC is the foundation for one cloud,
any app, any device. The components are in place, customer uptake is strong and
we've got years of innovation in front of us that's turning me and my engineers'
cranks every day.
