VMware CEO pledges cloud computing freedom

In what’s become something of an annual tradition, we talked with VMware CEO Pat Gelsinger at the outset of the virtualization leader’s VMworld 2016 conference. In this interview with Network World Senior Writer Brandon Butler and IDG Chief Content Officer John Gallant, Gelsinger shared the big news from the event, including new tools that make it easier for customers to build cross-cloud environments, as well as an expanded partnership with IBM. With finalization of the Dell/EMC merger just over the horizon, Gelsinger reassured VMware customers about the company’s independence but said the resources available from that powerful ally will put ‘turbochargers’ on VMware’s back. He discussed the state of the software-defined data center and where customers stand in the deployment of virtual networks.

BRANDON BUTLER: What is the big message from VMware and VMworld 2016?

The big message is clearly this idea of the Cross-Cloud Architecture that enables our customers to have cloud freedom, control and simplicity. With that, we’re making two big area announcements. One is the VMware Cloud Foundation, bringing together all the core technologies to build and operate clouds and make them simpler to build and run, as well as a new set of cross-cloud services – largely built on the capabilities of NSX vRealize – enabling our customers to manage, run and connect workloads on any cloud, including major public clouds that aren’t built on VMware technologies at their core, like Amazon, [Microsoft] Azure, etc. That’s the big headline: changing the way people can take advantage of cloud for the future.

VMware Cloud Foundation is a unified SDDC [software-defined data center] platform and we are announcing with IBM that they are the first customer to take advantage of that to build and accelerate their cloud offerings. It’s an extension of what we announced earlier with them but now IBM with SoftLayer will be bringing a new offering forward that allows people to essentially instantiate a full VMware SDDC environment in minutes. That used to take days.

Also at the show, we will have updates on NSX, our storage, our products, VxRail and the VxRack products. We’ll have Michael Dell there affirming both his commitment to the ecosystem as well as his embrace and use of the vCloud Foundation products, and we will be rolling out our VMware integrated container offering as well. This is making containers great on VMware environments, making it easy for container development but also robust, manageable, secure from the IT shop. Those will be some of the big, top-level messages.

+ MORE FROM VMWORLD 2016 VMware ‘Cloud Foundation’ integrates virtual compute, network and storage systems +

BB: I wanted to dig in on the Cloud Foundation product. What’s the idea behind that? Is this at all an acknowledgement of the struggles that customers are having building private clouds?

Making private clouds easy and it’s that simple. People say: Boy, cloud is easy. Well, cloud is easy if you do easy things but if you want to now start setting up complex networks, security domains, connect old apps to new apps, those are not easy. What VMware Cloud Foundation is doing is bringing together all those pieces to make it easy for day one as well as for day two; lifecycle management of the stack, patch, upgrade, etc. That VMware Cloud Foundation technology will be represented in two ways. It will be available as an on premise product.

As I mentioned before, Michael will say that he’s making that available as part of the Dell/EMC family of rack products. It’s also the foundation of IBM and they’re delivering their service offering based on the SDDC stack. IBM will be standing up and saying: We’re taking the VMware Cloud Foundation as a core part of how we’re building the VMware SDDC offering from IBM SoftLayer and the broad set of vCloud Air Network partners. We expect many of them to take that same technology to make the full as-a-service offering easy for customers to be able to consume.

If you’re an IT guy and your complex applications are running in a VMware environment, now you can easily have all of the same services, networking, security, management, etc., and I’m doing it on somebody else’s data center, somebody else’s hardware. Wow! That’s a powerful new set of flexible choices that they’re offering. If I bring it back to the beginning of the discussion, that’s what we mean by cloud freedom and control. It might be private, might be public. I have the freedom and the same controlled management security mechanisms that I know and love from VMware for the last decade plus.

SOFTWARE-DEFINED DATA CENTERS

JOHN GALLANT: Pat, you’ve talked with us for several years now about the concept of the software-defined data center. How far away are we from that being a reality?

I’d say minus two years. I’m being a little bit flip but I’ll describe the journey of the SDDC. We declared the SDDC almost exactly five years ago. It’s when Raghu Raghuram (VMware EVP and GM, SDDC Division) and Steve Herrod (formerly VMware CTO and SVP of Research and Development, now managing director at General Catalyst) stood up and described the concept of the software-defined data center and really laid out that vision. We then spent three years putting the pieces together and now we’re about two years along and people are instantiating full SDDC environments.

I’ll have a customer montage [at VMworld] that will show a handful of customers who are now operating SDDC at scale. I was just reading one last night where they were describing the hundreds of man-years of savings, the cost savings, which in their mind was half of what it was costing them before; the reduction in patch, reduction in incidence tickets, etc., that are resulting because of the full deployment of SDDC. As I said, we’ll have those customers in the video montage. People saying: It’s real. I’m doing it and it is delivering great results for me.

JG: I just want to make sure that we understand that, the minus-two-year thing. You feel at this point that VMware has delivered to customers everything they need to have a true software-defined data center covering compute, storage, network?

Unequivocal yes. I now have hundreds of customers that are running that at scale and we’ll have a handful of reference customers, relevant brands who are describing their use of exactly that. Let’s build that timeline a little bit. vSphere: Got it. NSX. We started shipping NSX approximately three years ago. It took a while to get it really robust and scalable, but now we’re at 1,700-plus customers running who have bought it, hundreds of customers who are now in production. VSAN, another key ingredient, we now have just in the last quarter 5,000-plus customers running VSAN. VRealize automation and operation, thousands of customers running it. If we take the Venn diagram of all of those pieces together, we clearly have hundreds of customers now who are running the full SDDC stack, all of the elements that I described in production, at scale.

JG: I’ll take a different angle on that. If you’re minus two years into it, how far away are your competitors from delivering on that full SDDC vision?

Well, not speaking on behalf of my competitors but none of them is there. If you say you have to do those four things at scale in production, being able to automate and operate at the management plane, virtualize the network, being able to have fully software-driven storage for enterprise-grade workloads and, of course, the compute virtualization, no one else can deliver all those components.

JG: How much lead time do you think you have in the SDDC market?

NSX is years ahead of anybody else in the marketplace and I know of no plans from anyone that gets them within years of NSX. We have leadership positions in all four and NSX, VSAN, management, you add up those components, every one of those is at least a year or more ahead of its competition. I’ll argue NSX is a couple years ahead of anybody else in the marketplace.

Again, it’s not just about “the ingredients” but now we’ve fully brought them together with automation, lifecycle management. That’s what the Cloud Foundation is about. And we’re also delivering them as a service. That’s what the IBM and the vCAN announcement is about, where people can consume those in as-a-service models on other people’s hardware, other people’s data centers and yet have all of the robustness, security, networking complexity, etc., addressed. This is a pretty powerful combination.

BB: I wanted to drill down on the software-defined networking piece of that and the NSX product. From your vantage point, where would you say we are in terms of adoption of that?

If I go back to the facts here, we said 1,700-plus customers, hundreds of customers now in production, deployment, year on year. We’re up 400% since the beginning of last year in terms of deployment. We’re clearly now, in Geoffrey Moore terms, in the tornado. Customer adoption is vibrant and accelerating, use cases are expanding. We have customers at scale that are running thousands of virtual machines in a fully virtual network environment. We’ve got multiple use cases across industries, across geographies. At the same time, we’ve got a lot of stuff to do yet.

As I described NSX, we have just barely done the first vMotion if I were to pair it in vSphere terms. This is a rich, rich domain for innovation for years to come and obviously, it’s part of the cross-cloud services. We’re now describing the next phase of the NSX evolution because we’re presenting it as a service. We’re allowing it to operate across clouds. We’re enabling a common network environment that fully embraces the rapid growth of the public clouds like Amazon, Azure and yet combining it with the private cloud and traditional networking environments.

This is absolutely game changing and unique. As thrilled as I am about being in the tornado, the numbers are showing to me what the next decade portends here is even more powerful. We’re seeing the ecosystem reflect that, with more and more ecosystem partnerships. Obviously, Palo Alto has been a great partner and just this morning I was reading Juniper announced their increased support for NSX. Obviously, Cisco has become more favorable, acknowledged the role and importance of NSX to their customers. Several of the SDDC announcements that we’ll have at VMworld specifically are Cisco-plus-NSX customers so it really is gaining traction in multiple dimensions.

BB: You mentioned the news at SDN World around using NSX as a multi-cloud platform. What are the advantages of customers using a software-defined networking platform as a hybrid cloud management tool?

Right now, how are people accessing their public cloud resources? They’re simply setting up some kind of gateway to interface between their private environments and public environments, and there’s very little connectivity between those. What we are enabling with NSX is literally that my microsegment environment can now stretch across any dimension. I could, in fact, set up a virtual overlay network at the L2, L3 level where my IP domain is consistent across my public/private cloud environment.

I can move things around as I choose to across my public cloud environment or from public to private, be firewalled across those environments in a common, software-driven, scalable and resilient fashion and never change any aspect of my development environment that I’m taking advantage of today, which may have private cloud as well as public elements. That’s absolutely game changing. As we’ve engaged with customers about that, it’s like Einstein walking in and describing E equals mc2. It’s like — Aha. It just changes their perspective of what’s now possible.

CISCO VS. VMWARE

BB: I wanted to ask you about the Cisco and VMware relationship. You mentioned Cisco and the integrations within NSX. Do you view Cisco as a competitor or a partner at this point?

They’re clearly in the coopetition phase where they have the ACI product that they position in the marketplace covering some of the NSX use cases and we’ve clearly said there are aspects of ACI that we’re never going to do. We’re never going to do automated physical fabric management. That’s not our space and we’re never going to do that better than Cisco or the networking vendor would do. There are clearly some places where they would say ACI can do some of the things NSX is doing. But the vast majority of use cases sit above that layer and that’s where we’re finding the great resonance and value to a very broad and growing set of NSX customers.

It’s things like distributed firewalls, application agility, cross-cloud management and connectivity, being able to rebuild a DR [disaster recovery] architecture or a DMZ, taking advantage of this software-driven networking approach. Those are things that are just game changing and absolutely not overlapping with anything that Cisco is doing. They wouldn’t acknowledge the product if they could deliver their own but they’re seeing these use cases from a growing set of their customers. There are these complementary cases and our customers are asking us to support that.

DELL/EMC MERGER

JG: Pat, you mentioned that Michael Dell will be at the event and as that Dell/EMC merger approaches finalization, we want readers to understand exactly what that means for VMware and for them as customers. What does it mean?

Michael is going to stand on stage and he’s going to say: I love the vibrant ecosystem of VMware and I support it. I’m going to grow my business with VMware and I’m committed to go do that with Pat and the VMware team but I hope all of you grow faster than I do. I’m going to continue to support them working with and partnering with this rich ecosystem of vendors, some of which they compete with, some of which they partner with as well. It continues to be reinforcing the independence of VMware, the ecosystem of VMware and the acceleration of VMware. We’ll have, as I said, the VMware Cloud Foundation, they’ll stand up and commit to the support of that and the EMC/Dell product line going forward as one example of that acceleration.

JG: Can you share some other thoughts on the acceleration angle of that?

One that we’ve already talked about is clearly the VxRail product line. [Ed. Note: VxRail is hyperconverged infrastructure from EMC’s VCE division.] They have a tremendous channel and opportunity so there’s clear excitement around that case. In the broader sense, we’re building out opportunities where their strength in the marketplace in different segments will increasingly take advantage of the VMware technologies. Some of that will be geographic. They are substantially stronger in China than we are. They will help us get to Tier 3, Tier 4 cities more rapidly. Others will be vertical segments. They’re very strong in the state, local and education marketplaces. They have a very large PC business, as you know. One of the use cases for AirWatch is [enterprise mobility management of] Windows 10 upgrades and environments, a much more cost-effective, efficient way to manage Windows 10 devices, a great opportunity for us with the mammoth Dell channels and PC customers they have. Those are a few examples but every one of these has specific business case, sales motion, etc., that we’re developing with them so we’re quite excited about it.

JG: At this point, you would say a customer shouldn’t expect any changes in how they work with VMware or how they buy from VMware?

Correct. We will continue to support them, work with them as we have in the past. Some may choose to opt into a greater partnership with Dell, EMC and VMware. I’ve had customers that are big Dell customers that have said: Wow, I can start getting more of the VMware technologies pre-integrated with Dell solutions. That’s pretty good. I like that.

JG: I just really want to emphasize this one because openness has been such a big part of your success. You’re assuring customers that that openness and working across the industry is not going to change and that this deal does not unduly favor Dell/EMC.

Absolutely. That’s part of the reason for Michael to be on stage is to say that first-hand. I can say it, but Michael saying it carries a different weight. Also we have, for instance, our Partner Exchange Conference. The day before VMworld, he’s going to stand up in front of thousands of our partners and say the same thing. Some of those are shared partners but those [companies] he competes with are sitting in that audience and will have private working sessions for him to address them directly as well. We’re addressing that head-on with all of those who would be potentially most implicated by that.

BB: What has been the impact of the Dell/EMC deal on VMware in the past year? Has it changed customer perceptions of you? Has it affected company morale at all?

In October, when the deal was announced, everybody was surprised, shocked. I mean it was a big, big deal and those questions were internal as well as with customers and partners; the biggest deal in IT history. As I described it, everybody had the deer in the headlights response: What? Remember, October whatever it was announced, I’ll say there were 30 to 45 days of questions. What does this mean? By the time people heard it for the fourth or fifth time, OK, it’s exactly the same. They get it. And by Thanksgiving, everybody settled down and got back to work.

As we’ve seen over that period of time we had a very solid Q4, we had great performance in Q1 and Q2. The stocks recovered from that original shock. So what was, I’ll say, shock and concern has emerged into optimism and confidence for this independence, the support for the ecosystem, the acceleration of our business. We’re now into a period where people are saying let’s get the deal done because we’re ready to get on with this new phase of the industry. Also, it isn’t just that it builds optimism but also it builds confidence.

For VMware now, our future is assured. There are many people that are going to be merged, changed and [deal with] private equities and all this other stuff in a period of dramatic disruption. We are confident about the position, the stature, the role, the growth, the balance sheet, the structure of the company for the long term. We also turn inward to the employees to say we have the confidence that our product agenda, this disruptive, innovated culture that we have is entirely reaffirmed in this new structure. The culture of the company and the values that we have in the company are not changing in this. In fact, we’re doubling down and driving that aspect of who we are and what we are broadly. The deal is not closed yet, it’s in sight. As a result, the light is at the end of the tunnel. We’ve worked through a lot of those things and people are ready to really go forward aggressively. People are going to come out of VMworld with a bit more bounce in their step, optimism and confidence for the future.

JG: If I’m a company that has really committed to the VMware strategy and consider you a strategic partner, what’s the one thing that I should be most excited about as a result of that Dell/EMC deal?

I think when you look at that, you’ll say: Wow, my partner, VMware, now has turbochargers put on their back. If I was confident in them before, their ability to innovate, scale, deliver globally, support me, commit my next architecture and platform to them, if I was already making that decision on their products, I can now do it with more confidence and expectation that they’re going to be able to deliver more for me in the future.

For every CIO, this is a very unnerving period in their career. They’re owning less, they’re controlling less of the infrastructure and security demands are becoming greater. They have both the opportunity and the essential role to be the source of transforming the business in this digital business environment as never before and they have to make hard choices with regard to both their technology and partners to accomplish that bigger mission and agenda that they have. Being able to look at a key technology partner like VMware with more confidence, that’s a big deal.

IBM DEAL & BEYOND

BB: Pat, I wanted to ask you about another important deal, the partnership with IBM that you announced. What expectations do you have for the VMware/IBM partnership?

Let me give you a brief customer story [about] a big healthcare company. I’m meeting with the CTO. It’s about two weeks before the February announcement. We’re sitting in his office and we’re having a wide-ranging discussion on cloud, what they’re doing with some of the public clouds, how they’re trying to run their own private cloud. We covered everybody. We talked about Amazon, Azure, vCloud Air, IBM SoftLayer, etc. I looked across the table to the CTO and I said: Let me tell you a secret. And I described the IBM deal to him and what we were going to do in the partnership with IBM and I got about 90 seconds into the description and he throws his arms in the air and he says: Touchdown.

To the core enterprise customer, this is a winning deal because they have maybe IBM hosting relationships, GTS [IBM Global Technology Services], they have big VMware footprints. They want to have increasing choice flexibility, maybe running fewer data centers themselves. They need it done with enterprise grade agreements, terms, conditions, all of those types of things, support and so on because this is the core of the core. Bringing together a world-class global supplier like IBM with the highly penetrated, deeply virtualized stack of VMware is simply a winning combination for the enterprise customer. We’re going to have customers on stage at VMworld who are attributing that.

We have 500-plus customers who have committed to the product and platform at this point, an expanding pipeline of opportunities together. This really is a very good alignment of partners. IBM will be there in force at VMworld and they’ll be singing the benefits of this partnership to their customers and their large reach into the marketplace. As I mentioned before, they’re going to stand up VMware Cloud Foundation. They’re going to offer it as a service and really say to all the other vCAN [vCloud Air Network] partners and the other VMware partners: This is a powerful offering. You should do it too.

JG: You’ve got some big announcements coming up at VMworld but what should we be expecting for the coming year? What’s the direction that you’re plotting as leader?

We’re just launching cross-cloud. This is sort of day one. We’re firing the gun. We’ll give the first demonstrations of it and describe it, but we will build that out over the next year, more features and capabilities, bring the v1 product into the marketplace associated with that. Being able to accelerate the VMware Cloud Foundation both on-premise and as a service and you’ll see us have more partnership announcements in that domain over the year. Our container service that we’re announcing, the VMware Integrated Containers. You will see us build that out as we go through the year.

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As I described it in the last earnings call, my rocket ship products like NSX and VSAN, we really see that both of them are sitting in this tornado phase of adoption and we’ll just be building out more features and capabilities and acceleration of them in the marketplace. They are foundational to delivering pieces that I described before. They are both products as well as critical elements of these larger platforms across cloud services that we described.

BB: Is VMware still committed to the public cloud? I know there were some changes to that strategy over the last year.

As we think about cloud, we’ll say private cloud. Number one, help people run their own private cloud, extend the private cloud into the public cloud. That’s vCloud Air as well as the vCloud Air Network and for that, we continue to operate and we’re actually continuing to do quite well against our business case for the vCloud Air proper, which is very much focused on a handful of use cases and really the petri dish for the vCloud Air Network. Everything we want the network to do we’re first doing it in our environment and then scaling into these 4,000-plus vCloud Air Network partners.

Part three of the cloud is embrace any cloud. That’s really where the cross-cloud services come in, that we’re saying: Oh, you’re running a piece of the workload on Azure? Great. We’re going to make that better. We’re going to help you manage it, secure it, network as well. It really is a very comprehensive view because every IT shop has multiple clouds. They’ve got traditional IT, they’ve got their private clouds, they have their unique services that they’re running on VMware that they’re going to run in somebody else’s data centers, they have new apps that they’ve built on one of the public clouds.

These three business strategies, private cloud, SDDC and the public cloud and cross-cloud, taking those together are unique but connected and they reinforce each other to deliver the full power of cloud to the IT customer of VMware.