VMware CEO talks software-defined data centers, OpenStack and dueling Amazon

At the helm for a year now, Pat Gelsinger says his company is well positioned

As a top executive at Intel and EMC, Pat Gelsinger helped build the data centers of today. Now, as CEO of VMware, he’s promising to deliver the data centers of tomorrow. In this installment of the IDG Enterprise CEO Interview Series, Gelsinger spoke with Chief Content Officer John Gallant and Network World Senior Writer Brandon Butler about what he’s accomplished one year into his tenure, and why the company is uniquely positioned to deliver on the vision of software-defined data centers. Gelsinger detailed the company’s plans for its upcoming infrastructure-as-a-service offerings and how it will out-duel early leader Amazon in that market. He also discussed VMware’s plans to simplify mobility and explained how, rather than threatening the company, OpenStack is widening VMware’s market. (Oh, one other thing about OpenStack: He doesn’t see it gaining traction in the enterprise.) Gelsinger also shared thoughts on VMware’s competitors and discussed how he’ll work with former VMware CEO Paul Maritz’s new Pivotal spin off.

John Gallant:     What did you set out to change at the company and what have you accomplished so far?

Pat Gelsinger:    Coming into the company, a number of things were obvious.  One was this choreographed plan of the formation of Pivotal and moving the assets from EMC together to do that. I came in here, stepped in to take over as the leader.  That freed up Paul [Maritz] to go develop the Pivotal plan, and then we executed on that plan.  April 1st was the formal launch of it.  But also it was clear that VMware, as we moved those assets out, we needed to simultaneously clarify what it was that we were going to do going forward. We had the core virtualization platform that has been extraordinary for the compute [layer], but we had to lay out very clearly what our next vision was going to be as a company.  And we did that, our three priorities for the company, and then got everything aligned against those priorities.  We restructured the company, we sold off assets.  And really our Q2 earnings call, to me, was sort of the marker: OK, we’re done with all that stuff.  We’ve clarified the earnings, we clarified what’s in and what’s out, where we’re going for the future, and obviously, the good financial numbers helped us sort of snap the line in saying: OK, we’re ready for up-and-to-the-right for the next decade like we did for the last.


JG:         What does the coming year hold for the company and what are some of the milestones we should expect along the way?

PG:         Well, we’ve laid out a bold agenda. Let’s just briefly walk through the three elements.  Obviously, for software-defined data center, take what we’ve done in compute and now execute on management, storage, network and security, and deliver that whole capability as a suite of integrated solutions, our vCloud suite offering. Really virtualize the data center.  Number two is do that both on-premise and in the cloud.  That’s what our hybrid service is about, launching ourselves into the infrastructure-as-a-service business, but then uniquely binding on- and off-premise, given our core position in the enterprise workloads, and being able to combine that in the cloud. We think that really uniquely allows us to execute on the hybrid value proposition.  The third, of course, is the end-user computing, which we have a good position for virtual desktop.  But the world is moving to mobile. We say that the entire computing landscape has moved from client/server to mobile cloud, and we will be uniquely positioned as the infrastructure provider for mobile and for hybrid cloud on and off-premise. Those three things, to us, form the triangle of complete strategy that allows us to be the infrastructure provider for enterprise. That allows them to both build that new infrastructure, but also we can help them save money in their old, if they’re transforming and building efficiencies in their old environment.  That strategy has been laid out.  We’ve communicated it clearly internally and externally, and now we’ve just got to execute like crazy on making it happen.

JG:         Let me explore one aspect of that in more depth, because I think it’s critical for people to understand.  Talk about the software-defined data center [SDDC].  What exactly do you mean by that?  What are the components of it and where do you stand in delivering on that promise?

PG:         The most advanced [aspect of] our portfolio obviously is compute and we just keep that going. There are still workloads that aren’t virtualized.  We’re not virtualizing Hadoop and big data yet, there are pieces of business-critical that are [not virtualized.] We just keep cranking on that.  That’s obviously the most mature leg of our offerings.  The second most mature leg is management.  I was delighted by some of the recent market analysts who said in the cloud-management space we are the largest provider, and we are the fastest growing provider of management solutions.  There, it really is moving from management to automation, and allowing the policy-driven, self-service portals, big data telemetry aspects in management. That business is well underway for us and we’re quite excited with the business results we’ve seen the last couple of quarters. 

The two nascent areas are networking and storage. With networking I include the whole net stack, everything associated with infrastructure, security, all the Layer 4-7 services.  That’s where [we did] the Nicira acquisition, software-defined networking, establishing what we’ve called NSX.  The network security architecture for us is enormous.  That’s still very early days, and you’ll be hearing a lot more about that at VMworld.  The fourth leg of this is storage and delivering the virtual storage architecture.  Again, you’ll be hearing a lot more about that at VMworld as well.  Those four taken together really execute on the complete software-defined data center -- compute, network and security functions, storage, all being delivered through this layer of automation.  And that, to us, is the Software-Defined Data Center.

BB:         So Pat, you mentioned the infrastructure-as-a-service offering that’s coming out.  Tell our readers how this is going to be strategically different from what Amazon and other providers in the market offer now.  What advantages are you going to offer?

PG:         The biggest advantage by far, and the unique differentiator, is the compatibility of the VMware on-premise offerings with the off-premise vCloud Hybrid Service. That’s really what we mean by hybrid. Three or four use cases emphasize that.  Test and dev.  A lot of IT budget is spent on test and dev. They can go do that on Amazon, but they then can’t bring it back and run it internally.  You’re locked into the proprietary Amazon interfaces that you can’t run on-premise.  So it doesn’t really solve your test and dev problem.  Another would be burst.  They want to be able to flexibly run things on-premise, but when month-end or quarter-end or a particular event happens they love to dynamically move things out, but then dynamically move them back.  So this idea of burst capacity.  Another example might be DR [disaster recovery] DR usually doesn’t work well because it’s not operational inside of an IT shop -- I didn’t patch this, I didn’t upgrade that and now when the natural disaster happens I can’t really effectively use DR.  But if you’re going to an operational environment like hybrid cloud, I can now make that my DR site.  Those would be some examples that are unique capabilities where they would want this hybrid, this ability to flexibly, compatibly move across those environments. That’s the space where we think VMware is just uniquely positioned. Then over time we expect true hybrid applications to be developed as well.  Some things can be resident in the cloud, other things should be resident on-premise. Those might be driven by regulatory effects, privacy requirements, unique governance, SLAs, etc.  But number one, and we’re just getting enormous resonance from our customers, is hybrid.

[MORE: Why VMware’s hybrid cloud announcement could be a big deal]

The second and third aspects of it would be that [this] is based on our mission-critical SLAs, certified everywhere.  This is a government cloud that’s suitable for enterprise customers.  It has the SLAs, it has the validations, the certifications, etc., for the enterprise use cases. Enterprise customers aren’t finding that from any of the public cloud offerings today.  Also, as you extend further into enterprise use cases, what they want to be able to do is have one management domain, one support call, people who know how to support enterprise customers.  That just takes a long time to build up. We’re 15 years almost into building that enterprise relationship support. Taken all together, this is getting great resonance from customers.  Our Early Access Program that we’ve been in now since early June has been dramatically oversubscribed and you’ll be hearing a lot more about that at VMworld.

BB:         Can you share more about how this is going to be rolled out or what the pricing is going to look like for the vCloud Hybrid compared to others in the market?

PG:         Pricing is available. You can go look at our pricing today. [ED NOTE: VMware vCloud Hybrid Service pricing page] Generally, our pricing policy is to say it’s a value service.  We believe that the value that we’re bringing, because of compatibility, governance, SLAs, etc., that we truly can have a premium over just commodity services in the marketplace.  That said, we are also aggressively using SDDC technologies as part of the offering, which allows us to be very cost competitive as well.  We’re not chasing the race to the bottom, as some of the other cloud vendors believe they have to.  We think here it’s much more about enterprise value. But we do know that customers will look at the Amazon rate cards, and we believe we have to be competitive with them. We think we’ve hit a great compromise that really is highly cost effective for customers.

BB:   How do you see this playing out for VMware?  How much of VMware’s business is going to be in the cloud versus on-premise, maybe in a year, five years from now?

PG:         We’ve not made any formal statements there of size, expectations, etc.  A few generic statements would be:  We’re investing in this to be big.  We believe there are aspects of scale that are necessary to be competitive here, would be point one.  Another aspect that - and I probably should have mentioned it in the earlier question [about what] differentiates us - is the fact that we, as a software provider, can readily embrace partners in building and delivering the vCloud Hybrid Service. We’ve called these franchise partners, and you’ll see us make franchise announcements in the future, where we will go to a service provider, a systems integrator, an outsourcer, and they will become a franchise partner of the vCloud Hybrid Service, which gives us another point of leverage.  If I’m talking to a financial analyst, they’ll probe on capex leverage, but from an industry analyst perspective we think it’s much more about vertical markets, geographic reach, leveraging a unique position across the globe that allows us to be, again, highly differentiated as we go into Asian markets, European markets, etc., that have different regulatory frameworks, different governance, availability of services. We get to build on their infrastructure in a capex-like way and really use their brains as well, in partnership with ours.

JG:         We talked about Amazon, but who do you view as your top competitors?  Who do you worry most about when you look across the competitive landscape?  Is there someone else out there that seems to share that same vision of the software-defined data center?

PG:         When we think about the software-defined data center and the on-premise view of that, the biggest competitor was, is, and - I expect - will continue to be Microsoft. As you know, they make lots of money and they have no problem being persistent. When you go to the hybrid cloud, we think it ends up being primarily around the big cloud providers that have significant intellectual property, and the ones that we think are going to be of that character over time would be Amazon, Microsoft, Google and ourselves.  Of those, the two that uniquely, I think, can deliver on the hybrid value proposition would be Microsoft and ourselves.  Obviously, the very large market share lead we have in enterprise on-premise workloads, we think gives us a substantial advantage versus Microsoft or anybody else.  Then in the end-user space, obviously, Citrix is our key competitor there.  We’re happy with our progress vis-a-vis theirs over the last couple of quarters.

JG:         That’s a pretty diverse set of companies with a pretty diverse set of resources from a Citrix to a Microsoft or an Amazon.  If you’re looking a year out or two years out, who do you think really begins to dominate the landscape here?

1 2 3 Page 1
Page 1 of 3
The 10 most powerful companies in enterprise networking 2022