VMware’s Casado talks about evolving SDN use cases, including a prominent role for security

Says Cisco anointing VMware as a top competitor has helped his Networking and Security business unit reach $100m in just nine months.

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Do you have to call on different people, or is this still a network sale?

That’s a great question. Originally, in the days of Nicira, we’d go to the networking guys and it was so hard. It was like we were fighting against the Cisco sales force. It was a very difficult, long sales cycles, very technical. With VMware the discussion is very different. We talk to virtual admins who have shown enormous value to their company and are used to working with us and we say, “We touch everyone you’ve impacted today in software already. We have for ten years and things are great. Let us go ahead now and tackle some networking problems.”

So we’re entering on a much more friendly foot through the virtual admin, and then have the discussion with the security guys and the network guys, but normally the procurement goes through the virtual admin guys.

Given that, who do you most often stack up against competition wise?

Through some stroke of serendipity we have become the number one competitor to Cisco. John Chambers said it on an earnings call, and we’ve heard this many times. I don’t know how these things happen, and I actually don’t believe it’s true. We’ll never sell physical gear, ever. Our technologies are very complementary. We’d love to cooperate with ACI. I totally don’t see us as competitive. But somehow there’s this perception that we’re competitive, and the number one competitor at that.

Again, I’ll be very clear with you. I don’t believe we’re competitive. But the result has been we’re now part of every network procurement discussion. Two years ago, if you had a guy at some bank buying network kit, which companies would he call? Cisco and HP and Extreme or Juniper or whatever. Today they have to call us because of this positioning, just for basic procurement due diligence. And this is a conversation we would never been a part of a year ago. Never.

But we’ve been brought into every one of these discussions and that’s 100% upside for us. Let’s say I convert just 2% of those. That’s a billion dollar business. This is unbelievably serendipitous. Basically it’s created an enormous sourcing funnel for us. A year ago it was about going out and hunting and finding leads, and now it’s just qualify, qualify, qualify, because we’ve got this huge pipeline of people.

Are most of the sales still coming from the VMware customer base?

No. We get it from all over. We sell to a lot of non-VMware accounts. Those sales deals are more difficult for us because we don’t have an established relationship, we don’t have an established procurement structure, we’re not the incumbent, but we convert them. It’s just a much more difficult motion.

How many customers do you have today?

We’ve quoted the number as being over a 150 paying customers. Medtronic is one we just announced recently, which is a Midwest manufacturing company. USDA, which is federal. We’ve got a number of financial customers, including four of the five top banks. We’ve got beverage companies, telcos, service providers, SaaS providers. It’s pretty much all the verticals.

And why not? I mean, to see the future all we have to do is look under the covers of existing data centers. One of the most significant things in networking that nobody talks about is, if you look at modern third generation data centers, which are typified by the mega data centers run by the Yahoos and Googles and Facebooks, but not just them, anybody that’s building a new data center, and you look at the network architectures, they all look the same. They’re all generic Layer 3 fabrics. They do almost nothing. They just pass packets, and all the functionally is in software. These are the most scalable, most successful businesses on the planet. So in many ways Darwin has already spoken.

But those folks have the luxury of having a very small mix of applications, right?

Yeah. And they have control so they can rewrite security and performance as part of the application, and most people don’t have that luxury. But the people that do have proven that is a better way to build a data center. The CapEx is lower, the OpEx is lower, the innovation speeds are much faster. There’s just no argument there. This happened organically. And if you look, the traditional vendors don’t have the same representation in these data centers as they do in the traditional enterprise, and that’s the future.

Large customers can do the same thing. There’s no reason for me to buy networking kit with all the bells and whistles from the top vendor and pay top dollar for that if all I need to do is pass packets. I can go to the same vendor and buy a lower dollar SKU that does less, or I can go to another vendor and do price comparison between the two. So this pretty much unifies the acquisition discussion across all vendors. All I need is the cheapest L3.

So you expect to see more folks reaching for white box alternatives to the name brands?

White box is somewhat of a different discussion. The cheapest we can ever get is white box, so it’s sexy to talk about that, but there’s a lot of complicated logistics in procurement. ODMs aren’t really set up for onesies, twosies and those are still very niche and very rare.

But look at the announcements from like Cisco and Arista over the last two years. Almost all of them are around price.  Which, to me, is a sign of a healthy market. And I don’t think there’s any need to predict who will win. Let’s see what happens. Here’s the one prediction I will make: Networks are going to be much simpler and cheaper in the future.

Awfully hard to lever out that installed base.

The power of incumbency is unbelievable. And it’s not just that people have invested money in something. It’s the channel which is used to carrying the products and has those relationships. It’s the people that are trained on those products. There’s just so much there. It’s amazing to me we’ve made as much progress as we have. But our pace is accelerating.

What’s up next on the security front. Do you just keep adding services?

There’s pretty much all of networking and security to redo in ways that give you global views and let you apply big data analytics and take advantage of all this context. There’s so much stuff to do. But the real job now is focusing on scaling the business. That’s why I’m in this role. This is profoundly non-technical stuff, actually.

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