VMware CEO hits on network virtualization, the Cisco feud and the EMC Federation's future

Pat Gelsinger heads into VMworld 2015 with the unified hybrid cloud on his mind

It’s an interesting time to be the CEO of VMware.

The company is one of the pioneers of the modern data center with its virtualization management software, which still holds a large market share. Now, it’s trying to convince customers to virtualize their storage and networking, too. What's more, VMware is building up its public cloud in an effort to square off against giants like Amazon Web Services and Microsoft Azure,  and to help customers build out private clouds, it’s also offering converged infrastructure.

At the same time, rumors continue to swirl about what will happen to VMware as part of a possible shakeup to the EMC Federation.

As part of our ongoing IDG Enterprise CEO Interview Series, Chief Content Officer of IDG U.S. Media John Gallant and Network World Senior Editor Brandon Butler sat down with VMware CEO Pat Gelsinger ahead of the company’s annual trade show, VMworld 2015, to discuss all of these issues and more.

Brandon Butler (BB): What is the big message you’re hoping to get across at this year’s VMworld?

Pat Gelsinger (PG): Obviously, we’ve got lots of things that we’re talking about but the highest level is this idea of the unified hybrid cloud platform. It’s a continuation of what we announced earlier in the year with One Cloud - any app, any device. We rolled that out with a big vSphere 6 launch at the beginning of the year, but there’s lots of stuff coming underneath that. New services, new product capabilities, new cloud hosted offerings, new os offerings and networking features. One of my personal favorites is the hybrid networking that I think is huge and differentiated. But there are also many refreshes: a new DR [disaster recovery] service; new object storage services; new versions of NSX; the next generation of OpenStack; just a whole bunch of things to pay that off.

The second biggest message is probably the Cloud-Native announcements that we’ll be rolling out, which are very much about how we build a robust, secure, managed, scalable, lightweight stack for applications that are being solely developed for the cloud, largely in a container-like way. We’ll be doing a critical set of announcements and rollouts in that area as well. Of course we’ll pepper it with a zillion partner announcements, two zillion customer endorsements and many other things that reinforce that broader industry message. Then the meat and potatoes always is hands-on labs, getting certifications and taking our faithful customers to the next level.

John Gallant (JG): Among all that news, what do you see as the single most critical announcement from VMware?

PG: Unified hybrid cloud. The idea of that is so profound. Every single customer has two questions that come up in every single meeting: Tell me how to get to the cloud and how do I deal with security? What we’re describing with unified hybrid cloud is an architected, capable, proven solution that addresses those two needs. Everyone says: I need to make cloud part of my future but I’ve got this enterprise stuff, these 20-year investments in applications, I’ve got cool things going on over here. How do I bring those together? I can’t just forklift and move to the cloud for those things. It doesn’t meet my regulatory requirements. Bringing that together, that’s what we mean by the unified hybrid cloud - a single architected set of services and capabilities that allow you to run on-premises, off-premises and connect the two together in a complete way that also addresses their governance, regulatory requirements and their security requirements.

JG: Last year when we talked, the public cloud portion of your hybrid cloud strategy was relatively new. How are you measuring the inroads you’re making against the Microsofts and the Amazons of the world?

PG: We have thousands of customers on the platform now, so usage is ramping rapidly. Our partner network is in the thousands and they’re using our platform to host their services using our software, so we’re definitely seeing that uptick in momentum. What really excites me is the substantive enterprise use cases that can’t be done by any other cloud. Some of those that we’ll be talking about at the show are really demonstrating the value that they get from connecting their on and off-premises environments, allowing true hybrid workload ability. I can test and develop in the cloud, I can do production deployments internally, I can connect my private data access to a public cloud infrastructure over hybrid networking, I extend my DR footprint, I’m able to offer VDI deployments in a scalable, automated fashion. These are things that really exercise the difference that we’re having.

JG: Is there a single measurement of success that you think is most critical? Is it the number of developers that are building to your platform? Is it the number of workloads that are moving there, the number of providers or partners?

PG: I’d say it’s enterprise customers. Obviously, when you get an enterprise customer using the platform in a differentiated way, you have a customer for life. For instance, a CIO I was on the phone with just last week said I could not do this with Amazon or Microsoft, they could not solve my business problem that way. Those are the ones that to me are really powerful and that momentum is really starting to reinforce and build on itself. These are enterprise customers, enterprise use cases that are starting to ramp in substantive volume using the platform in a hybrid and, increasingly, in a mission-critical way.

BB: You mentioned you’re going to be announcing some services around disaster recovery and object store. But some of the analysts we’ve spoken with say that Amazon Web Services and Microsoft Azure still seem to be leading the market in terms of breadth and depth of features on the public cloud side. Do you feel you need to gain feature parity with them over time to compete in this cloud market?

PG: Our view of that is VMware must be differentiated and we’re going to do that in hybrid and mission-critical capabilities. It’s not a question of are we ‘jacks-or-better’ with what they’re doing? It’s a question of us doing things that can’t be done by anyone else that are mission-critical, enterprise valuable. We need to have a pretty complete set of offerings that are jacks-or-better as well on the public cloud side. But if they have a particular feature that I don’t have, that’s not going to differentiate a mission-critical enterprise customer who says ‘I can’t do my core business processes on any other platform’. That’s why we’re going to win or lose. I do have to make sure I keep the other aspects of the platform current, but we’ve been able to grow rapidly our customer base, our VM accounts. We’ve been able to do that, and I haven’t had an object store. Truly, I should have had an object store sooner in the marketplace. Now I have one that’s enterprise grade, that meets the enterprise requirements, allows you to be both on and off-premises for enterprise object store. It’s differentiated to meet enterprise needs, but that didn’t deter me from being able to grow the business rapidly over the last year.

BB: Are you seeing any customers switching over from Amazon or Microsoft over to VMware?

PG: Yeah, but in a lot of cases I don’t think it’s going to be a one-cloud world. There are going to be a lot of applications, mobile front ends, other things that people will have on an Amazon or a Microsoft. Some people are going to say that works and when they look at VMware they’ll say - those edge applications, they're fine where they are, I’m not going to port those necessarily. But the core stuff, that’s what we’re out to be highly differentiated around; the stuff that really matters to the business. Perhaps a customer is taking advantage of Office 365. Okay, that’s not mission critical. How are you running the core databases? How are you connecting your data center network with secure, private networking into a set of cloud resources? That matters to how a business is run. That’s the stuff that we’re going to win. Folks will also look at us and say ‘manage all that other stuff as well’. So products like vRealize Automation to us is critical because we do full workload management into heterogeneous clouds. The IT manager can now say ‘You can manage all my workloads? Even onto other clouds?’ Yes. We’re going to be highly differentiated in the stuff that really matters to the core IT operations of the enterprise. Okay, now you’re my strategic partner. That’s what we’re pursuing.

JG: Pat, on the virtual networking front, you have news at the conference and you’ve been very vocal about the importance of NSX in the overall product offering. Why aren’t we further along in enterprise adoption of virtual networks? For all of the industry talk about it, it still seems that for the most part enterprises are not adopting virtual networking.

PG:  At our last earnings call, we said 700+ customers have now adopted virtual networking or NSX from us. Why isn’t that thousands-plus at this point? The thing about virtual networking is that you’re changing the network. That’s like religion in some respects. People who’ve been trained in a certain model of networking, a certain way you do protocol connections, you manage routers, switches, etc., this is a religious conversion to many of those people and the network must operate for businesses today to operate. People don’t make changes there quickly. You have to be able to present them a very compelling set of proof points as well as use cases that are dramatic and impactful to how they run their business. Some of our early customers in the space like eBay have really embraced it; they run eBay and PayPal on NSX. It runs everything that you do, anytime you touch that website, every application, every service, every packet is running through that platform at scale. That is profound. The speed of developing and deploying applications and services is mission-critical for them. Enterprise customers tend to be more conservative, even though there are huge value propositions. That’s why we’ve very much focused on delivering very crisp use cases like microsegmentation that says ‘we can change your security profile in a fundamental and architected way’. You don’t need to change your switching, your routing, many of your operational characteristics but you cannot do this in a physical networking sense. Now we can start putting locks on every door. Every virtual machine or every virtual service can now be protected by an ingress/egress distributed firewall. This is just a radical change in how you build and architect networks. We’re now seeing that acceleration of customer adoption because we’ve done that hard work. NSX will almost be two years in the market come October. Would I like to be further along? Absolutely. But I compare it to where ESX was in year two and we’re actually meaningfully ahead. Here was maybe the most radical product that’s come across the face of data centers in the last 20 years, and my run rate and customer adoption rate is faster than ESX was in its year two. We really believe that this is profound. We are tracking to our business goals, even though we’re ready for that explosive piece of the growth curve. We think the NSX 6.2 announcement really has a lot of refinements of the product, and it will be one that enables that acceleration of market adoption.

JG: What is the software-defined network tipping point? People hate to change the network infrastructure. It’s costly, it’s expensive. What’s the tipping point that will make this a broadly adopted technology?

PG: I think the huge angst that people have around their security challenges. That is the pain point that we can uniquely solve at this point. And now we have enough adoption for proof points and enough of an ecosystem of solutions for that. We have Palo Alto Networks, F5, McAfee, CheckPoint, Arista, Juniper, Brocade - the industry has built out that complete set of integrations. The use cases are there, the proof points of customers doing this at scale are there, the industry support for it is at scale. I think the pieces are now all in place and that tipping point is nigh in front of us.

JGIn May we spoke with [Cisco’s then- CEO] John Chambers. It was the last discussion we had with him before he stepped down and we talked about the SDN market. I want to just read what he said. He said: “It’s unfortunate that VMware threw a hurdle into our EMC relationship because the economic payback from their acquisition of Nicira, it’s been a disaster. It’s not producing any revenue. What did they pay, a billion for a very early stage company? Disaster.” How do you respond to that?

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