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.
+ ALSO ON NETWORK WORLD Should EMC sell off 80% stake in VMware? +
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.
JG:I wanted to dig in a little bit more on this competitive situation. One of the things that we've seen in the public cloud market is really brutal price dynamics. As you're making these investments and as customers are moving along this path, how do you navigate the very different pricing environments compared to the standard enterprise software pricing that we've all been accustomed to?
VMware CEO Pat Gelsinger
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.