On episode 53 of the Six Five Webcast Infrastructure Matters, hosts Steven Dickens and Camberley Bates from The Futurum Group discuss VMware Explore and the latest developments in infrastructure technology.
Their discussion covers:
- Highlights from VMware Explore: An in-depth look at the key announcements and their implications for the tech industry.
- The future of infrastructure technology: Expert insights on where infrastructure tech is headed.
- VMware’s strategic initiatives: A deep dive into VMware’s current projects and future plans.
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Disclaimer: Six Five Webcast Infrastructure Matters is for information and entertainment purposes only. Over the course of this webcast, we may talk about companies that are publicly traded and we may even reference that fact and their equity share price, but please do not take anything that we say as a recommendation about what you should do with your investment dollars. We are not investment advisors, and we ask that you do not treat us as such.
Transcript:
Camberley Bates: Hi. Welcome to Infrastructure Matters number 53. I’m Camberley Bates and your host today, along with one of my favorite compatriots. I’ve got a lot of compatriots, but he’s one of my favorites, Steven Dickens, out of New York. There you go.
Steven Dickens: You’re close to my heart as well. You’re my sister from another mister, Camberley.
Camberley Bates: Right. So, it’s been a while since we’ve been on. I got vacation, and Steven’s just continued to travel like crazy. So, here we go again. And we’re into September now and we’ve been, at the very end of every August, they ruin everybody’s vacation by doing this, is VMware hosts their conference there, which is now known as VMware Explore, which is more syllables than we need to have. But it’s the big conference that’s held in Vegas on VMware. And I did not attend because I had just gotten back. But Steven was certainly there along with our other favorite people at the conference, and there was some pretty big announcements there. And the other piece is that Mr. Hock Tan was up on stage and, I guess, he was quite lively from what I heard from some of the press that was going on about him. So, I’ll turn it over to you since you were live and watching him on stage in the Q&A.
Steven Dickens: Yeah, so I think Hock’s got a particular style. I think it’s very, very engaging. The analyst Q&A, we’re old cynics. Well, I’ll speak for myself there. I’m an old cynic. I do about 25 of these Q&A’s with CEOs. They come on stage. There’s a room of, I think it was… they did the press and the analysts together for the session. That’s unusual. He was completely comfortable. There’s about 50 of us in the room. Hock just gets up, no charts, does a bit of the State of the Union and it’s straight into Q&A. It was gold. It was box office. Hock is so engaging. Just his speech rhythms, the way he talks, his directness to the questions that he got answered, absolute box office. I mean there’s communities, as I say, a bunch of old cynics. They’re tapping away on their laptops, they’re on their phone. They’re partially listening despite its being a CEO typically. Hushed silence, everybody hanging on his word. Everyone.
Camberley Bates: That is so important. I mean, I’ve been through these where it’s like standard talking points and we know what those feel like right now since we’re in the middle of political battle here in the United States. Or we’re doing rote stuff. And you really know when they’re coming in to be straight. And I want to communicate to you, I want to want to give you the straight speech, going on and direct. And so, what did he directly have to say?
Steven Dickens: Well, the strategy is very, very, very clear on what came across from all of the executives. They’ve all been given direct signals straight from Hock, this is the strategy. Broadcom runs a lot flatter organization than Legacy VMware. He communicates directly to his team. He’s in a lot more regular communication. I’ve not seen an organization on message. Message was private cloud, VCF, VMware Cloud Foundation, which we’ll talk about a bit more. Tanzu. Lots of different estimates of how many skews that VMware had. Tens of thousands. I was chatting to one of the execs. He told the entire leadership team, you’ve got 10 skews. You can figure out how you use them, but there’s 10 skews. So, just this radical simplification stripping away of all the bloat from a marketing point of view, from a go-to-market point of view, from a product point of view, from a skews point of view, chatting to one of their execs in one of the breakout sessions around what they’re doing with go-to-market.
There’s been lots of noise around what they’ve done with some of the OEM partners. Blog went out, not a press release. All of the OEM partners, Lenovo, HPE, Dell, all have now signed agreements. Just ruthless execution from the top by Hock of a very simplified message. One of the big announcements was VCF 9, VMware Cloud Foundation 9. We are all writing a big research note as a team, so you’ll see some coverage. Paul and I put out a quick hit while the conference was out, was going ahead. I think this is really just a very opinionated view from Broadcom of, “We believe we’re going to build a private cloud.” That’s a slightly different definition of private cloud is what they mean than the traditional message. But really we are coming after this private cloud space. We feel we’ve got the best virtualization and private cloud stack, and we’re going to be really focused on delivering that.
Less convincing about Tanzu, if I’m being truthful. You touched on that. And in the analyst community, you get the impression it’s a major on VCF and a minor on Tanzu. Tanzu’s still there. An approach around value add services for Tanzu. Paul wrote a really great note on that on our team. But I think what I’m expecting is, we talked about it in one of the sessions, is the same approach that Greg Lotko has been taking. I know you spent some time with Greg recently, the SVP over in the mainframe team, around focusing on value, just continuing to level up, deliver more. We’re starting to see a simplification of the VMware training program. We’re starting to see more focus on deployment.
VMware under Broadcom’s just going to focus on delivering value and ruthless execution, and just bringing more into that. I think this was the first point when we’re past the bad news and we’re into the path of strategic execution for me. So, a fascinating conference. I think if you were a VMware world attendee from five years ago, it would’ve been a very different conference. It was a lot smaller. Don’t know whether they do it past the next year, which is apparently their contractual commitment to the venue. Don’t know, but certainly a lot tighter, a lot more focused.
Camberley Bates: So, there’s a couple of things that I heard coming out of the conference. One, you’re right about the private cloud piece of it. But there was another piece that was running around was talking about… I think Michael Dell had tweeted about it, about how many CIOs are looking at repatriating off the cloud. And they’re not saying they’re taking the entire thing and moving it over. What they’re talking about is we’re looking at cloud applications and where did they reside. And from what I understand, Hock Tan did talk about that, about being people are a little bit overwhelmed or shocked by maybe the cost of the cloud. How do we look at that differently? And then he went on to talk about how their offering, specifically VCF, has a better TCO for the community. Now, I haven’t seen the numbers. And I suspect his TCO analysis has more to do with an operational expense number, as opposed to the hard hardware, software TCO analysis that most often gets the rigor when you’re looking at TCO analysis. Maybe you can comment on that.
Steven Dickens: Yeah, I mean he was pretty explicit about that. I think he said the AWS of private cloud in the keynotes, and that phrase got picked up. I think we’re starting to see a trend in just in general here. And I’ve spoken to two or three vendors about this from various different angles just this last week. Are you going to bring the AI to the data or the data to the AI? That’s the AI lens on this.
Camberley Bates: What do you mean by that is the compute to the data? The AI compute to the AI data.
Steven Dickens: AI. You going to bring Gemini to an Oracle database on prem or are you going… So, that’s the AI lens of this. I think the other lens of this is that I went out to FinOps X in San Diego earlier this year, 80 vendors selling software to make it easier to control your costs on the cloud. So, I look at that and I go, if there is space for 80 software vendors to exist to control costs on the public cloud, public cloud costs must need controlling because there wouldn’t be a market for 80 vendors if there wasn’t. So, make any comment on that as you will. I think we are at a point now where, what are we 18, 19 years into AWS those business? I think you can say two things can be true at the same time. Public cloud can continue to grow and we’re seeing that from the hyperscalers earnings. But you can also see private cloud growing.
The other thing I would say is private cloud isn’t what it was five, six, seven years ago. We’re not talking about taking a bunch of ProLiant DL380’s build it yourself, cable it all together yourself, spend CapEx. Then go and get a scrabby version of OpenStack, and try and build it yourself, and handcraft it, and it be a science project. That’s not what private cloud looks like these days. You can go to GreenLake. You can go to Lenovo, with TrueScale. You can go to Dell with APEX. You can go to these vendors and they can give you a beautiful turnkey experience. You can choose whether you go with OpenShift, whether you go with other platforms, whether there’s a VMware option in there. There’s a beautiful experience now for private cloud that you can pay by the SIP. So, I think that yes, people are realizing public cloud’s not the Nirvana it was once painted to be around cost, and private cloud’s gotten better. Then you layer into that AI, interesting times.
Camberley Bates: Yeah, okay. But I get back to the TCO. And-
Steven Dickens: He was pretty explicit about that.
Camberley Bates: Yeah.
Steven Dickens: He’s very much of the opinion that public cloud is expensive.
Camberley Bates: Well, I agree. Yes. Okay. First of all, I absolutely agree and that’s always been the truth with the public cloud. In fact-
Steven Dickens: I think it’s more nuanced than that.
Camberley Bates: Yes and no because, I mean, I’m talking at least five years ago when we did our first cloud study in my prior company, and we were asking those questions, why cloud first? What does cloud first mean? Why are you doing it that way? And a significant number were not looking at it from a cost basis. They knew it was more costly. Why they were doing it was speed. I can move faster, I could do things faster, I can execute faster. And that has a lot of meaning when you’re doing digital transformation or putting things out there. Now, once you establish a baseline of a system, all of a sudden you get to a standard. SOP, standard operating procedures. And now I’m going to look at, once we get to that space, the next thing you look at is how do I take some of the costs out of the SOP?
So, now I’m going to look at saying, okay, so do I bring it back? The problem with that is what’s the level of effort to bring it back? Do I have the data center to bring it back to? And do I have the staff to bring it back to? You say, okay, so do I stay there or do I what? So, I’m going to go back to what VMware is talking about. And because what they’re saying and what they’re talking about in terms of the TCO is significant in terms of what that cost is. Because if I’m bringing it out of the cloud, I’m going to layer on there as well the data center, the people. All of those things go into that cost. And so, it must be looked at from that basis.
Steven Dickens: I think you’re right. I think the other thing that’s changed when you say data center, I think in a lot of cases, it’s not my data center. It could be an Equinix. It could be a digital realty there. There’s a bunch of different options there. They’ve got better and come up the stack from Colo into more value add services. I mean, you put a VMware, VCF 9 on a GreenLake, APEX, TrueScale box in an Equinix data center, I think it’s pretty hard to spot the differences in where the joins are versus an AWS, and Google, and Microsoft Azure. So, I think private cloud’s improved the narrative around… I think for me, I’ve always been of this opinion, I’m pro-public cloud, I’m pro private cloud, I’m pro mainframe, I’m pro power, I’m pro Unix.
Camberley Bates: You work for the state department or something.
Steven Dickens: All of the above. I just look at it as the right platform for the right job. The analogy I always use when people have heard me use this one for at least a decade now, cars, planes, trains, boats all exist because journeys need to be different. Exactly the same applies for computing where it should sit in your infrastructure. There’s reasons to have mainframes. There’s reason to have public cloud instances. If you look at infrastructure as I’ve got a hammer and everything to nail, you get mixed in my metaphors, then you’re looking at your infrastructure the wrong way.
Camberley Bates: Absolutely. Okay, so anything else that we want to talk about at VCF in terms of the details of the technology itself?
Steven Dickens: I think what I would do is I’d stress that we’re working… about four or five of us, I think, are working on a detailed note. There’s a lot to unpack in the technology. There’s a lot to unpack in the route to market. You’ve got to be thinking about skills. So, we are going to put a pretty heavyweight recommendations document together. There are some alternatives. There was a few vendors out there interested in how Geico is getting into OpenStack and unpacking that. That came out at the event. AT&T filed a lawsuit against Broadcom for some of their tactics. So, I think we’re still in the inflection point for me. I think I start to see a lot of that in the rearview mirror and now just execution around VCF 9.
Camberley Bates: Yeah. And one of the others that I would mention that we saw some announcements on was Nutanix in their AHV technology. Which is definitely making roads, especially in the SME, SMB space.
Steven Dickens: Nutanix, for me, it was interesting. I got into a really good conversation with the guys at Rackspace who obviously have got a huge VMware practice and a huge OpenStack practice. And I asked them about Nutanix and they’re like, those guys have got to have a big year. Given the blood in the water, if they don’t break out this year, they’ll have missed the boat.
Camberley Bates: Well, they’ve done some really good breaking out. And there also was an announcement with Dell and Nutanix this last month. I’m not sure if they’ve covered that in our materials or not. But basically, Dell has re-upped their relationship with them, and their support structure, and their releasing. So, whereas before there was definitely some tension between the VxRail product, which is a VMware-based product, and the Nutanix product, even though they sold the Nutanix product, there was definitely some tension. So, what we’re seeing is that the Nutanix product is getting some more visibility.
And the other big thing that I got brought to it is that they’re now running PowerFlex with the AHV product. What that means is there is a very strong distributed stored box storage system that’s sitting side by side with the AHV, which means that things can scale out big. Where I expect to see that is some of the large institutions that have used PowerFlex environment, which we’re talking thousands of nodes kind of stuff. So, I mean it’s a big, big environment that is going to go into. Maybe we’ll get Keith on here at one time because he’s very familiar with these items and what the challenges are with taking an HCI product that doesn’t have huge scale capability. And this does make a big change there. So, very, very-
Steven Dickens: Dynamic times. Dynamic times. Lots of options.
Camberley Bates: Yeah. So, the second item we were going to talk about is the HPE earnings. So, we’ve had Dell earnings, which were very good onto the server side of the house, and did extremely well on the server and the AI server. And then HPE just came out with their release of talking about where they did… and I know you’ve were doing a write up with them. So, let’s cover them about what we saw. I’ve got some numbers here, if we want to, but it was like a 10% net revenue, 7.7 billion up year over year on the high end of their guidance. So, really definitely. And then they also talked about they added 3,000 unique customers to their GreenLink offering, which is big. Big.
Steven Dickens: Yeah. I mean I think the 10% stood out for me. I mean, HPE is a OEM vendor. Typically, I would put them in the same category as the Dells, the Lenovos, Ciscos, the IBM’s. Double-digit was the thing that stood out for me. Yes, just 10%, not any further into double-digit, but that’s good growth. I think some of the things that stood out for me, AI growth, $1.3 billion in AI revenue. That’s a 39% increase from Q2. HP’s got a weird financial year. I could tell you the story I know of one of the guys’ wives didn’t want it to be around Christmas, so they shifted it to the end of October. The other piece, GreenLake, 39% growth there. And that’s ARR growth. So, that’s crucial.
What’s that now? Up to 1.7 billion around AI and storage subscription. They’ve been early with this move. We were talking about it in the previous segment, this move to private cloud as a service infrastructure. HPE had Discover earlier this year launched what I thought was a really solid approach to templated infrastructure, opinionated infrastructure for AI. They made some announcements that Ron Westfall and I covered earlier this week on a research note talking about one-click deployment of AI services. That’s direction in the right place. So, I think all of this is ahead of them closing the Juniper acquisition, which is going to further supercharge the organization. I’d expect that to close at some point this quarter. Don’t know the exact dates. Obviously not going to get told by HPE of when the exact dates are, but I’d expect at some point this quarter. That’s going to make a really huge difference to where they’re going from a networking point of view.
We’ve already seen Dell buddy up with Cisco as a response. Ron Westfall and I covered that a few weeks back. I think when you partner Aruba and Juniper together, we’re going to have the first true at-scale, end-to-end roadmap competitor with Cisco that I think we’ve ever had. There’s been people in that space, but nobody’s ever had that end-to-end breadth. I think a combination of Aruba and Juniper is going to give them that breadth. So, that’s going to be really interesting. You’ll be working with people like Will Townsend over on the Moor Insights & Strategy side, and Ron Westfall on our side to really see their coverage as that gets announced. But fascinating to see how that plays out. So, I think going into what’s probably going to be the biggest quarter for HPE in the company’s history, maybe since they split with HP, I think it’s going to be… it’s a fantastic set of results. Was there anything that stood out for you?
Camberley Bates: Yeah, there’s a couple of things that stood out to me. One is the movement of the enterprise servers. So, what we’ve been seeing is the huge uptick from AI and server shipments. They saw the enterprise, traditional enterprise server starting to uptick. In fact, they said that that market was a double-digit number as well.
Steven Dickens: ProLiant’s a $10-billion-a-year business for these guys. It’s not-
Camberley Bates: The point is not just ProLiant piece of it. But we had seen the slowdown in this enterprise server market because we were all turning our faces to this thing called AI. And that’s got implications for somebody called Intel, probably some AMD stuff in there as well. But it has got implications there. So, as you go from Gen10 to Gen11, you’re slowing down in there to ProLiant stuff. It’s slowing down the shipments of Intel. So, Intel needs to see that kind of shipment in that side of it because they do for the more or less, they own a lot of that market. As opposed to when you’re shipping on AI, that market is really getting driven by the GPUs.
So, if we’re seeing that piece turn on now, what we’re seeing is where they had paused the market to say, I’m not going to be doing updates into the core of the market. Now what we’re seeing is the core of the enterprise market now is they’re turning their sites over to there. So, I thought that was really strategic. The next thing that was pretty big is that one of the big differentiators they stated was direct liquid cooling. So, they have direct liquid cooling. Lenovo has direct liquid cooling. They’ve cited that saying is there. But they also said it’s not only as a differentiator, but it can be problematic because not everybody is equipped to be able to do that. So, now what we’re looking at is saying, okay, so as we look at the data centers, are the data centers equipped to be able to do for these AI environments, especially the large ones? And so, that environment starts to get built out. So, that’s another space.
Steven Dickens: Well, we were tracking in the right direction from an ESG point of view and data center power, and cooling, and consumption in the right space. And now we’ve started putting these big GPUs that have power hogs into these machines. And it’s going back the wrong way from an ESG point of view. So, it’s going to be interesting. The only thing that stood out for me was just some softness around the edge numbers.
Camberley Bates: Yeah, but the other piece on the storage side, they’ve increased their sales on the GreenLake side, the storage GreenLake, not necessarily on the individual systems themselves. So, their focus is heavily on if you want to buy from us, you buy GreenLake. It’s less so, “Hey, I want to buy a block storage device.” That’s not how they think. What they think is, “You want to buy this GreenLake environment, buy this.”
Steven Dickens: Well, this goes back to the piece I was saying in the previous segment where we’re talking about private cloud has moved on. I think one thing that the public cloud providers have conditioned the market with, if you will, is, “I want to buy infrastructure by the SIP. I want to pay as I use.” And that’s feeding back into the GreenLakes, and the TrueScales, and the APEXes because we’re seeing that. So, it’s not a either or as a service or CapEx model on-prem versus the cloud. It’s a case of, I want OPEX regardless of whether it’s in the private or in the public cloud.
Camberley Bates: Yeah. And to that end, we still haven’t flipped to that section yet. We’re still more CapEx than we are doing it by the drip. So, when you’re talking about that, that’s still significant. Which is why they’re talking so heavily on the ARR side. So, wow, I cannot believe- almost 30 minutes together here, Steven.
Steven Dickens: I know. It just flies by when you’re having fun. I’m spending some time with an Antonio Neri and the executive leadership team I think on the 9th of October. So, looking forward to going deep. They’ve invited me to their equities analyst event. So, I’m really looking to dig in, and really get underneath what HP is doing, and pulling the string on some of these numbers. So, it’s going to be fascinating. Really looking forward to that.
Camberley Bates: Absolutely. Well, thank you very much guys for tuning in. We’ll catch you next time. We’re off and running on some new shows, so we’ll have a lot to talk about in the next couple weeks because we’ve been getting the pre-announcements coming down here. So, thank you very much Steve. And don’t forget to tune in, like, share, all that good stuff that we love you to do. Have a great day.
Author Information
Camberley brings over 25 years of executive experience leading sales and marketing teams at Fortune 500 firms. Before joining The Futurum Group, she led the Evaluator Group, an information technology analyst firm as Managing Director.
Her career has spanned all elements of sales and marketing including a 360-degree view of addressing challenges and delivering solutions was achieved from crossing the boundary of sales and channel engagement with large enterprise vendors and her own 100-person IT services firm.
Camberley has provided Global 250 startups with go-to-market strategies, creating a new market category “MAID” as Vice President of Marketing at COPAN and led a worldwide marketing team including channels as a VP at VERITAS. At GE Access, a $2B distribution company, she served as VP of a new division and succeeded in growing the company from $14 to $500 million and built a successful 100-person IT services firm. Camberley began her career at IBM in sales and management.
She holds a Bachelor of Science in International Business from California State University – Long Beach and executive certificates from Wellesley and Wharton School of Business.
Regarded as a luminary at the intersection of technology and business transformation, Steven Dickens is the Vice President and Practice Leader for Hybrid Cloud, Infrastructure, and Operations at The Futurum Group. With a distinguished track record as a Forbes contributor and a ranking among the Top 10 Analysts by ARInsights, Steven's unique vantage point enables him to chart the nexus between emergent technologies and disruptive innovation, offering unparalleled insights for global enterprises.
Steven's expertise spans a broad spectrum of technologies that drive modern enterprises. Notable among these are open source, hybrid cloud, mission-critical infrastructure, cryptocurrencies, blockchain, and FinTech innovation. His work is foundational in aligning the strategic imperatives of C-suite executives with the practical needs of end users and technology practitioners, serving as a catalyst for optimizing the return on technology investments.
Over the years, Steven has been an integral part of industry behemoths including Broadcom, Hewlett Packard Enterprise (HPE), and IBM. His exceptional ability to pioneer multi-hundred-million-dollar products and to lead global sales teams with revenues in the same echelon has consistently demonstrated his capability for high-impact leadership.
Steven serves as a thought leader in various technology consortiums. He was a founding board member and former Chairperson of the Open Mainframe Project, under the aegis of the Linux Foundation. His role as a Board Advisor continues to shape the advocacy for open source implementations of mainframe technologies.
