In this episode of Infrastructure Matters, hosts Camberley Bates, Steven Dickens and Krista Macomber review the news coming out of Mobile World Congress, Cohesity Gaia and trending from recent earnings releases.
Key topics include:
- A review of the Mobile World Congress in Barcelona covering teleco and broad technology trends such as 5G, edge computing, and private 5G networking.
- Industry leaders such as HPE and Lenovo and a shift towards open-source processes in the network core, with vendors providing server infrastructure and software stacks for edge and private network deployments.
- What is happening with private 5G networks in terms of security concerns and opportunities reflecting on the T-Mobile reporting and other offerings.
- Cohesity’s new AI assistant, Gaia, and its potential to enhance data management and analysis capabilities within secondary data infrastructures.
- What we learn from the financial earnings releases from companies like HPE, NetApp, Dell, and Elastic and the growth of AI-optimized technology plus shifts towards consumption models.
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Disclosure: The Futurum Group is a research and advisory firm that engages or has engaged in research, analysis, and advisory services with many technology companies, including those mentioned in this webcast. The author does not hold any equity positions with any company mentioned in this webcast.
Analysis and opinions expressed herein are specific to the analyst individually and data and other information that might have been provided for validation, not those of The Futurum Group as a whole.
Transcript:
Camberley Bates: All right, folks. It’s Camberley Bates here back with the Infrastructure Matters with my two buddies, Krista Macomber coming out of New Hampshire and the infamous Steve Dickens who just flew in from Europe at the Mobile World Conference, and he’s right now sitting in New York. So welcome, everybody. Good morning.
Steven Dickens: Still not got the memo about the outfits for Friday morning, Camberley. Come on.
Camberley Bates: I loaned my vest to somebody, so they were doing another video. So yes, so here I am. So you can just rag on me.
Steven Dickens: You look fabulous as always.
Camberley Bates: Thank you.
Steven Dickens: But we’ll get you dressed appropriately one of these Friday mornings.
Camberley Bates: Okay, there we go. Okay, topic today, as I just said, Steve just got back from Mobile World Conference. I have no clue how big it was. I’m sure it is absolutely huge. Because my husband says to me the other day, he goes, “Mobile World Conference, that’s a bunch of phones.” And it’s like, “Not anymore.” The world is mobile and it’s everything to do with networking, telco, how we’re communicating, how everything is moving around. I didn’t go because it’s not a huge data show yet, it will be though eventually. But it is a big show in terms of what’s going on in the infrastructure markets as well as the telco.
And then I know Krista’s going to pop in with a few things having to do with a big announcement from Cohesity, which was really, really cool. We were jumping all over that one. And a little bit, we’ll touch on some of the earnings stuff because we haven’t had time to absorb it all. So with that, take it away, Mr. Steve.
Steven Dickens: Fantastic. So yeah, I mean, I’ve been going to Mobile World Congress since the early two thousands when it was at Cannes. Good to see the event bounce back, up 10% year-on-year, getting back to where it was almost pre-pandemic. 95,000 people spread across eight halls. This thing is massive. Nokia, for instance, have a booth that is literally the whole width of one of these halls. It’s is probably, I would say 200 feet by 150 feet is a booth. And this is-
Camberley Bates: And that was who?
Steven Dickens: That was Nokia. I spent some time on Nokia’s booth.
Camberley Bates: Oh, Nokia. British pronouncing it.
Steven Dickens: You say tomato, I say tomato. Nokia, Nokia to me with my funny accent. Yeah, I mean it’s interesting you mentioned it back in the early 2000s, this was a telco show. A lot of the operators had booths. Some of the big global operators still do, but this is kind of pivoting. We’re also seeing with 5G emerging, and this is what I was on the Nokia, see I’ll try and say it fancy, booth talking about private 5G. So the lines are sort of blurring between edge computing, edge IOT, far edge, telco, wifi 6, the sort of technologies meaning that some of the vendors there are changing. So I got time to spend with a whole bunch of different vendors while I was out there.
HPE graciously allowed me to spend some time with Phil Mottram who leads their Aruba business. So Ron Westfall and I got time to chat to Phil and David Stark, who’s one of the GMs who works for him. Fascinating discussion talking about what’s going on with the Aruba business and they’re starting to see some of that private 5G networking come through. And the overall piece, off the record NDA discussion about what’s going on with the Juniper piece so that was fascinating for me. Probably shouldn’t get myself in trouble and talk too much about that. Just fascinating discussion with Phil and looking forward to spending some more time with him, with Ron because I think that’s going to be a fascinating space, watching HPE sort of ingest Juniper later on this year.
Camberley Bates: It’s going to be a big deal. On the private 5G networks, we recently started working with a new client called Infleqtion. It’s spelled with a Q, not a C. and they’re in the quantum computing, which for a lot of people, you’re thinking that this thing is way out there. Quantum computing is way… It’s not really out that far anymore. It’s about five years probably out till it’s really implemented. But one of the areas that they were working and looking at is these private networks and how people are setting up these private networks, and what strain that is going to put on us in terms of the bandwidth all the different pieces that go on.
And also timing, which is areas that they are bringing the time machine or the quantum time machines, bringing to market. So really, really interesting for somebody that’s not like the super physics kind of smart person learning where this is playing out. And turn it back to you and you’re pulling up your notes it looks like there.
Steven Dickens: Yeah, yeah. So I’ve got some time to spend with Charles Bertrand who runs the telco and industry vertical business at Lenovo. And some of what you were just saying is starting to come through. I think the interesting piece for me, and somebody like Ron Westfall, has been tracking this a lot closer than I have, but I’ve been at the last three MWCs, so private 5G has been sort of a topic. We’re now way past talking about widgets and we’re now into actual use cases and deployments.
I got some time to spend with the Red Hat team as well whilst I was there. All of my conversation with Red Hat was nothing to do with technology. I mean, obviously that came through on what they’re doing with OpenShift and some of the edge portfolio. I still didn’t convince them to change single-node clusters as a term. That one just plays with my mind how you can have a single-node cluster, but maybe I’ll win that battle eventually. But all joking aside, the conversation with those guys was about use cases when we’re starting to see stuff get deployed.
Going back to my conversation with Charles from Lenovo, talking about a big German carrier that’s deployed technology directly and based on Lenovo into their core networking. Previously what we used to see with ORAN was Nokia and Ericsson and Lucent and Alcatel going back used to provide the entire vertical stack. You would buy everything from one vendor. With Open RAN, what we’re seeing, and this was one of the conversations with Lenovo and HPE and with Dell, is that they’re providing server infrastructure into those core networks and certifying a lot of different platforms. So you’re seeing that from VMware. We spent some time on the VMware booth. We were also talking to the Red Hat guys.
A lot of these enterprise software vendors have been able to enter this market, provide those software stacks. We’ve seen that with people like Nokia and Erickson as well, having to adapt. I was chatting to Ron over dinner about what Marvell are doing. There’s a lot of these players starting to come in and the solution that I mentioned that Lenovo were talking about, seven different vendors were involved. That’s huge going back to where it was maybe 15, 20 years ago where you’d buy everything from one vendor. So we’re starting to see open source type of processes come through into the core of the network, and that’s changing the dynamic.
Camberley Bates: Okay, so at one point in time you had single vendors where you’d had the full solution is kind of what I’m understanding the piece now. And now because of the open source and the use of more open source for that, we’re seeing more vendors involved with the stack. That, to me, spells and screams exposure, lots of places that we could be attacked and security. And where Krista comes in is on the security stuff, that opens doors to all kinds of malfeasance.
Krista Macomber: Yeah, it’s a great point. And that leads into just a general question, excuse me, that I had Steven, which was did you have any conversations around security from a network perspective and how this is evolving not only I would say with some of the new technology, like 5G, but also from the standpoint of how this network infrastructure is enabling some of these multi hybrid cloud environments in that sort of discussion?
Steven Dickens: Well, we-
Camberley Bates: And also to that end, I know that Krista has done some work with T-Mobile, right?
Krista Macomber: Yep.
Camberley Bates: Get it right. Get the right person here. T-Mobile, and specifically on that about where they’ve developed technology supposedly that is making… I haven’t tested it or anything else, but it looks like what it’s doing is it’s hardening maybe a PC or whatever when you’re traveling around in an airport and you’re getting onto one of those free web services, could get attacked.
Krista Macomber: Yes.
Camberley Bates: So I mean, you look at the form of least resistance to where people come in and that would be one of them. But then once you’re in, you’re into the entire private network. I know I just took it down a left turn.
Krista Macomber: Yeah, it’s a great point. I’ll give just a real quick comment because we can link to the full research in the show notes, but this was really interesting. So for T-Mobile, we did a short survey and we also wrote a white paper. And really the discussion was around, to your point, Camberley, we the risks of unsecure wifi connections for example, and really the value from that standpoint that a 5G-connected device can bring for enhanced security. And one of the pieces in the research that really jumped out to me was there was an awareness among decision makers of the risks of public wifi, but they’re still taking steps to address them with things like buying 5G-connected devices. So that’ll be the little shout-out to that research. It was certainly was interesting.
Camberley Bates: Well, back to you Steve, and since I diverted from your topic.
Steven Dickens: Always good to get Krista’s take and I think that I did read that research on T-Mobile. So I mean, it’s interesting. I spent some time with IBM on this topic. I’ve got a couple of really good briefings from those guys whilst I was there. And this is probably where AI comes in. So I think that’s probably a record. We’ve been going 11 minutes here and recording a tech podcast in 2024 and nobody-
Camberley Bates: We’ll ask ChatGPT what it says.
Steven Dickens: Yeah, yeah. Nobody had mentioned AI and we’re 11 minutes in. But no, I mean, it’s just the sheer number of endpoints, the sheer number of technology-connected devices, IoT proliferates, and we start to see 5G going into some of these private environments. These are manufacturing plants, these are chemical production plants, they’re highly secure areas. Those are the use cases where private 5G comes through.
Security’s absolutely vital. You’re going to put a new network into a chemical plant, you’re going to be paranoid about security. These could be multi-billion dollar build outs of a chemical plant, and this was coming through in some of the use cases from chatting to Nokia. Whilst the network’s a small component of a 2 billion, 3 billion kind of roll-out, it’s absolutely crucial. And Nokia, were doing some work with Verizon to target the US market for some of these 5G roll-outs.
But going back to IBM, that was where they were seeing Watson X and some of the stuff that they’re doing with AI start to come through from an observability and network monitoring perspective. Humans just can’t do this stuff on their own. Alert fatigue, message fatigue, too much coming through to the console. Then how do you automate and provide contextual information to the operator to go, “Hey, network ops, we’ve seen this alert. We’ve seen it five times before from looking into the database. Here’s some contextual information from a large language model that we’ve ingested it” and being able to go “The last five times we’ve seen this, this is what we’ve done. Here’s some suggested fixes. Here’s some things that you should be thinking about,” and providing the ability then for automated next action? “So if you want to kick off an action, this is what we’ve seen in the last five times, this is the fix.” So that’s where from an operational point of view, AI is starting to come through. And that was fascinating, my discussion.
And then also from a call center point of view, one of the key takeaways from my IBM briefing was call centers, particularly for telcos, of being cost centers. How do you flip that to being a profit center? The corpus of data from a call center is huge. How can you monetize that data by putting it into a large language model like the Granite model that IBM’s got? So fascinating week. I could probably talk for the next hour about everything that I learned while I was there. I love MWC.
So one of the Lenovo executives had 65 meetings with clients in a week, but maybe that was 65 meetings with clients and people like me. Charles had to wrap quickly to get to the CEO of Orange, so I managed to get him away in time so he could walk three booths over to spend time with Orange. But it’s that type of event where it’s a who’s who of telco. Everybody’s there. There’s a lot of Six Five media coverage. Daniel and Pat were packed. I recorded a video with Tom Trill, the CEO of Qualinx, about a fascinating six mil by six mil squared semiconductor that him and his team are working on. So just a great event all around.
Camberley Bates: Steve, thanks so very much for that. That’s a great rundown. So thinking of AI, one of the clients that we work with, Cohesity, had a really cool announcement this week and just really sets them apart. So I’m going to flip it over to dear Krista to cover that and tell us what happened there.
Krista Macomber: Yeah, it’s exciting that we can finally talk about this one. I know the last episode or two, we’ve teased a number of kind of NDA announcements, and this was definitely one of the big ones. So as you mentioned, Camberley, it is basically a generative AI kind of assistant that Cohesity has introduced. It’s called Gaia. And what it does is it uses Cohesity’s data indexing capabilities. It also uses Cohesity’s scale out distributed architecture, and it layers on top of that access to a large language model. And this chat interface that I found really interesting because it’s what they call multi-turn, so you can ask it a question and then you can dig in further depending on what it provides back to you.
And this is an interesting space because there are your Snowflakes and your Databricks of the world, which have a little bit of a different perspective than a company like Cohesity, which is primarily data protection and these protection or secondary storage infrastructures versus more of a data lake or data warehouse type implementation. And then you also have some of Cohesity’s peers like Commvault and Rubrik that also have been investing in AI.
And what I think is interesting about Cohesity’s announcement is that it really is bringing more general purpose generative AI capabilities to secondary data. And what I would say is really relevant about that is just the sheer amount of secondary data that we have. I think Cohesity said based on his calculations, there’s maybe 10 times the protection data, as opposed to production data.
So just some really interesting use cases. One that Cohesity brought up was the ability to use Gaia, for example, to inquire as to if any patient data has been leaked in email, if you’re in the healthcare industry, for example. And then if it comes back and says, “Yes, there has been,” to ask it, “Okay, show me some examples or dig in further.” So it was definitely a really cool announcement that I know had a lot of people in the industry buzzing this week.
Camberley Bates: Yeah, and their first linkage’s to the Microsoft 365 capability, right?
Krista Macomber: Yes. Yep.
Camberley Bates: So one of the things that Cohesity had gone out to the market was not to be a data protection company, but to be a company that was managing secondary data. That is, being able to have the vision to say, “Okay, so here we have all this data here, let’s make it usable beyond a protected copy that we have there.” And so they’ve created, in terms of their file structure, I think it’s still called SmartFiles, it may not be, I know they changed names over time, but it used to be called SmartFiles. They’re not going to compete with any kind of filer company or anything else. It doesn’t have that kind of speed and capability. But it does have-
So now what they’re doing is they’re starting to overlay this GenAI capability, which gives you that data management analysis capability to pull the information out and have that data usable within the framework where it’s at right now versus creating another data lake. So interesting strategy, interesting announcement. Definitely interesting considering that they’re bringing Veritas possibly over. So those negotiations are still going on as they work on bringing that, but what potentially that would have for all of the NetBackup clients over the long haul. So it’s a very interesting play and it looks really healthy and really good. So hopefully we’re going to get our fingers on it in the lab and we’ll get to play with it and see how real it really is. So there we go.
Krista Macomber: That would be awesome. I know our Russ Fellows, who’s one of our VPs in the labs business, he’s on vacation this week, but I know with him, we had a big conversation with Cohesity about this, and I know he’s excited, like you say, to get his hands on it. And one thing we did talk about is the large language models that Gaia will use. So there’s visions to support the large language models from the big three hyperscalers, so AWS, Azure and Google, but also to be able to bring your own if the customer wants. They’re trying to simplify the process of integrating and managing all of that for the customers, especially at the start, which that’s certainly a big task. So certainly one other thing I would note.
And I think the other thing I’d note from the announcement is one thing as an industry that we do have to be careful about as AI becomes more real from a business standpoint is just the secure access to data and making sure that if someone is using a chatbot or an assistant or a tool like Gaia, that they for example, only have access to the data that they should have access to and that they’re not inadvertently pulling from sensitive data. And so Cohesity has certainly walked us through… They have the ability to partition users’ access. There’s multifactor authentication-based access controls. So I was definitely glad to see that they’re kind of focusing on that and making sure that all those controls are in place as well.
Camberley Bates: Great. Great announcement. So we’ve got others coming next week, and I know that we did put out a note on this latest one and updated the materials that we have in our library. One other thing that happened this week is a deluge of financial earnings releases.
Steven Dickens: Could they not be coming whilst I’m flying back from MWC? Could they-
Camberley Bates: And actually I really feel sorry for once for the Wall Street people because they were popping from one announcement to another announcement yesterday. In fact, I was listening to NetApp and the guy had come in late and he asked a question and Mike, their CEO basically said, “Yeah, we already achieved that number.” He’s like, “Oh, sorry, I was late to the call so I didn’t know.”
Steven Dickens: Investor relation, because they were all on February 29th. So what do we have? We had HP, NetApp, Dell-
Camberley Bates: Dell.
Steven Dickens: … and, Elastic all on the same segment of time after the market’s close.
Camberley Bates: And Pure did two days before, I think it was two days before they had their-
Steven Dickens: And that’s kind of okay. But putting HPE and Dell and NetApp all on the same-
Camberley Bates: I don’t know. There we are.
Steven Dickens: Same equity zone. It’s covering infrastructure. So I mean, I’ve not dug in yet too much into HPE. I was up early this morning starting to get my research note covered. So I mean, I can cover that one if you want me to go off first, Camberley.
Camberley Bates: Well, I think what I wanted to tee up here, guys, is that next week when we do the Infrastructure Matters, one of the things that we want to do with looking at these guys is understanding what are the trendings that we’re seeing, because there’s a lot of variations in terms of the numbers. And so if you just take the top line number, that’s great, that’s fine. Okay, so that’s trading people, that kind of stuff. But what’s more important, what’s really important to us is what’s happening with some of the things like AI, consumption modeling, transitions to whatever the technology is, because those are for people that are making decisions on products, those become really important. Yes, clearly important for all of our portfolios, what these guys are doing and everything else. But I think that that’s what gets really interesting is when you bury into the details of their announcements and what’s making things move.
Steven Dickens: Yeah. I mean, to to that point, HPE, they report out their HPC and AI segment revenue. That grew 25%. When you think about their overall revenue grew 5.5% year-on-year, you can see that the HPC and AI stuff’s growing faster. That’s a high margin for them, high margin products, so that reflected in the results as well. The other key thing for me, the company’s strategic pivot towards ARR as a model. They grew by 370 million year over year, culminating in 1.3 billion at the end of FY ’23. So starting to see some really fascinating stuff starting to come through.
Literally time-bound recording this month, Friday morning, 10:00. I didn’t get time to start digging into this morning, but I think mid-single digits for HPE overall year-on-year. Down 14% from the prior year period, obviously that’ll stand out. But I think ARR up by 42%, those are some of the bigger trends. Starting to see AI come through into the earnings, which is good. Good both from a valuation point of view and good to see strategically. So I think solid numbers all around from HPE. I saw them up over about 4% in the market. I’m yet to get into and do a full digging, but expect to see some research coming out from us covering that either later today or early next week.
Camberley Bates: Yeah. And I’ll comment a couple things on AI demand. Quoting from Dell, they had an uptick of 40% sequentially on their servers that were AI-optimized, meaning that they’ve got GPUs or whatever that’s in there. So that momentum is going. I know from NetApp they had some very big wins that were directly related to HPCI high-performance computing in the genomic space, oil and gas, and one of the very large wins that were there. And the same thing is going on with Pure.
So the demand is there. We’re continuing to see the demand. As we’ve said before, we are still in the extreme early stages of this space that they’ve shipped gear now and we’re still shipping gear. They’re now having to absorb this gear or bring more gear in whether or not whatever it is, and that we’re going through the first phase of the training, then we’re going to get to the inference side of the house and then we get into the deployment. And that’s a long tail. That’s a long tail. But as people have talked about, I’m going to say it again, it’s not one that’s going to disappear. This is like what we saw in the 1980s transaction processing, totally reorganized how a company’s operate from their ops, operational side of the house. This is doing the same thing and the investments will go into it.
Steven Dickens: Yeah, I mean if you look at… We didn’t cover NVIDIA. Daniel was everywhere covering NVIDIA last week. We didn’t need to. He had it covered in the-
Camberley Bates: He didn’t need to. It was on the front of the Wall Street Journal. It was on front of the Times.
Steven Dickens: Yeah, I mean-
Camberley Bates: Yes. They just blew the numbers out. They’re worth 2 trillion or something like that, thank you very much.
Steven Dickens: Yeah, but I think it’s interesting, and the point you make is worthwhile going back to and double clicking on. NVIDIA is the lead out company. They’re shipping into a HPE, a Dell, a Lenovo. They’ve got to then assemble it, then they’ve got to ship it out to a HPC client. A lot of these HPC deals are multi tens of millions or hundreds of millions. They’re not recognizing all that revenue over time. Up front, they’ve got to recognize it over time. So NVIDIA is the sort of canary in the coal mine as the lead indicator.
Camberley Bates: That’s a bad example. It means things are done. And the reason why I’m saying what I’m saying is because there’s people that are still saying, “Is this a bubble? Are we in a bubble again?” And the answer keeps coming back saying, “This is not a bubble.”
Steven Dickens: It’s a structural change.
Camberley Bates: It’s a structural change of how we’re going to operate. There will be hiccups. There will be problems. But you see things like what Cohesity did to kind of move things ahead. We’re going to see streamlined offerings that are coming out there continuously. And so we are out of time here.
Steven Dickens: Well, just to sneak in another one of our clients that we spend a lot of time with, Elastic is going to the AI trend. Total revenue three 28 million, an increase of 19% year over year. Seeing annual contract value greater than 100,000 increase, which is positive. Net expansion rate up 109%. These guys are starting to pivot from being Elasticsearch more to being around Vector, I covered some of the stuff. And what they’re doing starting to be that kind of data lakehouse type company that’s starting to become a platform for data curation ahead of an AI project. Starting to see that come through as well.
Camberley Bates: Yeah. Okay. All right, guys, we’re out of time and thanks for tuning in.
Steven Dickens: Busy week.
Camberley Bates: For another 30 minutes.
Steven Dickens: Busy week, too much earnings to cover, big conference, and then Krista’s got a bunch of stuff as well. We could have done an hour today.
Camberley Bates: Yep. Yep. All right, guys. Thank you very much. Don’t forget to click and follow us and share and share it to other people. If you like what you’re hearing, let us know. If you don’t, let us know as well, we’ll re-up and change up if we need to. So thank you very much and have a great week.
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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.
