On this episode of Six Five On The Road at VMware Explore Las Vegas, hosts Daniel Newman and Patrick Moorhead are joined by Broadcom‘s Hock Tan, President and CEO, for a conversation on Broadcom’s vision for VMware following its acquisition. The discussion provides valuable insights into the future direction of VMware under Broadcom’s leadership, addressing key concerns and opportunities for innovation and growth in the technology sector.
Their discussion covers:
- Broadcom’s strategic plans for VMware’s integration
- The potential impact on VMware’s customer base and product innovation
- How this acquisition aligns with Broadcom’s long-term goals in the technology industry
Learn more at Broadcom and VMware.
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Transcript:
Patrick Moorhead: The Six Five is On the Road here in Las Vegas, Nevada. We are at VMware Explore 2024. This is VMware’s key big tent event. Dan, the event so far has been great.
Daniel Newman: Yeah, Pat, I think everybody’s been really excited in the buildup to this year’s event. We are starting this big fall season. We are going to be hearing from the industry, we’ve got this big inflection on AI. We’ve got all this excitement about how companies are going to carry forward their strategies. And really, Pat, it’s been about value. How are we going to start to get value from these investments in AI? And this event is going to be one of the big ones, Pat, because we know a lot of data lives on-prem. We know companies are dealing with this private public, where did my workloads go? And VMware is a company everybody wants to hear from.
Patrick Moorhead: Exactly. It’s been nine months since we interviewed Hock Tan and most of his leadership team and can’t think of a better person to be kicking this off with than Hock Tan himself. Hock, great to see you again.
Hock Tan: Thank you, Pat. Nice to see you again. Dan, you too.
Daniel Newman: Thanks. Yeah, it’s great to be here in beautiful Las Vegas and this of course is that big moment as Pat said. It’s been I think nine months since we had the chance to talk to you on deal day. Of course there’s been a lot of excitement, a lot of reflection, a lot of opinion across the market about how this deal is going to work out. Our assessment was that it would work well, is that it’s working well, but we would love to start out with you there kind of in these nine months. How’s it going? What are you hearing? What’s this event mean, while we’re here in Las Vegas?
Hock Tan: Well it’s been very interesting. The nine months I’ve learned a lot, but also what I’ve also discovered is what we set out to do nine months ago before we closed the deal is very much what we are achieving now. So it’s great. Very interesting, working very hard, but what we are seeing is customers, enterprises, CIOs large to bottom, are very excited about the vision, about the technology we are now bringing to them.
Patrick Moorhead: Yeah, that’s great. It’s been incredible to watch it. It is great to see when we compare what was said nine months ago to actually what you did and it’s been good. It’s been really good. This event is really a culmination of what’s new, what’s going on, what have you delivered and it’s been really exciting. One of the things that I’ve heard you say is that the future of the enterprise is private. Now that’s a very bold statement given that the cloud 15 years ago was born and I would say about 10 years ago it was cloud first. What are your customers telling you that says the future of enterprise is private, because that might be contradictory to what the other people are saying?
Hock Tan: Well, yeah, that’s the interesting part. We set out to really basically position ourselves VMware, especially with an upgraded product stack called VCF or VMware Cloud Foundation where you would virtualize the entire data center we talked about. We set out to really put in position the fact that VMware, through creating private cloud, would coexist in enterprises with their public cloud environment. Not wrong. I think we’re achieving that. But what we are discovering, especially over the last nine months meeting, talking to CIOs, head of infrastructure of our largest enterprises, and small ones too, mid-sized ones, is simply that 10 years ago, as you say Pat, everybody enterprises were saying, “Let’s go to the cloud.” Board CEOs are telling their IT department, go cloud. So they went. I think they’re all suffering from PTSD now. That’s an interesting thing because they quickly find out it’s not what it appears to be.
Now there are a lot of benefits and it’s simply put, if you peel back the curtain in most data centers on-prem, you find that historically they build up into silos. The best of breed, they like to call it that in compute, best of breed in networking, best of breed in storage. And they expect these three silos to work together to deploy services to their internal clients. Doesn’t work that way in truth. It’s painful, it’s non-resilient, and they don’t work very well together. Which is what drove them to the public cloud, where it’s a platform. They work seamlessly. So easy to deploy, yes. But the end result, as they find out over the years we’ve been there, there are three famous C’s, as I said before. It costs a lot more. A lot more. I would say anywhere from two to four times more.
Secondly, it’s complex, very complex, not that simple to just say I put it out there. And thirdly, compliance is an issue, especially on AI running data now. So they have these issues. And what a recent survey done by research analysts on Barclays Industry group is they surveyed about over 100 CIOs and found that over 80% of them are now looking at considering moving the applications back on-prem. Back into a private and on-prem data center compared to sitting in the cloud. Which is where we show up very on a timely basis because what we offer with VCF is not another just any tool to run your data center. It is enabling them to create a private cloud platform on-prem. It’s really bringing what they have in AWS on-prem, a platform for very high-velocity deployment of applications. That’s what we are building.
Daniel Newman: And in order to do that, it’s about the service portfolio being able to offer the massive various services, and of course the right services, because it’s not all about the sprawl. It’s about having the right things. And Hock, something you said, you’re sort of speaking the language I think of most CIOs, which has been, they liked what the cloud represented. Now we can have a debate. We’ve seen that from a debate standpoint that we’ve only gotten to 20 to 30-ish percentage points of those workloads making it to the cloud. So it hasn’t all happened. So your thought about it being private and being on-prem actually is still the case. If you actually just look at the math.
Now growth is another side of this. Which is growing faster. I think we would say up to this date, if you’ve measured it might be more cloud, but then what you’re suggesting is maybe this next wave will be that growth on what’s being done on-prem that feels like cloud, could really accelerate if the right tools and capabilities are there. So you offering that comprehensive set of tools, that comprehensive set of services, it looks like that’s a big part of what you’re talking about here at the event. Share a little bit more about that.
Hock Tan: Absolutely. Because we realize creating a platform, which is what VCF does on-prem to create that high velocity platform for deployment application of developers in enterprises. It’s getting those developers, those applications, back on-prem. CIOs love it because they were losing it to the public cloud before until cause hits them, as I said. What we also realized is with that platform, yeah, it’s like building a Taj Mahal, no furniture. Got to put the furniture in, which is creating a reach, a robust catalog of microservices is what the public cloud calls them. That developers, that IT departments love to have to basically make it even easier to consume in the cloud.
And if they have it in a public cloud, no reason why we can’t do the same. Which is what exactly our investments has been. Since we acquired this company, we put in potentially billions of dollars of investment to create those advanced services. We’re talking about firewalls. VCF is perfect to build because we have additional agent virtual firewalls on East-West workloads. Then from that event security, which is monitoring, tracking, workloads, event security, load balancing, extend to that disaster recovery. On and on. Of those event services that now these enterprises building private cloud can literally have opportunity to those key-range of event services they would otherwise be able to get in a public cloud. We’re recreating the same thing. It’s a journey, it’s still going on, but we are.
And one of the most interesting things we put in place is this thing called private AI foundation. Particularly how interesting AI is today. So we have VMware, virtualizes the GPUs. Just like they virtualize the CPUs, they virtualize no different than CPU. So they can create the same environment for both CPU and GPU for the same application to run on both. And that’s one of the more interesting things to bring in on-prem because data is on-prem. You want control of that. So bring your models in on-prem, run it on the VCF, and you basically run AI on-prem.
Patrick Moorhead: That’s a great conversation. I like that. We had to go back 15 years ago and the reason the public cloud even became popular is that on-prem infrastructure and the way it was managed seemed very complex and it was hard to scale and then many of those workloads went to the public cloud. But what happened is the public cloud got a little bit more complex. In some ways that was good, because they had more offerings, but what happened is the expense sprawl got out of hand.
And what that did is I think that inspired VMware and VCF product to build something that delivered the best of both worlds, which was, hey, let’s bring the simplicity of what we like about the public cloud. We’re shielding you from a lot of that complexity of the infrastructure, which you said it, 80% of the data is on-prem seems like there is this huge opportunity for generative AI. We talked a little bit about private AI, but I wanted to double-click, Hock. What are some of those challenges that you’re trying to solve related to generative AI and serving up with VMware private AI?
Hock Tan: Well, that’s a very good question because generative AI or AI in enterprises as they want to consume it going forward is still in its early stages. It’s nascent. There are a lot of initiatives, a lot of POCs among enterprises to figure out if there is a return on investment in basically getting more productivity, reducing costs by deploying AI. And that’s not cheap either. You first you’ve got to get the models, the foundation models, those large language models, you got to train them, they can buy them pre-trained, you have to license them, but you still have to run them on your data center, on your infrastructure.
And what VMware is trying to do by creating private AI foundation, it’s basically telling these companies, you don’t have to train your entire data yourself. You license pre-trained models and you can then run it on-prem and run it next basically to your traditional CPU data centers. And what we offer is a seamless integration between AI and typical traditional corporate workloads running hand in hand. It’s actually what we have in private AI is a scheduler among other things that depending on the workloads, it can either deploy in CPUs or GPUs. And more than that, you keep your data on-prem. You bring the models, and that’s the path we’re headed now. It’s still early stage, still a journey because a lot of these companies are still trying to figure out if there’s a return before they make that vast investment. But at this point we believe it all happened and we’re pretty ready.
Daniel Newman: Yeah, the CAPEX side of the industry is indicative that people believe, but we are seeing some of that consumption bringing out questions from companies. And part of it I think is what you’re saying though, Hock is addressing where data lives, how expensive it is for companies to get value from the data that they have in their own data centers. The models have become somewhat ubiquitous, they’re accessible to everybody, but the data that makes your insights unique that sits on top of your software stack is complicated and it’s expensive to have it moving. The egress can be pretty cost intensive. And so it matches up with kind of your three C’s in why a company might want to think, “Hey, I want the convenience of what cloud represents, but I want to do it here. I want to do it close to my data.”
And Hock, who’s probably thinking about this quite a bit, is your partners. I mean we are here, many of them are here. I would love to just kind of talk a little bit more about the commitments because you’re helping bring AI, you’re helping bring on-prem cloud or private cloud. What are the commitments now that you are nine months down the road, you’ve had all these conversations, you’re rolling out all these services, what are you really focusing on bringing to them?
Hock Tan: We really made three commitments early on and we are delivering on it. First is we’re trying to simplify what the software we have out there so complicated, what VM had before and we did. We reduced 8,000 SKUs of products to simply four today. Make it easy to understand, which makes it easier to consume.
Daniel Newman: Product marketers dreams.
Patrick Moorhead: No, I mean when I hear 8,000 to four, I always do a double take even though I’ve read that Hock.
Hock Tan: It’s true.
Patrick Moorhead: It’s amazing.
Hock Tan: It is. So we make it easier and it’s easier for the customer, but it’s also easier for the partners, the ecosystem of partners. Second thing which we committed to really do is we want to go to put in place the go to market, the routes to market to be also very clear and simple to customers, to end users. Because they must know where to get it and how to get it quickly. And so we have simplified a lot of the channels, simplified particularly go-to market, routes to market and eliminated or minimized you never eliminate or unfortunately by minimized channel conflicts.
Which leads me to the third commitment, which is to then enhance and strengthen the partnership in the partner ecosystem. VMware used to claim they love partners. To be honest, anybody can be a partner. No, we are more thoughtful about positioning partners such as they are first and foremost, that it is a financially healthy environment for them. Then they can invest as we do. And on top of that to basically then put in place a situation where if the partners can do it, we shouldn’t be doing it. Which is not just selling the products, not just deploying the products, but also operating the products. And what we have done in making a lot of investments over the last nine months, is strengthening the partnership ecosystem because eventually that’s what will optimize and benefit our end users.
Daniel Newman: Well, Hock, I want to thank you so much for taking the time. We know how busy these events can be. Lots of partners, lots of customers, and of course meetings that an event like this can have for you. But we love you sitting down. We appreciate you coming back for the third time here with us and hopefully you’ll keep doing it and-
Hock Tan: As often as you want.
Daniel Newman: As often as we want. Y’all hear that? We’ll be in touch really soon, but have a great rest of your event. Thanks so much for joining us.
Hock Tan: Thank you. Very good to see you guys again.
Patrick Moorhead: You too.
Daniel Newman: And thank you all for tuning in. We are here in Las Vegas at VMware Explore 2024. That was Hock Tan. Great conversation. So much more coming from us. Stick with us. We’ll see you all in a bit.
Author Information
Daniel is the CEO of The Futurum Group. Living his life at the intersection of people and technology, Daniel works with the world’s largest technology brands exploring Digital Transformation and how it is influencing the enterprise.
From the leading edge of AI to global technology policy, Daniel makes the connections between business, people and tech that are required for companies to benefit most from their technology investments. Daniel is a top 5 globally ranked industry analyst and his ideas are regularly cited or shared in television appearances by CNBC, Bloomberg, Wall Street Journal and hundreds of other sites around the world.
A 7x Best-Selling Author including his most recent book “Human/Machine.” Daniel is also a Forbes and MarketWatch (Dow Jones) contributor.
An MBA and Former Graduate Adjunct Faculty, Daniel is an Austin Texas transplant after 40 years in Chicago. His speaking takes him around the world each year as he shares his vision of the role technology will play in our future.
