Speaker 1: 0:22

Welcome to TechSign TV. We're at VR Explorer in Las Vegas and we're talking to Prashant Shinoa. Is that right? Yeah, shinoa Ah okay, he's CMO and Vice President Marketing for VCF, vmware, cloud Foundation, cloud Foundation and Broadcom. Now, eh yeah, so welcome. Good to have you on our show.

Speaker 2: 0:45

Thank you, thank you for having me.

Speaker 1: 0:47

Yeah, I want to dig in a bit because a lot has changed for VCF. I think maybe it's fair to say that VCF is now the most important firmware product.

Speaker 2: 0:57

Yeah, absolutely. I think you heard our CEO Hark at the keynote say I mean, we try to keep things really simple and focused in terms of where the market is going and where we need to prioritize. And, frankly, over the last few years, we've been hearing that customers are looking for alternatives to a public cloud, to have a modern private cloud where they can modernize their public cloud with the security, the IT controls and the cost predictability of a private cloud coming together. So that's where we've been focusing on and, yeah, it's just been what? Two years, but it feels definitely like 20 years.

Speaker 1: 1:40

Yeah, because I've been covering VMware since 2017, I believe You've been around for some time as well. I think Botcom did make some changes that were that were overdue. I guess, because the portfolio VMware was way too wide and product names changed too often and yeah. So they kind of realigned the whole portfolio. They integrated a lot into VCF. A lot of the screws, as they call it, or the products. They kind of disappeared, because they were integrated now in VCF and you get them by default basically, yeah, absolutely.

Speaker 1: 2:19

Yeah, that landed on Broadcom Wasn't well received by all organizations. To be honest, I think the larger organizations are happy with it because it's easier to do proposals, it's easier to do licensing. But in the mid-market and the smaller organizations it's a bit of a tough cookie to eat. How do you look at that? Because that's now two years ago when the big changes fell. Things've normalized a bit, I guess.

Speaker 2: 2:49

Yeah.

Speaker 1: 2:50

So what's your vision on that?

Speaker 2: 2:51

Yeah, absolutely. I think we did three big changes right. One was kind of the business model simplification, moving to a subscription model which every other enterprise software company.

Speaker 1: 3:01

It was also overdue, to be honest, Exactly as you said.

Speaker 2: 3:03

So that was one that we made. Number two was the product portfolio simplification. As you said, overly complex. We had 9,000 SKUs for VMR 9,000, yeah, 9,000 SKUs.

Speaker 1: 3:14

To be honest, I spoke to one of your partners a couple years ago I think it was Software One and they told me like if I hire a new guy on VMR?

Speaker 2: 3:28

it takes him six months before you can make a proposal. Yes, we need a decoder ring with a whole manual, so, and that was already in the works, but Broadcom just accelerated that and that's where the product portfolio simplification to a single platform came in. And then we did the route to market simplification right. So there are a lot of inconsistency the way this product gets deployed and managed, whether you go through a hyperscaler or a cloud service provider or an OEM or a reseller. So we standardized all of that, gave them price predictability and made sure that they provide value-added services on top of that right. So those were kind of the three big changes. But from the product perspective, yes, I think customers who wanted Broadcom to be a strategic IT partner, if you will, were looking at us as a cloud vendor or a public cloud alternative if you will right and for them, vcf perfectly made sense For customers that were smaller size and didn't have large data centers and had to manage that.

Speaker 2: 4:17

we do have alternatives for them. Right, we have the vSphere Foundation, which is pretty much your compute virtualization platform, with the VCF operations built into that right, so we can still run your modern workloads and your VM workloads, and then we also have the other vSphere standard too, so we have multiple alternatives for our customers. But, yes, we work our direct sales folks work very closely with the customers who are looking at a modern private cloud and VCF is the right thing. But we have thousands of resellers and distributors also who sell vSphere Foundation and VMware Cloud Foundation as alternatives.

Speaker 1: 4:52

Yeah, but we can't fully ignore that. For some customers it's a choice of are we going to stay or are we going to migrate to one of your competitors because it doesn't fit completely like it does in the past. Let's call it like that. Yeah, what would you tell those customers?

Speaker 1: 5:10

Because, yeah, I think the target audience of Botcom is in the higher range. You know it's more the enterprise, the bigger customers. But from your perspective as a marketing guy responsible for VCF, you probably want to keep everyone on board. That's not always possible, but what would you tell customers who are considering alternatives? Where should they focus on? Because there's also a lot of gains to be made with all the new integrations in VCF? You also added new capabilities in version 9, you know, adding AI again, so there's a lot coming in as well.

Speaker 2: 5:52

Yeah, I would say this to the customers right, like you should absolutely look for alternatives, right, as any healthy organizations do when they have a big purchasing decision, even in our own personal life. Right, it's not like we just go and buy something. We look for a lot of recommendations, we check for alternatives and this is one of the most critical decision-making for IT organizations, where they trust a vendor to run their business critical application. So they need to do the due diligence. I would say have an open mind, take emotions out of the picture, have a very clear assessment of what is my alternatives and what is the cost comparison for those alternatives. Right, we have tools, but if you want to use our tools and it can be highly customized to their environment what is their IT, how many cores they have, what kind of components they have and what do they want to build, it gives you a very fair cost comparison that you can tweak to your liking based on what you think is the real thing. So I would say do that and see what alternatives are better.

Speaker 2: 6:50

We've had now two years of that experience and I'd be very honest, we haven't seen a lot of customers churn at all. They do the alternatives they figure out like hey, based on my current environment and what I want to do, I think we say if it's the best alternative for for them now. The second thing that we are very focused on making sure is most of our customers were either vSphere customer or a vSphere with vSAN or vSphere with NSX, and we are asking them to change their mentality to be a more of a platform team. Right, not a component team, not a compute team, storage team, network team, operations team, but be a cloud platform team, just the way hyperscalers run their IT organizations to build their compute platforms.

Speaker 1: 7:31

That means for some organizations. You also are asking for culture change, Absolutely. Organizations are very separated still with operations and networking.

Speaker 2: 7:42

Absolutely.

Speaker 1: 7:44

That will have some kind of collision.

Speaker 2: 7:45

The silos are one of the biggest challenges facing, and it's okay to have those teams, but they need to have a common goal and have communication. Again, it's just like our personal life, right? Like of course you have your own thing, but if you don't communicate well and you have misaligned goals, that's a very hard thing to solve for. So I would say technology is just one third. Having the processes and the team structure and the governance model is where we are extremely focused on to make sure the customers understand hey, you get this, but have a crawl, walk, run, fly way of deploying this and show value to your board, to your CEOs, as you're deploying this. And we've seen quite a few times where any other alternative is like 50% more expensive.

Speaker 1: 8:31

All things done right, the total cost of ownership yeah there's also a huge discussion always about total cost of ownership, because every vendor will do a different calculation basically that's what I said, right, so I wouldn't take it with a grain of salt. I go to your competitors as well and I speak to their customers. Speak to your customers. I know there are a lot of customers thinking about okay, what should we do? Should we stay with VMware? Should we?

Speaker 2: 8:53

migrate? Yeah, absolutely.

Speaker 1: 8:55

Should we make plans? I think everybody agrees. You have the best product.

Speaker 2: 8:59

Yeah.

Speaker 1: 9:00

I don't think that's the real discussion. Only some will think it's too expensive for them. So maybe there are things they should focus on more, that they are kind of ignoring, which will reduce the TCO.

Speaker 2: 9:17

Are there things?

Speaker 1: 9:18

you see, because you probably talk to customers as well with the same discussion.

Speaker 2: 9:22

Yeah, 100%.

Speaker 1: 9:24

Are there things? They are generally missing.

Speaker 2: 9:26

Yeah, see, the first thing is, when you have that mindset shift, as you're saying, it's a pretty big disruption, not only to their skills and their team, but also to their operations, and they don't want to disrupt their operations, right? So step one that we generally tell our customers, who have various different components all done in silos, is to say, go to a platform operating model which is very non-disruptive, which is like hey, how do you operate your entire data centers across the board?

Speaker 2: 9:56

at a fleet level, right, doing upgrades, patching, maintenance, cert rotations and password management. All of that can be done in at a platform level and it can be done at scale. It's non-disruptive to your underlying infrastructure, but huge productivity gains, right? I don't think I've seen at least one IT admin who say hey, you know what, I love patching and upgrading, I love doing security patches. It's painful, it's boring, but it's business critical. Use the VCF operations, get it automated and you're off to the races. So huge productivity gains that they can see how their day-to-day life has changed, but also how it impacts the business, so they can develop faster applications and give it to the line of business. So that's number one.

Speaker 2: 10:40

Two, what we've seen is platform consolidation. They have multiple platforms, as you said, some running container workloads, some running VM workloads. Vcf comes built in with Kubernetes and all of the capabilities and IaaS services that Kubernetes workloads need. So move all the workloads and run it on one platform. Same operating model, same set of services, and you're off to the races. That's generally the second set. And then, especially for organizations that have a lot of line of businesses, all of them require their own set of services, right? So create a self-service catalog so you don't need to file an IT ticket and bother IT every time.

Speaker 2: 11:15

I want a Kubernetes cluster, I want a database, I want storage. You get it off pretty much from the VCF automation console and it's done fast, right? So make it developer friendly so that the developers don't flock and go to somewhere else. Right, that makes it the hero, it makes them a very strategic business enabler and it helps them show value to their business also. Right, so that's kind of the the steps. And then it depends, as they're doing, storage refresh or a server refresh, can I then use software defined storage that is again built in as part of of VCF, rather than having storage areas? And what is the cost benefit? And Broadcom IT is a great example of that, where we did storage area consolidation and got it onto Visa and ESA and we saved around 69% to 70% cost.

Speaker 2: 11:59

just based on that right Like huge, huge benefit. So that's where we see a lot more value to your point around like, hey, cost concerns, let's sit with you, figure out what your IT initiatives are and then show you the value at each step.

Speaker 1: 12:14

Yeah, I think they're good points. What I want to move to now is the whole AI part, because you added your AI services into VCF.

Speaker 2: 12:22

Yeah.

Speaker 1: 12:24

And how I understand it. It's now fully integrated and available for all existing customers, no additional cost, Is that?

Speaker 2: 12:29

correct. Yeah, all VMware Cloud Foundation customers.

Speaker 1: 12:33

So VCF will be one of the popular choices for AI to land on-premise, I guess.

Speaker 2: 12:39

Yeah, and that's where when private AI was born.

Speaker 1: 12:42

A couple of years back.

Speaker 2: 12:43

The idea behind that was a lot of customers were concerned about data access, data privacy, data sovereignty, etc.

Speaker 2: 12:51

Especially when all these large language models running in a public cloud environment and they didn't want to send their proprietary data, their IP and their customer confidential data off to some LLM model and, not knowing how it gets used, who gets access to that?

Speaker 2: 13:06

So they wanted kind of a more of a private AI environment where they are in control of their data but they get to use all of the Gen AI benefits. So that's where the private AI service was born, right, so you get control of your data, you get to use the models you do fine tuning, inferencing, RAG, all those use cases and you get to run it as another workload on VCF. So that's where the genesis was born. And the reason why we put the private AI now as part of VCF was, I think this year we are seeing AI projects going from a pilot to more of a production real world environment. So we said, OK, let's build it into the platform itself so you don't need to buy another add-on for this. You get all of this, since now it's literally like any other workload, so make sure you have VCF supporting all of your workloads, including Gen AI workloads.

Speaker 1: 13:58

There's a lot of focus on on-premises here, but there's also the public cloud. Yeah, on-premises here, but it's also the public cloud. Yeah, I have a hard time seeing where it's going with VMware. What's the focus? I'm getting the feeling the focus is primarily on on-prem and, yeah, there is some public cloud focus, but it isn't really big. But you can correct me there.

Speaker 2: 14:23

I mean, at the end of the day, it's a customer decision, so we are not in the place to say you have to do this. That's why one of the key aspects of VCF is same platform.

Speaker 2: 14:33

run it by yourself, generally in a co-location or in a data center that they own or give it to a CSP of your choice, and there are hundreds of them spread across the world and they can take the same platform and run it as a managed service for you and provide their value-added service, or you can do that in a hyperscaler environment, right?

Speaker 2: 14:51

so we work with pretty much AWS and GCP and everybody to do that right. So and the key part that we changed as part of our business model simplification is the license portability right. So you buy once, deploy anywhere, so you get that flexibility to that right. So that's, that's been our model. Yes, where we see some of our largest customers fsi, some healthcare, which has a lot of compliance and regulatory requirements they prefer to run their critical applications on-premise and they have a lot of data centers and engineers and IT to manage that.

Speaker 1: 15:28

I'm getting the feeling. Your partners, the hyperscalers in this case, are a bit two-faced, because at one side they're your platinum sponsors here and they're happy to take your big customers if they want to land. You had a whole case with Walmart, probably not the smallest customer If they choose to do I don't know 30% in a hyperscaler it's a big revenue stream for the partners. But, at the other side. As you Google them on VMware, they're all like oh. Mike, your VMware stuff to our cloud native platforms. So, it's a bit too fair.

Speaker 2: 16:02

I don't know how to yeah, absolutely. That's why.

Speaker 1: 16:05

Do you think that's normal IT practice by now? Do you think that's riding on the wave of the last couple of years where Botcom had some no, no, it's a normal IT practice, right?

Speaker 2: 16:15

It's the smart workload placement what is my right cloud location and a cloud operating model for the right workloads? And in some cases it may be in a public cloud environment, in some cases it may be in an on-prem, or in some cases it may be like hey and? And that's where we saw this cloud reset the data that we looked at talking to 800, 1800 it decision makers to see, hey, how is generally the workload strategy being thought of? And it was surprising for us to see that almost 70% of these organizations were thinking about repatriating or already had repatriated some of their workloads from public cloud to on-premise and goes back to the same privacy gen, ai, security, resiliency concerns that they have seen.

Speaker 2: 16:57

I mean public cloud is very mature right now. It's been there for 15 years and initially it was really good. I don't need my own data center or IT. I have scale up, scale on demand, very developer friendly, etc.

Speaker 2: 17:08

But over the last few years the cost transparency has been very hard to find, and obviously there are some security issues etc that they've seen and the private AI aspect of it. Those are what is making them shift back to an on-premise environment. But yeah, so that's where I think you can call it cooperation, where we work very closely with them, but it's up to the customers. So if they want to migrate, they can migrate on a VCF platform itself, and that's what most of our customers do, right, because they don't want to refactor their applications and how much potential is there then for VMware in a public cloud?

Speaker 1: 17:46

Because I remember when you did VMware on AWS years ago, that wasn't a huge success. You released some numbers and I believe in 2022, during the Barcelona event really bad. There were like 500 VMs a month that were added on AWS. It was really low. Oh, on the VMC, on AWS, yeah yeah, that didn't work out in the end. So what has changed to make VMware more successful in the public cloud?

Speaker 2: 18:13

I guess, yeah, the concept of making it. There are two aspects right. One is they get very predictable and consistent platform, no matter where they go. That was not the case previously. Like, vmc was its own platform compared to VCF. On-premise. Avs was its own Microsoft's made Azure VMware solution. Gcve was the Google Cloud's VMware engine. It has its own version. So it was all very snowflakey, in a way, right. So when we changed our strategy on VCF, we said, hey, customers should have a very predictable, consistent platform experience, no matter where they go with.

Speaker 2: 18:51

VCF. So all of our contractual agreements says that, hey, they have to use the same VCF bits and we will provide them the same VCF bits, right. So that is number one. So it provided that consistency. So now we are seeing a lot more uh growth in that area. Right. And two is the license portability.

Speaker 1: 19:08

Right, because if I want to give you consistency.

Speaker 2: 19:11

You can't say hey, today I'm here but I want to move there. But without license portability, how can I make it move?

Speaker 1: 19:17

I'll have to pay again and can you get the same performance in the public cloud? Because I know the hyperscalers have built their clouds a bit differently networking wise and the stacks are a bit different than the on-prem ones.

Speaker 2: 19:28

Yeah, that's where the customer needs to do the evaluation, to say, hey, if I'm moving some of my workloads there is the performance going to be the same.

Speaker 1: 19:36

Do you work with them to make that better?

Speaker 2: 19:39

Yeah, we have reference architectures and I mean, since we started off all these hyperscaler integrated offering, we've been working with them to provide validation reference architecture. But, frankly, the responsibility lies with them because it's their product. It's not our product. The AVS, GCV are all their product because they package our VCF with their package solution. So they are responsible for driving the performance and the validation.

Speaker 1: 20:04

What do you think is the biggest quote area for VMware at this moment?

Speaker 2: 20:09

There are quite a few, I would say. I would put it in this way One is the modern applications and modern workloads that are Kubernetes is where we are seeing tremendous growth right now. I mean, customers have always trusted us to run their business critical applications, their VDI, the sequel servers, all of those which are VM based thing right Now. In the last few years we have seen a lot more growth since we put Kubernetes runtime as part of the VCF and all of the services that these container workloads require as part of VCF. That's an area of growth for us. So that's number one. Two, I think AI and the AI workloads, especially with our partnership with NVIDIA, with AMD, with Intel. All of these make sure we provide the flexibility and choice of the underlying hardware with GPUs, but we provide the same consistent platform to run their AI workloads.

Speaker 2: 20:57

So now that is the second area of growth that we are seeing, and the third area I would say is more around the storage, the cyber resiliency and the compliance aspect of it. Right, because we work with a lot of stringent, high requirement of compliance like financial, public sector, defense and life sciences, healthcare, et cetera. For them, they want to make sure their data is protected? And if something happens with cyber threats as you know, ransomware is on the rise how do they confidently recover? How do you do continuous enforcement of your compliance at scale? How do you do fast security incident response? So we are seeing a lot of traction there and storage, along with the rest of VCF platform, plays a critical role there. So that's the third area that we expect a lot of growth in the next few years.

Speaker 1: 21:47

Thank you very much for this interview. I think it was very interesting and a lot of information for your customers and potential customers.