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Talk about VCE. A number of partners have had success with Vblock and the VCE company model, it seems, but more often, they like the Vblock model of selling converged architecture and what that has accomplished, and still have some problems with VCE the company. The big question I have is that based on what's publicly available in your various filings, VCE is continuing to be operated at a loss. Cisco has a share of that loss, obviously. So how long do you keep funding VCE?
We went into this relationship, and I was part of the original team that investigated how we could bring value to customers by bringing together the industry-leading technologies from three great companies. We had concentric circles in many of the customers we each serve. We have preintegrated three leading technologies and their road maps, added value around automation and security, and actually, I think that's why we've been successful with the UCS platform and why our market share is increasing.
The answer to your question is, this is an investment we made in building a unique value proposition that is second to none. The success of VCE, going past $800 million in annualized run rate, that's clearly going to drive $1 billion in data center infrastructure at the high end, and has been well worth the investment. We are extremely committed to the VCE model and extremely committed to the value we brought to customers. We think there's a whole runway to expand the reach of VCE and our capabilities much more through the data center partnerships we share. We are committed 100 percent and achieved exactly what we wanted to, which is a unique model that no one else has. You will see announcements from others beginning to emulate the model that VCE established, and that adds credibility to the fact that we did the right thing.
But do you really need VCE? You've had astounding success with UCS and you get it as part of a package with the FlexPod model and other configurations, too. So why does Cisco need VCE at all?
There is a part of the market here that absolutely wants to know the commitment behind converged infrastructure, and oh, by the way, put that commitment to a multiyear road map, the integration of vSphere with our evolution in the Nexus OS, and keep those road maps aligned. The cost savings we generate for the customer is actually the value proposition. How do we then help our partners pass those cost savings on is the opportunity to scale. There is always a role for the three of us to play. The long-term future role for VCE, I think we just look at the automation. There's lots of opportunity for us to go further, especially with enterprise-class workloads being optimized.
The things you accomplish with VCE, the tightly integrated stacks. You couldn't accomplish this with the three separately operating companies in much the way you do with FlexPod?
I know what the difference is, and it's a different value proposition. We are committed to that value proposition and expanding the options we have for partners.
What is the big difference? Partners get the model and there's no question they like the idea of the integrated stack, but why do you need the VCE company at all considering all the headaches VCE caused in the channel? Why do you need them when you can have a similar relationship to what's there with NetApp for FlexPod?
The committed resourcing we put behind the level of integration with multiple platforms. The level of automation we're trying to drive here is a differentiated offer, and I'll come back to it one last time, the uniqueness of the Vblock offer is that customers are asking us to commit to that long-term integration and that's reflected in the investments in VCE that we're all going to continue to make and opening up that experience more in the future to offer options of consuming that. That's why we're going to mainstay the investment.
So Cisco will continue to fund VCE?
Absolutely.
You told me last summer that you had been personally involved in fixing the logistical headaches we'd seen from VCE, especially regarding the channel execution. What work did you do there?
You know, I think they solved a lot of the problems that existed themselves. We provided the feedback we heard from partners, and there has been huge progress. The No. 1 progress area has been the huge turnaround in Vblock delivery, the level of partner engagement, and we have some very successful stories we'd love to follow up with you on about how partners have been building VCE Vblock capabilities right into their core offers.
VCE is a success?
VCE is a huge success. We made a market and achieved all of the objectives we set out, and achieved them probably faster than we expected.
