VMware's Gelsinger Talks Virtustream, Dell And What It Takes To Grow Into The Cloud

VMware CEO Pat Gelsinger focused his Thursday keynote presentation at this week's NexGen Cloud Conference on how solution providers should transform their business models for the cloud, but attendees wanted to drill down on what will happen after the Dell-EMC merger in their questions after the presentation.

Gelsinger's audience at the conference -- sponsored by CRN's parent, The Channel Company -- wanted to learn more about the impact of the merger and how VMware will work with EMC's Virtustream going forward.

One solution provider asked how VMware might be impacted by Dell's planned acquisition of storage king EMC, which owns about 80 percent of VMware.

[Related: IDC: Storage Sales Shift From On-Prem External Arrays Toward Cloud, Server-Based Storage]

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Gelsinger said it doesn't matter whether there's a "D" or an "E" in front of the VMware name, as VMware will continue to have an independent board of directors under Dell as it did under EMC. "The result is, we will keep doing what we are doing," he said.

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In a follow-up question, Gelsinger was asked if he expects other big IT acquisitions in the near term, and he responded that there are too many networking and storage companies.

"This year, IT on-premises spending went negative vs. off-premises spending," he said. "Dell is taking the high ground."

Gelsinger also said that the channel partner community is likely to see a continuing wave of consolidation as solution providers look at where they play in an increasingly changing market. "Each one of you has to make some pretty hard decisions where to make your bets," he said.

Another solution provider told Gelsinger she has already been approached by EMC reps who were looking to help her company implement Virtustream, an Infrastructure-as-a-Service technology for running both legacy and Web-based mission-critical applications in the cloud.

VMware and EMC in October unveiled a new cloud services business jointly owned by the two centered on Virtustream, the enterprise-grade cloud services business EMC acquired for $1.2 billion in July. But a number of news sources late last month seemed to indicate that the joint venture may not take off as planned.

Gelsinger seemed to brush off any concerns about the future of the Virtustream-based joint venture, and said that after Dell closes its acquisition of EMC, both Dell and VMware will continue to have a stake in Virtustream.

He also said that VMware will be coalescing several of its technologies, including vSphere, VRA (vRealize Automation), VRO (vRealize Orchestrator), and VCD (vCloud Director) into the Virtustream management system.

During his keynote, Gelsinger talked about the growing impact of the cloud and what solution providers need to keep in mind as they get ready to do business in an increasingly connected environment.

Citing research that more than half of the world's population will have a persistent connection to the Internet by the third quarter of 2019, Gelsinger pointed out: "This will be the first time since the Roman Empire road system that half the world's population is connected."

The average person has 2.9 connected devices, but by 2020 that number should grow to 5.9 devices, Gelsinger said. This is reflected in the growth of apps. Apps built for Apple's iOS platform already generate more revenue than Hollywood films, he said. "What's more important now?" he said. " 'Birdman' or 'Angry Birds'? Geeks rule!"

Gelsinger used most of his keynote to outline what he called five imperatives driving digital business.

The first is what Gelsinger called asymmetry in business, or a battle between unequal-sized organizations. More specifically, he said, today's business climate is characterized more by small startups disrupting larger businesses and less by large businesses battling each other.

"Little upstarts have nothing to lose in attacking big companies. ... But what's changed is, little upstarts have access to cloud and connectivity for unlimited scale," he said.

He used the future of automobiles as an example: Citing a number of surveys but not specifying a timeframe, Gelsinger said that as consumers move from driving their own cars to sharing autonomously driven vehicles, the utilization of cars will increase from 4 percent to 75 percent; the cost of driving will move from a capex model to an opex model, resulting in a 70 percent drop in the number of cars; and the number of accidents will drop from 5.5 million to 1.3 million.

The change in driving habits will lead to a new order in auto manufacturing, Gelsinger said. "Who becomes the leaders?" he said. "Do any of the current companies have a role in the future? ... [This is] a fundamental shift."

The second imperative is the shift from the experimental phase of the cloud to the professional phase. The professional phase, he said, combines the availability of enterprise applications with the governance capabilities businesses need, and takes advantage of hybrid cloud architecture, Gelsinger said.

He estimated that less than 10 percent of IT spending is currently targeted toward the cloud, a figure that will likely rise to 50 percent by 2030. "This is something that we'll be working on for decades," he said.

The third imperative is security, which Gelsinger said until now has been terrible. "No part of IT spending has risen more than security," he said. "[But] the cost of breaches has grown more quickly."

Some of the biggest innovations happening today are in the security arena, with history's richest set of startups and richest innovations now happening. "So why is security such an issue? ... We haven't built an infrastructure to do it [right]," he said.

Doing it right will require a new architecture, he said, built on virtualized environments, that allows security to happen. "A renaissance in security has begun," he said. "We've created an industry that allows security to grow."

Gelsinger's fourth imperative is a new wave of proactive technologies build on an architecture that allows them to work autonomously. He cited as an example devices that can look at a calendar and the weather to automatically adjust home temperatures.

These proactive technologies require a combination of applications with the right algorithms to take advantage of big data and other data structures, Gelsinger said. "Proactive technologies have become the hottest technologies going forward," he said.

The fifth imperative is what Gelsinger called the age of rattling the cage. This, he said, requires anyone who wishes to grow with the expansion of the digital world to be ready to take risks.

"Taking risk is the lowest-risk opportunity. ... The opportunity for change has never been greater," he said.

A couple of managed services providers who heard Gelsinger's keynote presentation said the VMware executive showed he understands how the business world is changing and how it impacts his channel partners.

The ability of smaller companies to compete with larger ones lies at the heart of what MSPs need to do to grow, said Matt Johnson, CEO of Phalanx Secure, a Millersville, Md.-based MSP with a security focus.

"It's important for us smaller cloud companies to learn how to compete with larger companies," Johnson told CRN. "We are a 15-person company, but we sometimes compete with companies with over 100 employees."

Cloud security is a key issue for clients, Johnson said. "I like how Gelsinger said people are spending more on the security side but still not getting the job done," he said. "That shows how important it is for MSPs like us to focus on this area."

Kyle Wentworth, founder and chief technology officer at Fusion-IT, a Jenison, Mich.-based MSP, told CRN that Gelsinger's understanding of how customers are moving to the digital world is making him take a second look at VMware's technology.

Wentworth said his company was a VMware partner about 10 years ago, but eventually moved to Microsoft's Hyper-V solution because it is included at no extra charge with Microsoft's operating systems. "Establishing a VMware practice is expensive," he said.

However, VMware has automated many of the monitoring and management processes related to virtualized environments and the cloud, while Hyper-V is still a much more manual environment, Wentworth said.

"Gelsinger's and VMware's attention to growth in the cloud solidifies our desire to investigate VMware technology for our cloud business," he said.