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>> From the CUBE Studios in Palo Alto and Boston,
connecting with thought leaders all around the world,
this is a CUBE Converation.
>> Hi Stu Miniman and welcome to this special
CUBE conversation over helping cover the
2nd generation of the VMware Cloud on Dell EMC.
Happy to welcome to the program Rick Villars,
who's the Vice President of DataCenter and Cloud with IDC,
not too far from me physically, even though of course
in today's day and age, we're all practicing
social distance.
Rick great to see ya, thanks so much for joining.
>> Well thanks, Stu. Pleasure to be here.
Lookin' forward to a great conversation.
>> All right so Rick, usually this time of year,
you and I see other more than we see our families,
'cause we are traveling (sound cuts out) circuit,
going to the analysts events and the like.
And one of the topics we spent a lot of time
talking about over the years is of course cloud.
VMware's partnership with Amazon is of course
one that the entire industry took notice of.
And the relationship of Amazon, VMware, and Dell
is an interesting one.
And what we're talking about today though
is the VMware Cloud or in the short-hand VMC
on Dell EMC, and it's the second generation of this product.
Help us understand where this fits in the categorization
and the research that you and IBC looked at.
>> Yeah, Stu, it's an interesting question.
It's one that we've actually been thinking about
for several years now.
And it had to do with some early conversations
we were having back then with companies
about their private cloud environments.
They'd been deploying those for the last 4 or 5 years.
We were seeing them come up on a refresh cycle.
And we started asking about how satisfied they'd been
with those, and where they wanted to use them.
And we got back some very consistent feedback,
saying that they'd had some problems
with their first generation of their
private cloud environment,
and that they they needed to address those.
And one of 'em was a consistency problem,
is that every private cloud they built,
whether they build it themselves or whether they
looked at a hosted private cloud provider,
even in their own company were different.
Different technologies, different configurations,
different sets of tools.
And that was a big problem for them.
The second big problem they'd run into was
basically, every time there's a new technology
or an upgrade or a fix, we basically
can't adopt it quickly.
We can't use it 'til the next refresh cycle.
So we're always behind, we're playing catch up.
And neither one of those things really aligned
with what they felt cloud should be,
and what they'd been seeing
in their public cloud environment.
And so when we looked at that, and we started looking
at the feedback about what was going on,
we realized that we were about to see a new generation
of private cloud environment.
We said, "But this will be different.
"Not just because of new technology,
"but it'll be actually different use cases
"and a different approach."
And the first thing is we said is, "First of all,
"these are, it's not so much a private cloud
"as it's a dedicated cloud.
"It's I have resources that are dedicated to a business
"or a service and application I want to get done.
"And I want to basically operate that just like
all those other clouds."
And then the second thing is they said,
and by the way this is less and less about a general purpose
new data center, and just run my data center
the same way.
It's, "I want this to be a platform for creating
"new services that I want to deliver in a location."
A factory, a hospital, a city block, whatever that is.
And so we brought those together and we started
looking at those and we said, "Well this is really going to
"lead to the emergence of a whole new product class,"
which started calling "local cloud as a server."
Because it reflected both of those things.
It is no longer assembling piece parts,
but it was consuming these resources and
as a service method, with all of the benefits of agility
and responsiveness and continual enhancement
that come with that.
But it was also about "I need to be able to put these
"in new location.
"Not just in my corporate data center, but out where
"I'm trying to do new businesses and services."
And that's what led us to start talking about this
new product category of "local cloud as a service."
And then we started seeing solutions that came out
on the market that fit very much with this idea.
>> Okay, yeah, Rick, really interesting because
you're right.
Private cloud is a conversation we've been having
in the industry for about a dozen years.
And one of the biggest challenges is
you talk to 100 customers and you get
150 definitions of what a private cloud is.
So if I hear you right, local cloud is
in some ways is an extension of what we see
in the public cloud.
So I think back, it used to be "Hey can I get
this same stack in both places?"
We saw companies like IBM, Oracle and even VMware saying,
"How can I match what you have in your data center there,
as opposed to Azure Stack, AWS Outposts?"
We're saying, "Hey we're actually going to give you
the same hardware, same software, as a service,"
as you said.
>> Yeah.
>> You talked about also some of those new locations.
So without getting into too much depth,
so it sounds like, and I've looked a little bit
at your research there,
there is the data center piece, and then
really emerging, there's the potential for edge use cases.
>> Yeah.
>> Do I see that right?
Is this like we've got kind of the hyper-scalers,
we have the data center, edge is pulling on everything
so you're saying edge doesn't kill the cloud
and everything before it, it's going to just be
another option in what we see.
>> Absolutely, I mean, for us this is more of an extension
of the cloud environment.
And by that we also said one of the other
critical things in this is,
If you think about new applications that
you're trying to create,
whether it's in the public cloud or whether
one of these local cloud environments,
they're being built on a cloud native architecture.
And that's one of the other key elements of this solution
is these become the platforms that allow enterprises
to bring things like containers, and serverless designs,
and this sort of dev-ops driven
application development model
into both the corporate data centers,
which absolutely these solutions apply,
but also again to extend it out to places where in the past
you didn't have a lot of IT.
You didn't have computing storage.
But now if you're trying to do things like
real time monitoring for, in the world we're living in today
in an airport, can I use machine vision to track
the health of the people going through the airport?
I need to deliver a cloud service essentially
at that airport.
I have latency issues, I have availability issues.
I can't do it from a data center sitting half-way
across the country.
It has to be at the airport.
But I need to be able to basically have a reliable
consistent cloud environment that now
I can put in 10 airports, or 100 airports.
So it's that combination of location,
but consistency everywhere I put it.
That's part of what this new story's about.
And I think that's the other big part of the message here.
>> Excellent. Rick, so one of the things I,
before we get into the numbers and talk specifically
about the VMware solution,
how do customers get from where they are
to these type of solutions?
One of the discussions around private cloud is,
"Could I upgrade what I have, move to these environments?
"When I think about many of the solutions that are
"extending public clouds,
"it doesn't necessarily mesh into what I have today.
"So, how do we get from the environments that I have today,
"and how do these local cloud as a services fit into
"those environments?"
>> Yeah, and so this is actually one of the interesting
use cases for this is,
one way you can use this is to deploy this
in your corporate data center
where you have you're existing application
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But yet it's creating the public cloud environment.
You can do a lift and shift and leverage this
as a way to, I guess you would say now
it's shift and lift.
Because now you can bring it into this local
cloud as a service platform.
Still run it locally, get those kind of things
tested and evaluate.
And as you decide which functions you may want to move,
offload to a public cloud or add DR,
you can this platform to do that.
But I think there's more to it than that.
The other part of what we talk about here is,
and I think it's something that needs to be addressed
as something that helps people do this faster is
these new systems, while very modern, very consistent,
there's a great value,
they, like many of the more modern converged systems
that are coming on the market,
have very different power profiles,
very different network requirements
than what's in a lot of corporate data centers.
And that's one thing we've seen again and again
when we've talked to people about deploying these
is the technology's great, the solution's great.
But I have to make sure I've got the right power
and I've opened up the fire walls,
and all those things to go in there.
One thing that I found interesting is
we're starting to see companies say,
"One way to remove that friction is,"
if there's a collocation facility near
the customer site that has great power
has network connectivity,
"I can use that place to now deliver this service in days
instead of weeks."
Because it's concentrated there,
you know it's a pure environment.
And I think that's one thing that's also helping
with this shift, is people can leverage
those facilities and that connectivity
to basically make this migration a lot easier
for companies when they want to transform their environment.
>> Yeah, really important points there, Rick. Absolutely.
We've been telling companies for years,
"You need to understand what you're good at,
"and what you're not.
"And pouring concrete and managing power and cooling,
"there's a handful of companies that are excellent at that
"and most of the rest you companies, you suck at it.
"So therefore if you can leverage other people
"then you can do that."
So when you say local, it does not need to mean
a piece of real estate that I owned,
it could be that spectrum of hosting their environment.
All right. >> Absolutely.
>> Let's get to the numbers, Rick.
So we're going to put up a slide here of some of your research.
For years we've been talking about
the private cloud category is huge
compared to public cloud.
Because while public cloud is growing huge numbers,
compared to traditional IT, it is small.
So let's take a look at the slides,
and talk us through what were looking at here.
>> Yeah Stu, so this is the thing,
part of it when we're talkin' about this forecast,
and we again, we're looking at product like
the VMware Cloud on Dell EMC,
and the alternative solutions out there,
is for part of the use case, which we've talked about,
where as this the next generation
of the corporation's private cloud
with better connectivity and better consistency.
In some ways, that's the easy activity.
But what you're doing, as we've said, is
I'm transferring from a upfront capital expenditure
to a three, four year subscription model.
And so when we look at this,
and we start thinking about the forecast,
and what we're saying is, what I've done is
I've moved from an upfront spend in one year,
to spreading it out over three years.
And from a forecast standpoint, that means
in the early years, while you may be deploying,
and a lot of companies are going to be leveraging these
in their private cloud and their data centers,
the revenue stream to the provider,
in this case VMware and Dell EMC,
who are the group we're talking about today,
streams over three years.
So the forecast can look really big, or grows very fast,
but that's because that subscription revenue
keeps growin' and growin'.
So today when we've looked at some of the solutions
that have been out there,
you brought up earlier Rackspace and others
as early versions of this,
but it's still relatively new.
These types of solutions have only really been on the market
now for six months, seven months.
So 2020, even without Covid, wasn't going to be
some huge year.
One thing we see actually is that
these types of solutions are even more attractive
in the world we're living in.
Because they give you that promise
of rapid deployment and scale.
But absolutely by 2022, that accumulated revenue stream
that subscription stream,
both for enterprise and for a growing number
of edge use cases, we're talking revenues
up and around the five, seven billion dollar range.
And that only accelerates.
One thing that's not really showing in here yet
but it's also part of this local cloud conversation
is the 5G build out, and the extension and use
of these local clouds in connection with
the 5G environment.
And that's part of this edge use case, too.
So absolutely if you want to see total revenue streams here
in 2022, as we talked about here,
of just under $5 billion, going from
a half a billion dollars this year,
but even the biggest growth and the biggest expansion
is after that.
And why we think this is, is the value,
why people are willing to pay for this,
is because of that value of consistency,
continuous enhancements,
and a platform for innovation.
That's what makes this all come together,
and why we think this going to be such a big
and important market in the coming years.
>> Yeah, absolutely, and has an impact on your job, Rick,
instead of counting boxes and the growth there,
you're now talkin' to Wall Street about,
"Oh well Dell might've shipped X number of boxes,
"but they can't recognize it over this period of time."
So let's talk about the customers, though.
How does a solution like this,
what do you see it affecting their adoption
of what they're doing with their
overall cloud provider?"
>> Yeah, and this is the case specifically for
VMware Cloud on Dell EMC is
without a doubt as we all know that VMware
is a critical part of most corporations'
IT environments today.
Many of their applications are there.
They've invested great amounts of resources and expertise
in understanding how to operate and drive
those environments.
And one thing this does is, again, it gives them
that ability to leverage those investments
and the things they've done there
for application design and disaster recovery,
and management of their IT environment.
But now, again, use it in this as a service way.
So it's definitely one of the big benefits we see
it helps people make that transition,
removing the friction of that modernization
for a lot of companies if they want to move
to a cloud environment.
That's step one, I think that's value one.
I would say and point out VMware also now
is being very focused on making sure it's also
a strong platform for these next generation cloud native
development environments.
And that's been added to these platforms
and we'll absolutely expect to see this
in all the VMware Cloud solution.
So that's another great part of this is, they are again
preserving that ability for their customers to both
do better with their existing environment,
and also have a platform for going forward
with these new systems.
For us the big thing is a continued focus
by VMware and Dell as partners,
to make sure that it can scale its ability
to operate these environments.
One of the things they're makin' a commitment to,
to their customers, "We're going to make these
"continuously available, available on very good
"short notice, and that they continually improve."
And that's going to take a lot of back-end investment
because really VMware has to now centrally manage
not 100 or 1000, potentially 10's of thousands
of systems for many customers around the world.
That's the real next big step there we see is
when you can add that fleet management ability.
So when a company has the ability to say,
"I can now deploy some great new service
"in one place, 100 places, 1000 places,
"while still being secure, while still offering
"my end-users the availability and the latency
"that they want."
That's a very powerful thing that companies
are going to be able to offer in the coming years.
>> All right, well, Rick Villars,
really important items there of,
really glad you brought up about the modern applications,
about their data of course.
VMware's partner, Dell, has a strong legacy in data.
>> Absolutely. >> Something that IDC's track,
the explosive growth of that for more than a decade.
So, thanks so much--
>> And I think you captured that perfectly.
The data control part of this is critical.
>> All right, lots more from the VMware Cloud on Dell EMC.
I'm Stu Miniman, and thank you for watching The CUBE.
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