Enterprise

VMware CEO Raghu Raghuram: Edge computing is growing faster than the cloud

The now-standalone company is staking its immediate future on the multicloud era of IT and hybrid work, while anticipating increased demand for edge-computing software.

VMware CEO Raghu Raghuram

VMware CEO Raghu Raghuram spoke with Protocol about the company's future.

Photo: VMware

Nearly a year into his tenure as CEO, Raghu Raghuram believes VMware is well-positioned for the third phase of its evolution, but acknowledges its product transformation still needs some work.

The company, which pioneered the hypervisor and expanded to virtualized networking and storage with its vSphere operating environment, now is helping customers navigate a distributed, multicloud world and hybrid work with newfound freedom as an independent company after being spun off from Dell Technologies last November.

“I think we've done a good job of repositioning and re-aligning the company around the tremendous opportunity that's ahead of us,” Raghuram said in an interview with Protocol. “If I measure it by what our customers are telling us about where they want to go and how our strategy aligns with it, I think we have done really well. If I measure it by alignment of excitement level amongst our employees, it's great. Our product transformation is a work in progress.”

Raghuram had been chief operating officer of VMware, overseeing all product development, before he became its CEO last June. Raghuram started at VMware in 2003 as a product manager for its flagship hypervisor product, VMware ESXi.

Raghuram talked to Protocol about demand for VMware’s Cross-Cloud Services (which launched last October), how remote workforces have changed its product strategy and demand for on-premises computing at the edge in a cloudy world.

This interview has been edited and condensed for clarity.

Can you talk about VMware’s realignment and what you're trying to accomplish?

About two, three years ago, we started incubating the next act of VMware as a company, and that was born by the realization that … our customers … are transforming themselves as digital companies very quickly. And as they do that, they're rewriting their business applications as well as creating a lot of new applications. They were doing that in their data centers, they were doing it in public clouds, multiple public clouds. They're doing it at the edge of their network.

So there is a new era of IT … that we call the multicloud era of IT. What this means is that customers have a lot of places that they can run their applications. In fact, 75% of our customers use two public clouds or more on their applications, 40% will use three or more, and they are continuing to operate their data centers. And there are companies, a lot of them, who are also building on the edge.

VMware's opportunity … is [to] help our customers master this complexity of this multicloud world, provide them with a consistent way by which they can build new applications faster — wherever they want to build it or run them, however they want to run it — and make it all secure and connected. That's a big part of our focus as a company.

The second area of our focus as a company is … a lot of us … are working from home, working from the road, working obviously in the office in places where the pandemic is subsiding. And in the world of hybrid work, IT organizations are looking for new platforms to make their employees more productive in this world, but at the same time, more secure. That's the problem that we're solving.

What are your three biggest priorities this year as CEO?

The first priority is to transform our product portfolio to address this emerging need that customers have to build, run, manage, connect and secure their applications and users wherever they are — whichever cloud they will be in, whichever network they will be in, etc. We have done a great job of helping our customers in their data centers and helping them manage their end-user devices, so this is the next evolution of the product portfolio. That is the No. 1 priority.

That takes the form of three areas where we provide solutions to the customer. One is helping them modernize their applications through our Tanzu portfolio of products. The second is helping them transform their infrastructure so that they can support these applications wherever they're running. And third is [to] transform their end-user computing platform so that they can support users in a world of remote work. Those are the three areas where we are transforming our portfolio. And then along with that, as we start serving our customers wherever they are, the best delivery model for them is to increasingly deliver our products not as licensed software, but as subscription and SaaS offerings.

You have said that the spinoff from Dell positioned VMware to become the “Switzerland of the new multicloud industry.” Can you explain what you mean, and how being a standalone company enables that?

The “Switzerland of the industry” refers to the fact that we are able to partner with pretty much everybody in the industry. We have partnered very deeply with the top public cloud providers: notably, AWS, Azure, Google, [Alibaba Cloud], Oracle and IBM, to name a few. We also partner very deeply with the infrastructure providers, like Dell, and competitors of Dell, like HP, Lenovo, etc., as well as software companies. We don't take sides; we don't say one is better than the other. We in fact work with a customer and say, “Mr. Customer, of all these various cloud providers and infrastructure providers, tell us whom you want to use, and we will help you execute and implement your strategy across the cloud providers and infrastructure providers of your choice.”

Historically, we've done that in the context of the data center. Now we are able to do it in the context of the data center and the cloud.

When you partner with the big three cloud providers, such as with VMware Cloud on AWS, do you lose control of the customer relationship?

Not really. In all of these cases, the customer is using the VMware software, and they're using this VMware software because of the unique value proposition they get. We get to support them, we get to innovate on the software and make those innovations available on these cloud providers. So the more accurate way of saying it is they all become joint customers. It is not that the customers go to AWS and then say, “Hey, VMware, you're just some little piece inside of the big AWS architecture or the Azure architecture.” We are the reason why they go to use a VMware solution on the cloud, so we're very much front and center with the customer.

You mentioned the hybrid work environment. It's been about a year since you launched VMware Anywhere Workspace. How is that going?

That's going well. Historically, we have always had the ability to or value proposition for what the industry calls unified endpoint management, which basically means that, as an enterprise, you are likely to have a lot of employees that are very often carrying different types of devices. We provided the best management solution across these environments.

What we have done is realized, during the course of the pandemic, that was not sufficient; that was necessary, but not sufficient, because in this new world of post-pandemic, a lot of us are working from home and other places. In fact, one of our customers told me that they consider the perimeter of their network to be their employees' living room … that's doing a Zoom call and Teams calls and everything.

The network becomes very critical, and so we extended our network technology using our SD-WAN technology and integrated that into the Anywhere Workspace. If you're calling from home, you can still have a great Zoom experience or a Teams experience, no dropped calls, etc. We worked with these companies and products to optimize the network experience.

Similarly, network security becomes a very important thing, and there is a zero-trust product category called SASE: securely accessing enterprise applications from home. We integrated that technology and integrated the network experience management technology. As the end user, we know exactly what your experience is so that IT teams can proactively support your issues without you raising trouble tickets or something.

How is VMware Tanzu faring, and can you make the case for why it's better than Red Hat OpenShift or any of the big three cloud providers' offerings when it comes to Kubernetes?

Tanzu's doing very well for a few different reasons. One is it's truly agnostic to the cloud or the underlying platform, meaning the Tanzu Kubernetes stack runs wherever you want it to run.

The second is that the portfolio is a fairly broad portfolio. It is not just a Kubernetes distribution. It includes capabilities for managing Kubernetes environments wherever they are. A customer could be using Tanzu's management capabilities to manage the AWS Kubernetes environment, manage applications that their customers are deploying on the AWS Kubernetes environment or on OpenShift or on a VMware stack. It allows the customer to unify the management of the networking that needs to happen when customers have got some applications in AWS and some applications in on-prem. We do that better than anybody else.

The third reason is [that] it's modular. It's not an all-or-nothing solution like OpenShift. The customer can say, “Look, I don't want to use VMware as Kubernetes distribution, but I want to use VMware's management or VMware's networking.” You can literally pick and choose what you want. We don't impose one sort of monolithic thing to an architecture.

The last advantage over OpenShift on-premises is lots of times customers are running their Kubernetes applications on-premises on top of a vSphere environment, and we have invested a lot in integrating and simplifying the task of running Tanzu on top of a VMware hypervisor or a VMware networking environment. All of this translates into advantages in cost of ownership, advantages in flexibility and vendor-independence advantages in security and resilience.

How strong is the demand for on-premises right now?

When we talk about on-premises, there are two places: One is the classic data center, and then the other is the edge.

In the data center, customers have built what they call the private cloud, and what customers are realizing is [that] instead of cloud-first, they're all adopting a cloud-smart strategy. They're looking at their application portfolio and deciding which applications live on cloud one, cloud two, which applications live on the private cloud. As a result, the … corporate data center is also experiencing growth. They are more the single digit as opposed to the double digits of the public cloud, but it's growing.

The other exciting thing that's happening is enterprises are rethinking the edge of the network. If you're a retail business, and you want to deploy cashierless stores in your retail stores, now you're able to put a lot of cameras that can track what shoppers are wanting to purchase. All of the images have to get processed, so they want to get processed locally. And people are building clouds and applications that go into those clouds on the edge. If you're a manufacturing company and you want to introduce a new level of automation in your manufacturing shop floor, or if you're a logistics and supply chain company, and you're reshoring and you’re nearshoring your supply chain, and you're rebuilding a lot of that stuff new — all these activities are causing an increase in the edge. Or you're a telco, and you're building the 5G network.

The edge of the network is, in many ways, what we would classify as on-prem. That is growing very, very fast. In fact, it is growing faster than the cloud.

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