from the cube studios in Palo Alto in Boston connecting with thought leaders all around the world this is a cube conversation hi I'm Stu min a man and welcome to this special cube conversation over helping cover the second generation of the VMware cloud on Dell EMC happy to welcome to the program brick Villiers who's the vice president of data center and cloud with IDC not too far from me physically even the worse in today's day and age we're all practicing social distance Oh Rick great to see you thanks so much for joining no thanks - pleasure to be here looking forward to a great conversation all right so Rick you know usually this time of year you and I see other more than we their families because we're traveling a both circuit going to the analyst events like and one of the topics we spent a lot of time talking about over the years is of course cloud you know VMware's partnership with Amazon is of course one that the entire industry but notice of and the relationship of Amazon VMware and Dell is an interesting one what we're talking about today though is the VMware cloud or in the shorthand VM see on L EMC and it's the second generation of this product help us understand kind of where this fits in the categorization and the research that you in an IDC like that yes - 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 environment they've been deploying those for the last four or five years we were seeing them up on a sort of refresh cycle and when he 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 had had some problems with their first generation of their private cloud environment and that they needed to address those and one of them was a consistency problem is that you know every private cloud they built whether they build it themselves or whether they looked at a host of private cloud provider even in their own company we're different different technologies different and figure 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 till the next refresh cycle so we're always behind we're playing catch-up and and neither one of those things really aligned with what they felt cloud should be and what they've been seeing in their public cloud environment and so when we looked at that and we started looking at the feedback a boat was coming on or we realized that we were about to see a new generation of private cloud environment but 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 its first of all these are it's not so much a private cloud is that they dedicated cloud it's it's I have resources that are dedicated to a business or a service an application I want to get done and and I want to basically operate that just like all those other cloud and then the second thing is is they said and by the way this is less and less about a general-purpose new data center and we just run my data center 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 you know a city block whatever that is and 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 we started calling local cloud as a SERP because it reflected both of those things it says like it is no longer assembling piece parts but it was consuming these resources and as a service method with all 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 in and that's what led us to start talking about this in 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 you know 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 a hundred and fifty definitions of what a private cloud is so if I hear you right local cloud is in some ways it's an extension of what we see in the public cloud so you know I think back it used to be hey can I get this same stack in both place we saw companies like you know IBM and Oracle and even VMware thing you know how can I match what you have in your data center there as opposed to you know as your stack AWS outposts we're saying hey we're actually going to give you the you know the same you know same hardware you know same software and as a service as you said yeah you talked about also some of those new locations so you know without getting into too much depth so it sounds like and I've looked a little bit of research there there is the data center piece and then really emerging there's the potential for edge use cases do I see that right is just just like you know we've got kind of the hyper scalars we've the data center edge is pulling on everything so yeah your city you're saying edge doesn't kill the cloud and everything before it it's gonna just be another op in oh absolutely I mean for us this is it's more of an extension of the cloud environment and by that we also said one of the other critical things in this is it's it changes 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 service designs and this sort of you know DevOps driven application development model into both the corporate data centers which absolutely this these solutions like 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 a lot of compute and storage but now if you're trying to do things like real-time monitoring for you know in the world we're living in today oh and air you know 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 you know sitting out halfway across the country it has to be at the airport but I need to be able to basically have a reliable consistent cloud environment but now I can put in 10 airports or 100 or so it's that combination of location but consistency everywhere I put it that's part of what this this new stories about and and I think that's the other big part of the message here excellent Rick so one of the things I we get into the numbers and talk specifically about the VMware solution how do customers get from where they are who these type of solutions you know one of the discussions around private cloud is could I upgrade what I have moved to these environment and I think about many of the solutions that are extending public clouds it it it doesn't necessarily mesh into what I have today so it did how do we get from you know the environments that I have today you know and how do these local cloud as a services fit in yeah so this is 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 set where you but yet it's creating that public cloud environment you can do a lift and shift and leverage this as a way to MA 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 and still run it locally get those kind of things tested and I wait and as you decide which functions you may want to move offload to a public cloud or add dr you can use this platform to do that but i think there's there's more to it than that the the other part of of what we talk about here is is and I think it's something that that needs to be addressed as something that helps people do this faster is these new systems while very modern very consistent there is a great value they like many of the more modern merged systems that are coming on the market have very different power profiles very different network requirements then 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 solutions great but you know I have to make sure I've got the right power and I've opened up the firewalls and all those things there one thing that I found interesting is we're starting to see companies say one way to remove that friction is you know there if there's a colocation facility near the customer site that has great power has great network connectivity you know 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 in that activity to basically make this migration a lot easier for companies when they want to when they want to transform their environment yeah really important points there Rick absolutely we you know we've been telling companies for years you need to understand what you're good at and what you're not and you know we're in concrete and managing power and bullying there's a handful of companies that are excellent at that most of the rest of you companies you suck at it so therefore if you can leverage other people that you can do that so when you say local it does not need to mean a piece of real estate that I own it could be you know that that spectrum of boosting or to the environment yeah all right let's get to the numbers Rick so we're gonna pull up a light here with some of your research you know for years we've been talking about you know 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 we're looking at here yeah so this is the thing part of it when we were talking about this forecast and we again we're looking at product like you know the VMware cloud on Dell you see and the alternative solutions out there is is for part of the you space which we've talked about whereas this is a the next-generation of the corporation private cloud with better connectivity and better consistency in some ways that's the easy activity but what you're doing is as we've said is I'm translate I'm transferring from a upfront capital expenditure to a 3-4 year subscription and so when we look at this and we started thinking about the forecast and what we're saying is what I've done is I've moved from you know 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 lot of companies are gonna be leveraging these and they're in their private cloud and their data centers the revenue stream to the provider in this case VMware and WMC or the group were talking about today streams over three years so the forecasts can look really big or grows very fast but that's because that subscription revenue keeps growing and growing so today when we've looked at you know comments some of the solutions that have been out there you brought up earlier you know the Rackspace and others as early versions of this but you know it's still relatively new these types of solutions have only really the market now for six months seven months so 2020 even without Co vid 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 you know that accumulated revenue stream that subscription scream both for enterprise and for a growing number of edge use cases we're talking you know 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 conversation is is the 5g build-out in 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 so absolutely if you want to see you know total revenue streams here over you know in 2022 as we talked about here just under five billion dollars going from you know a half a billion dollars this year but even the biggest growth in the business expansion is after that and why we think this is is the value why 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 is gonna be such a big and important market in the coming years yeah absolutely and you know has an impact on your job rake instead of counting all that is in the growth there you're you're now talking to Wall Street about you know oh well Dell might have 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 you know what do you see it affecting their adoption of what they're doing with their overall you know I mean this is the case specifically for VMware cloud on Delhi see is you know without a doubt as we all know that VMware and and is 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 and understanding how to operate and drive those environments and 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 that's to recovery and and and sort of the AB neo 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 is 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 you know VMware also now is being very you know focused on making sure that it's also a strong platform for these next-generation cloud native development environment and that's been added to these platforms and will absolutely expect to see this and all the VMware cloud solution so that's another great part of this is there again preserving that ability for their customers who both do better with their existing environment and also have a platform for going forward with these new systems you know for us the big thing is is a continual 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 making a commitment to to their customers we are going to make these ingenuously available available on very good short notice and that they continually improve and that's gonna take a lot of back-end investment because really VMware has to now centrally manage not a hundred or a thousand potentially tens of thousands of system for many customers around the world that's the real next big step here we see is when you can add that fleet management ability so the company has the ability to say I can now deploy some great new service in one place a hundred places a thousand places while still being secure while still offering my end users you know the availability and the latency that they want that's a very powerful thing that companies are gonna be able to offer in the coming years alright well Rick fillers really important items they're really glad you brought up you know about a modern application about their data of course you know the inverse partner Dell has a strong legacy in data you know some pcs track you know the explosive growth of that or you know more than a decade now so thanks a lot and I think you captured that perfectly the data control part of this is is critical all right lots more from the VMware cloud on Dell EMC I'm sue minimun and thank you for watch the cube [Music]