VMware's Inside Man: An Interview with Carl Eschenbach

A Q&A with the VMware COO on how the company intends to carve out a market for its unique brand of Infrastructure as a Service.

The company that everyone else sees as the market leader in virtualization is a year removed from its dramatic CEO shuffle, which happened around the time of VMworld 2012. What's interesting is that within the company there's no perceived focus on maintaining that market-leader position in virtualization, but instead a drive to move on to bigger opportunities -- in the cloud. That vision has been taking shape for more than two years, when the company started kicking into gear its vision of a software-defined datacenter, which has been going through refinement since then. Even in the past year, much has changed in personnel, vision and corporate culture at VMware Inc.

One constant, though, is Carl Eschenbach. Eschenbach has moved up the ranks since joining VMware in 2002, and a year ago, at around the same time as the CEO shuffle, he was moved up to chief operating officer. So, besides bearing witness to the changes taking place right above him for the last decade, he's also been intimately involved with crafting and fine-tuning VMware's vision and making sure it stays on track.

Virtualization Review interviewed Eschenbach and asked him to self-assess the company's success with its hybrid cloud vision so far, much of which you'll be hearing about atVMworld 2013 in August. "We'll be showcasing and highlighting the early success we're having with the vCloud Hybrid Service and where we're taking it in the future," he said, "and we're bringing real proof-points at the meeting this year." Here's the rest of the interview.

Virtualization Review: VMworld will be a bit like an anniversary party, marking a year in the role with the installation of a new VMware CEO. In general, what have been some of the biggest challenges this year so far for you personally and professionally?
Carl Eschenbach: It's really two anniversaries. It's truly become an industry event as well as our own, for the virtualization world. It's our 10th anniversary, and we expect to have a great turnout.

Second, it's the first anniversary for Pat Gelsinger as our CEO, when he made his first appearance on stage at VMworld 2012. He took over the reins from Paul Maritz. I think it's been an exciting year for VMware and an exciting year for Pat, as we looked at refocusing the company on a fewer number of priorities this year than we had when we went into VMworld last year.

As far as what were some of the biggest challenges, I'd shorten it down to it being a transition year. It's been a transition year in two different dimensions. No. 1, we obviously had a couple of leadership changes, and it's been quite a transition to get a new leadership on board, get us all focused on the same set of core priorities, and I think Pat has done a great job. We're really starting to see the core executive team at VMware gel together, understand the roles and responsibilities we each have. We feel like we're starting to execute as a team that's producing results in a very good way for customers, employees and shareholders.

An interesting challenge -- but an opportunity -- is VMware refocusing on three priorities: the software-defined datacenter, the hybrid cloud and end-user computing. We had to take a look at all the assets that VMware had owned, either through organic development of products or through acquisition, and we had to determine which assets were going to fit into one of those three priorities. The ones that did not fit, we decided to divest. Through those divestitures, it's got us focused on those three priorities.

Now that we have those divestitures behind us, I think we're more focused and energized than we've ever been.

Can you provide an overview of VMware's strategy to address these areas?
The software-defined datacenter is something that VMware brought to market almost two years ago when we started to put together this notion that datacenters will be run in the future by powerful virtualization software that will create a simple environment for IT to operate in and provide more of a self-service way for lines of business or customers to get access to IT. We were very much a thought leader, not just a technology or solution leader.

VMware is taking the approach that in the software-defined datacenter, we want to virtualize all components of the datacenter through virtualization software, which is very similar to what we did in the compute layer, in x86. We want to move horizontally across the other physical components -- specifically network computing -- and do so by leveraging virtualization that we have in datacenters on the compute side.

At the same time, we want to leverage powerful software that will automate the service delivery of IT to reduce the friction between the producers and consumers of IT, to take the human capital aspects out of IT service delivery in a way that allows people to get access to IT services in a frictionless environment. That's the software-defined datacenter strategy.

Our second strategy is to take our notion of the software-defined strategy and expand it or extend it into the public cloud through the hybrid cloud service. We think it's unique because it gives customers that opportunity to federate their workloads into a public cloud without any changes to architecture or IT business operations in a way that we don't think anyone else can do today.

The third area of focus for us is end-user computing. We're moving from a very static or tethered world of the PC era to one in the future that will be largely and predominantly driven by social and mobile. In that space, we're focused on bringing continued enhancements to the market with a product called the Horizon Suite. It provides end-user computing transformation of legacy devices into VDI [virtual desktop infrastructure], and leverages powerful technology to manage Windows environments in a product called Mirage. Last, it allows customers to create this virtual workspace or an enterprise portal for users to get access to their data through any device they want in a secure way, but maintain all security and compliance and control through IT, so IT starts to provision users to their data, not their devices.

And those are the three key focus areas. Everything we do internally and externally, as well as with our partners and services [for] our customers are focused on one of those three key priorities, and we're excited about showcasing these priorities to the world at VMworld.

Speaking of which, it has been a year since Pat Gelsinger was named CEO and was introduced on stage at VMworld. How has the company's vision changed since then, and has there been an evolution of that vision since a year ago? It sounds like you had very similar priorities last year, but it's consolidated.
Yes, but there were some areas that were above and beyond the three. A lot of the components of the business that we decided to put into the Pivotal initiative, which is a company that we had invested in by putting a lot of our layer-2 assets into, that [VMware] once had... Our data products, and our Platform as a Service [PaaS] products like Cloud Foundry, are now a part of Pivotal. That's an example of something that we divested into another business.

At the same time, recently we announced the divestiture of Zimbra. While it was part of our end-user computing strategy, it was much more of an application and that was something that we decided we didn't want to have as part of our end-user computing strategy. We wanted to double back down to our infrastructure core roots on the desktop and really focus on our View and VDI business, and also focus on how we can help people move from a world today that's a very PC-centric to the world of mobile, something that we call the Horizon Workspace.

While we've had some areas that we completely divested ourselves of, there are other parts of the business that were, while they were maybe part of our core strategy, they weren't tight enough to the core platform of virtualization or what we view our future to be.

Of late, we've seen a lot of news around VMware vCloud Hybrid Service (vCHS) and the ecosystem surrounding that. How has the beta program been going, and what kind of responses have you been getting in the market?
We announced the vCloud Hybrid Service back in the May time frame, at which time we said it was open for general availability -- although we were limiting access with a program we called the EAP, or Early Access Program, wherein we wanted to bring in 50 of our customers to leverage the platform and have them get experience with it in a hybrid cloud manner.

I'll tell you, by the time we get to VMworld, we'll have more than 50 [customers] in the Early Access Program, with customers running applications on top of it. The early interest in the program has been extremely positive. In fact, we're limiting the number of people we take on. We want to make sure we get it right -- we want to understand how to operationalize it and make it easy to use and suitable for our customers.

The whole strategy behind the vCloud Hybrid Service is really to look at cloud computing from what we call an inside-out perspective, as opposed to an outside-in perspective. What we mean by that is, we're focused on delivering the software-defined datacenter in a private cloud, and we want to provide a seamless extension of that software-defined datacenter into a public cloud environment so people don't have to change their networking, their VM format; they don't have to change any of their security policies; they don't have to change any of their management, automation, or tools around their private cloud. We think we clearly have a radically different solution to cloud computing through this hybrid cloud approach than anyone else in the market, and the customer demand and interest has reflected that. Our entrance into the market was clearly the right thing to do for VMware.

What role do partners play, and what can they do to make vCloud Hybrid Service a success?
The way I think about it is, this is an evolution or next generation of our VSPP, or VMware Service Provider Program, that's been around for a number of years and it has been very successful, where people are leveraging our technology and providing cloud services on top of our platform, but it's under their own brand.

The vCloud Hybrid Service is VMware's owned and operated cloud service, and we've built it completely on a VMware stack. We look to take all the intellectual property and all the runbooks, how we run our own cloud, and provide that IP right back to our partners. If they wish to run a public cloud in the most-efficient manner on a VMware environment, we're going to share that IP with them.

VMware also believes we provide a very good and unique partnering opportunity for service providers out there. What I mean by that is, a lot of service providers do not necessarily want to be in the Infrastructure as a Service [IaaS] business; they want to provide services that sit above the VM or above the application to their customers, and provide higher-level services. So, they're looking to partner with us. They're saying, "We'll use the vCloud Hybrid Service stack, that will be our Infrastructure as a Service offering," because they're trying to target the existing workloads that are already running on top of VMware in the datacenter, and then they'll provide the higher-level services above and beyond or on top of the hybrid cloud itself that VMware would provide. So, there's a unique opportunity with us going forward with service providers.

We also see a unique opportunity to partner with ISVs out there who are looking to move from a traditional model selling perpetual licenses or products to customers who now want to do this in a world known as SaaS [Software as a Service], but again they don't want to be in the infrastructure business. So now, we can provide that Infrastructure as a Service with vCloud Hybrid Service and the ISV can run their ISV application or service on top of VMware. That lets VMware focus on our area of specialization, which is Infrastructure as a Service services, and lets the ISV focus on SaaS services. We're seeing some new ways to partner as we bring this new platform to market.

Have you seen any push back from partners?
No, we haven't seen a lot of direct push back. In fact, they're talking to us about ways of partnering to leverage the VMware brand, to leverage the intellectual property that we've built around our architecture, and finding ways to deliver services above and beyond infrastructure, which is really VMware's focus today. So, while some people might believe we're looking to compete with our partners, we're not at all. We're looking to leverage the intellectual property with them, to share it with them, to make them a better cloud provider than they may be today. We don't think a single cloud is going to be the answer in the future.

There's going to be many, many clouds -- hundreds of clouds out there that will be providing infrastructure services, and we know we can't do it all ourselves. So, it's important that we keep our partners in mind and figure out how we can leverage each to expand each other's footprint to offer this truly unique hybrid-cloud solution.

With VMware entering the public cloud market with vCHS, it changes the company from being a software provider to a service provider. The service provider role seems more critical and high-profile. What changes have happened in VMware to make that new, high-profile position successful?
If you think about cloud for a minute and you step back and think about what makes a cloud successful, I think there's two components of it that come together to actually create a very unique cloud offering. First of all, you need powerful software to deliver a cloud. Secondly, it's the convergence or the meeting up with services or service experience. VMware clearly has the software experience, the horsepower and chops to bring that to market. And we've gone out, both through the acquisition of talent as well as people on our staff who have services experience, and we brought those two together to bring what we think is a world-class cloud platform, but also a world-class industry experience to do so.

Earlier this year, we brought in Bill Fathers to lead this effort for VMware, who was a prior president of Savvis. He comes with a lot of background in providing cloud services and infrastruc­ture services. The people who actually built this service offering for us came from very large cloud providers, like Terremark, and others out there.

Let's talk about competitors in this space. Microsoft recently announced its cloud OS vision that competes directly with the VMware software-defined datacenter strategy. Is that of concern, and is there a strategy to fend off the capital and massive install base of Windows admins?
We think we clearly have a unique and differentiated solution for a hybrid cloud. You mentioned that Microsoft has an installed base of Windows administrators, but don't forget that VMware has a pretty large installed base from a virtualization perspective. We have more than 40 million VMs under management today in the private cloud. All of those workloads need to have the ability to seamlessly extend into a public cloud offering and that's what our hybrid cloud solution has today. There's no one -- Microsoft [included] -- that can provide that seamless extension without any change to the underlying architecture or operations and how they run. No one can do that as seamlessly as VMware can today in our competitive space.

What about Amazon? There's talk of Amazon being the big fish in the public cloud and IaaS space. Is the goal to overtake it or be in the same conversation when it comes to IaaS?
I think you need to look at cloud from a different dimension. We don't believe we're entering just the public cloud space. We're truly creating a category called hybrid cloud that differentiates us in the market from Microsoft, and in this question context, Amazon.

Amazon is taking the approach where it's getting customers to sign up to its service, and that service is significantly different from what it's doing today in its private cloud. VMware is taking the approach that's an inside-out strategy, where we're leveraging VMware's incumbency and presence in the enterprise and providing [customers] that same level of service, delivery and platform architecture in a public cloud environment. That's not something that Microsoft or Amazon can do today.

Speaking of Amazon, a few months ago there were a few reports of your outward frustration with Amazon's growth. It seems that Amazon has been growing even faster since that time. What has VMware done so far to mount a challenge to it, and what are some of the outward results that those measures are working?
We recognize that there are a number of competitors in the cloud space, but we don't think there's a direct competitor necessarily in a hybrid cloud offering out there that has something to compete with us, when you're trying to federate workloads from a private cloud to a public cloud without any disruption of service. We think we have a differentiated solution. We think we're creating a category of hybrid cloud that doesn't exist today. While we respect the competition, we're excited about the offering we're bringing to market.

As VMware's hybrid cloud message seems to be getting more visibility these days, it seems to dilute the work elsewhere, especially in mobility, which has been a strong area lately for VMware. How does VMware maintain momentum in mobility and other areas?
Right now, we couldn't be more pleased with our end-user computing business than we are today. We've heavily invested in our end-user computing business both internally in the business unit as well as externally on the go-to-market side. In the first six months of this year, we have hired approximately 200 people just on the go-to-market side to help drive VMware's solutions into the market and also leveraged the existing sales force that are already selling the products for VMware. We expanded and we've invested heavily both in our sales force and our channel. We're taking market share: We grew our business in the last quarter in end-user computing in the mid-teens, and our competitors grew in the low single digits. So, we're actually growing a bit faster than the market and we're clearly growing faster than our competitors.

Just because we have a very clear and focused vision on our software-defined datacenter and emerging business in our vCloud Hybrid Service, there should be no misunderstanding that we are doubling down on our end-user computing and investing heavily as well.

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