Pat Gelsinger was in town recently to kickoff VMware’s America’s sales efforts for the coming year. The purpose of the Toronto-based event, as VMware’s CEO put it, was to “plant the flag for new growth areas” and to apply “intensive focus on training and sales enablement” – a “deep dump” that would educate, and serve as the “marching orders” for the Canadian, US, Latin and South American teams going forward.
Outlining VMware’s line of market attack, Gelsinger pointed to solid performance on the company’s “growth engines, NSX and vSAN,” to good response on the partnership with AWS, announced in October 2016, and to ongoing strength in the “fundamentals,” such as vSphere and end user computing solutions organized under the Workspace One banner. But he also shared his perspective on product positioning and opportunities for the future: it looks like this.
NFV – huh? To date, VMware’s networking strategy has been focused on the development and marketing of NSX, a virtual networking and security platform that can be applied by enterprises across industry. NFV, on the other hand, which is defined by SDxCentral as the use of IT virtualization technologies that run on high-volume service, switch and storage hardware to virtualize network functions, is generally viewed as a technology that is targeted at the service provider segment. But a convergence of trends appears to be driving a VMware retake on future growth potential and the technologies that will help the company to achieve it.
At the industry level, the service provider community has been identified by VMware – here in Canada at least by national director of solution engineering Peter Near – as an important source of new business going forward. Large consumers of ICT equipment and services, over the past decade many telecoms have transitioned to new market models by replacing declining landline revenues with the delivery of consumer mobile and with new services, such as cloud, aimed at the business community. This transition has required significant retooling and new investment in advanced ICT infrastructure and applications, and many carriers continue the upgrade exercise needed for modernization of legacy systems. As part of this, many service providers are now in the process of shifting focus from hardware onto software, and specifically, to the exploration of NFV. According to market research firm HIS Markit, on a global basis, the NFV market will grow at a GAGR of 42 percent from 2015 to 2020, with investments in software comprising 80 percent of the total in 2020 (as opposed to server, storage and switch hardware). This software-based approach is well aligned with VMware’s software-defined vision of the data centre and networking.
Another key trend that is shaping VMware’s new interest in NFV is IoT, which by virtually all accounts is poised to achieve significant growth by 2020, driven by the ongoing articulation of multiple use cases, and by more optimistic calculations of ROI on IoT scale deployments. VMware has already put its IoT stake in the ground: in addition to device security provided through AirWatch, and the advanced vCloud hybrid management tools and other resources, including access to public clouds offered by key suppliers such as IBM and AWS, needed for the support of many vertical IoT applications, the company has launched an open source SDK for IoT gateway control and orchestration applications – Liota – that resides on the gateway product of partners – and especially Dell’s – to deliver edge computing to support security and analytics in distributed environments. And more recently, VMware CTO Ray O’Farrell has been chosen to head up a new business division within Dell Technologies to manage the Dell/VMware IoT partnership, and to explore new applications in this growing solution area.
From an organizational perspective, the creation of a new business unit was a function of neither fish nor fowl. Unlike new technologies such as PKS and containers, which fold up under the one Cloud umbrella, or AppDefense, which aligns with VMware’s networking approach to security, neither IoT nor NFV fit neatly into VMware’s four key solution pillars: Workspace One, DC transformation, NSX, and Cloud. Rather VMware efforts in these emerging areas fall into what Gelsinger described as “very much a nascent effort. In our overall product planning solution efforts…. IoT and NFV are both still in the incubate phases. As we go to move it into a velocity broad sales motion, we will have to better answer the question [on organizational alignment].” But “In the incubate phase,” he added, “we’ve found that the best thing to do is to keep a pretty narrow organizational focus because in those bigger divisions, you get lost in the group. Those two [IoT and NFV] we’re treating as special cases. I’ve set up specific, business units for maniacal focus on creating that incubate phase in those two areas.”
But most interesting are VMware plans to leverage capabilities in these two outliers, and to merge these with cloud to solve complex issues in IoT for service providers and businesses looking to deploy the technology. To illustrate, Gelsinger sketched out a potential use case:
“Imagine a Smart City and the primary connectivity is 2G or some 3G variant that will be connecting smart light poles, and other things. VMware will gateway to the connectivity protocol of choice at the gateway level. The gateway could be public or private, or managed by a multipurpose utility – cities might sell space for an application to sit on the device at the gateway. There, there will be a set of more intelligent services that will be either local – to address latency, bandwidth, or architectural issues – or cloud-based. And next imagine running an IoT service that supports intelligent analytics that is coming off the service provider network – which will look like a VNF (virtual network function) on an NFV network – it’s just another application that is running for the service provider. Increasingly, they are going to be putting up different IoT services, different apps on their service provider networks, and different IoT services, that absolutely will be part of our NFV approach. The other thing that we did [in a demo at Mobile World Congress] is we demonstrated the ability to run a VNF (an application or distributed service) over the Vodaphone service, a VNF service that was hosted on the VMware Cloud run by AWS. Now you see these three concentric circles playing out in real time: there could be a service provider network that is connecting to IoT delivery, and pulling services from a cloud service.”
“Quite excited” about this “wonderful confluence” – or the interaction of cloud, NFV and IoT going forward – Gelsinger believes that by providing a consistent, VMware-based architecture across these three areas, that the company will be doing its part to foster IoT innovation, a boon to enterprises looking to deploy IoT, as well as the service provider partner: “I believe that as that flywheel gets going, it’s going to become a very powerful cycle of innovation. When, all of a sudden, a service provider has a very cool idea for a new IoT network service, it will be able to spin that up in the AWS Cloud, and then simply move it into the core network or push it to the edge – that’s the world we’re creating.”
But as VMware standardizes and extends its platform, the key question becomes what services will be delivered by the company, by the service provider, by a third-party developer, or by owner of the asset – the Smart City in the case cited above. Gelsinger claimed that as the area evolves, some functionality will clearly be delivered as application services: it’s likely, for example, that voice services would remain the preserve of the mobile carriers. Other areas would be more “grey.” VMware, for example, now offers SD-WAN services via its December acquisition of VeloCloud, and will create, package and deliver a VNF version which is easily consumable by the service provider and that can run in the telco network. “I’m not trying to become a service provider; I’m trying to create core services, and connect these worlds together,” Gelsinger observed. The convergence of telco and IT networks has created a revolution in the past – this will be a line between to watch.