VMWare CEO Pat Gelsinger Claims It’s Still All About Costs for Enterprise IT CIOs

VMware’s CEO Mr. Pat Gelsinger participated in a panel discussion during the last day, February 13, 2014, of Godman Sachs’ Technology and Internet Conference. Mr. Gelsinger was joined, for his presentation, by Mr Don Duet of Goldman Sachs, Co-Chair of IT for the firm.

Readers can visit the VMware investor’s website to register to listen to the complete webcast of this panel discussion.

Mr. Gelsinger’s opening comments touch on a couple of points CEOs of early stage ISVs with big ambitions ought to think about. These include:

  • planning for the inevitable transition, from a particularly favorable stage of business ” . . . when you’re golden that long, everything you touch turns to gold” (quoted from Mr. Gelsinger’s opening presentation in this webcast) to one where business success is harder to achieve.
  • how to manage partners. Mr. Gelsinger notes: ” . . . we just finished our Partner Exchange Conference here in San Francisco . . . where we said ‘here are our focus areas and if you don’t get it (right to our partners), then I’m going to tattoo them on your forehead.” (ibid)

But his observations about how VMware’s enterprise customers are grappling with on premise computing vs. public, private, and/or hybrid clouds, are, for me, even more worth a listen.

Software Defined Data Centers (SDDCs)

Gelsinger categorizes the market for SDDC solutions as one of the two focuses of VMware over the next near term. The other important trend is the market for hybrid cloud computing solutions.

If readers are not familiar with this SDDC concept, Patrick Kerpan, CohesiveFT wrote an article on this topic for Wired Magazine back in January 2013, Software-Defined Data Centers: Built for the Cloud, Modern Apps, which is worth reading as it defines the concept.

Gelsinger claims enterprise organizations continue to develop software for on premise use (he points to an approximate 10-15% CAGR). But the growth rate of this need is dwarfed by the growing demand for cloud alternatives (he points to an approximate 40% growth rate for these solutions).

He categorizes the SDDC approach as ” . . . about the on premise . . . ” (ibid), and the off premise trend is ” . . . about the hybrid cloud . . . ” (ibid)

The familiar driver, for most of the CIOs Gelsinger has spoken with, is entirely financial: ” . . . how do I reduce the cost of what I’m doing today . . . and how do I build the infrastructure needed for what I’ll be doing tomorrow.” (ibid). Another nice nugget from this presentation is the estimate of the relative size of a typical IT computing budget, vs. the broad operating expense for one of VMware’s typical customers — 3%. Gelsinger presents this figure during his opening remarks.

On the topic of VMware’s product category, he makes the following claim ” . . . no technology has been more helpful for reducing the cost of today’s footprint . . .[than virtualization] . . . and we’re going to do that for everything you do in the data center . . . ” (ibid)

My advice? Product managers at early stage ISVs should continue to focus on collecting as much data about computing costs for their customers as they can. At the same time, the imperative for them is to use Marketing Communications media to demonstrate how their solution(s) significantly contribute to a reduction in these costs.

As Pat Gelsinger demonstrates during this webcast, those ISVs capable of framing a convincing argument for their products around enterprise IT computing cost reduction, still have the advantage.

If your organization can use a re-alignment of its marketing communications around cost topics, and you lack the internal resources to handle the effort, please contact us.

Ira Michael Blonder

© IMB Enterprises, Inc. & Ira Michael Blonder, 2014 All Rights Reserved

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