Times of India: November, 2016
New Delhi: India has been a major R&D centre for VMware, accounting for about 4,000 of its engineers, of the total global employee strength of 18,000. In recent quarters though, it has also become one of VMware's top performing markets. CEO Pat Gelsinger was in Bengaluru recently, his first visit to India after Dell's $67-billion acquisition of VMware's parent company EMC, and spoke exclusively to TOI. Excerpts:
How is India doing for you, both the R&D centre, and as a market? You called out India in one of your recent earnings calls.
India is involved in almost everything the company does. In almost every product that we announce, almost every service we offer, there is some role for India and in some cases they are the leaders in creating those or actually own the business. We have now 4,000 or so people here, and this is VMware's second biggest site; our biggest is our Palo Alto site. This site is very integrated to the business and is expanding in its relevance for us. Our business in India is now growing well. VMware traditionally has not performed in the Indian market to the degree that we should have. Now, with Arun (Parameswaran), who runs our Indian business for us (joined from RedHat in 2014), effectively leveraging the India R&D centre to engage with local customers, we're quite excited by the market momentum.
You spoke about product ownerships by the India centre. Which are some of these?
Our NSX (network virtualization) product is owned out of the US but the most compelling use case for NSX is what we call distributed firewalls, that's developed and led out of India. In our networking cross-cloud services, there are pieces of management, storage, networking work that is being done here in India. For our AirWatch mobile management business, about half of the engineering is done here. In our management business unit, which is comfortably over a billion dollar business now, there are several products that are done in India.
You said the India market is now growing well for you, and you said it was partly because your R&D is working more closely with sales. Is that the major reason?
I think there are several things that have changed and are changing. Fundamentally, VMware's technologies automate many manual processes. Hardware required people to manage it; when you put VMware software in place, there's less hardware and more of automation. India is a land of cheap labour. Cheap IT labour was what caused the entire Indian IT sector to emerge. I'm not saying it's a bad thing by any means. But because labour costs were so low, India could use traditional approaches and did not need to put in place virtualization or many of our automation technologies to accomplish similar outcomes. This is why, across the world, over 80% of workloads are now virtual, but in India, it's 30%. Now, in the cloud world, given the scale of the environments, no human can do them. Even if you throw a million humans at them, there are so many virtual machines running at such scale, at such speed, there's no way you can do it manually anymore. The second is that, while India is still comparatively low cost, you're not as low cost any more, and this is part of the pressure on all of the system integrators. They have to move to higher margin, higher value-added services. And yes, we've done a lot of work to bring our leadership team together to leverage our engineers better in our local sales and marketing efforts.
You are saying cloud is growing rapidly in India and that's creating demand for virtualization?
Yes. Both public and private cloud. Private cloud is essentially - give me a public cloud like experience in my own datacentre, and it has to be as ordinate and as scalable as I would experience this getting it into the public cloud. The Indian market is similar to China. If India is 30% virtualized, then China is like 25%. For similar reasons, lots of cheap labour. But all those aspects are changing in China as well.
What does Dell change for you?
I have used three words that describe the Dell acquisition from the VMware perspective: independence, ecosystem and acceleration. Independence - we remain an independent company, separate boards, separate customers, separate ecosystem. Ecosystem - Michael (Dell) is committed to the VMware model, we will have a unique and independent ecosystem relationship. Earlier this morning, sitting in that chair was the managing director of IBM's business in India. IBM largely competes with Dell. We are quite excited about our IBM partnership. Amazon competes with Dell, but we think our Amazon partnership will be good for us. And we expect our business with Dell to accelerate; over the next several years we expect a billion-dollar revenue acceleration for VMware as a result of Dell.
Would you say the public cloud is exploding, generally, that big companies no longer hesitate to use it?
Three years ago, enterprises had a very cautious view and were generally negative. Today, it is like...I am using it in some capacity. There's a fundamental shift. But there is a wide range. Some customers would be using it for very limited purposes, like say when they do a new mobile application, may do that on Amazon or Azure or some other public cloud offering. Others are at the other end of the spectrum - I'm not going to build datacentres anymore. And there are some in the middle - I'm going to have a real balanced environment.
We hear half your management is now Indian...
Yes. My direct staff...it's interesting. Rajeev Ramaswamy, who we hired from Broardcom recently, we have Sanjay Poonen who joined us from SAP about three years ago, and then Shekhar Iyer, Raghu Raghuram, Bask Iyer. Bask joined us from Juniper about a year and a half ago. And Shekhar and Raghu have been with us for a long time, so literally five of my leaders...
Five out of?
Five out of ten of my direct staff, so literally half of my staff is of Indian descent. Most of them are from Chennai. So somebody was telling me, we have two locations in Bengaluru and Pune now, maybe I was getting lots of votes to make the next one in Chennai. I will neither confirm nor deny (laughs). But I'll say that it is interesting that overall, senior Indian technologists have emerged in Silicon Valley companies in very significant ways.
We hear Diwali and Halloween are your biggest celebrations in the Palo Alto campus...
We have a variety of celebrations for different holidays and events, but the two biggest are Diwali and Halloween. We had thousands of people and kids on campus for the recent Diwali celebration.