There are several interesting power dynamics currently at play in the industry, particularly around VMware ecosystem challenges. This year’s VMware Explore event has been marked by the intersection of emerging technologies, such as generative AI and shifting strategies among industry giants.
This year’s VMware Explore looks very different compared to years past. It’s sparsely populated, but it represents the tip of the pyramid, according to Dave Vellante (pictured, right), chief analyst at theCUBE Research.
John Furrier and Dave Vellante discuss power dynamics during a CUBE Pod analysis at VMware Explore.
“The customers that I’ve talked to here are all investing in VCF. They’re sort of what I would call the all-in or mostly-in customers that, basically, are running mission-critical applications on VMware,” Vellante said. “The vibe is completely different.”
Vellante spoke with John Furrier (left), executive analyst at theCUBE Research at VMware Explore, during a CUBE podcast analysis on theCUBE, SiliconANGLE Media’s livestreaming studio. They discussed the evolving tech industry landscape and the developing strategy tied to VMware ecosystem challenges.
VMware ecosystem challenges in spotlight
The focus at VMware Explore this year has shifted significantly, with analysts closely monitoring the high-stakes environment around VMware ecosystem challenges. There’s so much risk-reward opportunity on the table of VMware right now, according to Furrier.
“VMware runs in a majority of the enterprises out there, IT departments. There’s so much built around it, jobs, people make money from it,” he said. “There’s software developers, there’s ecosystems. So, whether you’re just a person who has a job, if that goes away, you’re out of a job.”
Those reasons are why the stakes at play at the most watched piece of the show this year, according to Furrier. That brings with it important questions tied to VMware ecosystem challenges.
“What will happen with the ecosystem? Are people going to switch? What’s the deal with the licenses? Is VCF ready, is it truly a great platform? Can it sustain another run of durable value creation in the IT world?” Furrier said. “I’m telling you right now, that’s all everyone’s talking about.”
There is a reduced presence of ecosystem players at this year’s VMware Explore, which could represent an emotional backlash from those who didn’t make the cut, according to Vellante. That may be a missed opportunity, but there is an additional opportunity at play too.
“To me, it’s an opportunity, because Broadcom is setting a high umbrella on margins and pricing, and most of these services companies, these partners, they’re operating on much thinner margins,” Vellante said. “Even a company like Dell, its operating margins is in single digits. And take Nutanix, their operating margins are virtually nonexistent. So, it’s an opportunity for them to actually partner, however that partnership evolves, with Broadcom to pick up the slack that Broadcom is less interested in.”
Nvidia’s dominance and future prospects
The tech industry is closely watching Nvidia Corp. this week, with the company’s upcoming earnings due Wednesday. Nvidia could be a $200 billion company entering the end of this decade, according to Vellante.
“I still like the Nvidia thesis, the long-term thesis. I know everybody’s coming after them. I know there’s a lot of talk about inference, but … training and inference go together,” Vellante said. “I think Nvidia has a lead that is maybe not insurmountable, but I think it’s sustainable for at least five, potentially 10 years.”
The only thing that could hurt Nvidia right now is themselves, according to Furrier. Right now, their lead is huge.
“They’re still a chip company, they’re still priced by the chip, but their value’s software. As long as there’s no major ‘world event,’ force majeure, something bad happens to Nvidia, things blow up, allocation happens on the hardware side, they got this,” Furrier said.
CrowdStrike navigating a critical juncture
As CrowdStrike navigates a turbulent period, all eyes are on CEO George Kurtz’s upcoming strategy. Recent ETR data very clearly indicates that customers are still in negotiations, according to Vellante.
“We know Delta Air Lines is going to try to get a pound of flesh. All that is going to cause, I think, a CrowdStrike reset,” Vellante said. “I think you got to wait for that and maybe look for opportunities to jump in after that.”
It’s important to not try and catch a falling knife, according to Furrier. There is likely to be a reset in the months ahead.
“I mean, they’re going to have to take their medicine. I think their product leadership is just too good and they don’t go away,” Furrier said.