As the role of artificial intelligence and the need to integrate real-time data continue to grow in government, so do the challenges of how to cost-effectively store, manage, and process all that data securely. After a decade of moving data operations to the cloud, agencies are beginning to rethink their approach in the face of escalating costs, latency, and complexity. I'm Wyatt with Scoop News Group, and joining us to talk about the evolving IT landscape in government is Hock Tan, President and CEO of Broadcom. Hock, great to see you again.
Great to be here again, Wyatt.
So the last time you were with us, you were in the midst of buying virtualization software pioneer VMware. It's now been 16 months since you closed on what is now probably the largest technology acquisition in history. How has that integration been going?
The integration of VMware has gone well. The innovation and value we are providing for our customers have been well received. When we acquired VMware last year, we made three commitments: one, to simplify VMware's offerings; two, to invest in innovation; and three, to enhance our partner ecosystem. I'm on the road talking with our customers and partners around the world. They said they want our products to work well together, be more user-friendly, and that's what we're delivering: a simplified product portfolio that provides a full range of choices, compelling value under an industry-standard licensing model, and a robust catalog of advanced services. We have worked closely with our customers, and I'm pleased our retention rate has remained consistent, if not improved. Our customers see the value we're delivering. That's a big accomplishment.
Congratulations on your early success with that. So last August at your Explore event in Las Vegas, you made a compelling and provocative statement. You said, and I quote, 'The future of the enterprise is private cloud, private AI fueled by your private data.' Could you explain what you mean by private cloud and when you say enterprise, how do you see that translating to the public sector?
Let me put your question in context. Historically, over the years, enterprises built up their data centers in a siloed manner. What does that mean? It means they start off with computing. In computing, they virtualize the computing to improve productivity and efficiency. Then they worry about storage and connecting the two together. They create networking. Three disparate silos. That's what we see in data centers all over the world today. In enterprises, especially large enterprises, they are siloed, and they do not run very well together, and they're not resilient. So what happened 10 years ago was enterprises, pushed by management, pushed by their leadership, decided to create resiliency, to create a platform for their data centers. They should go public, public cloud. And over the last 10 years, they have been putting the resources to put public cloud first. Today, however, all these enterprises going to public cloud are suffering the three S's of public cloud. One: cost. It is much more expensive to run your application workloads on public cloud. It makes total sense. These public companies are catering to 100,000 customers, and they need to make a margin, and they need to margin stack. Second: complexity. Most enterprises have to run both on-prem and public. There's no company that can go totally public, very unlikely. And so public cloud creates a level of complexity, a layer of complexity that they never planned on. And finally, in terms of security, public cloud is never as secure as the workloads you have under your control. That's the thesis. And that's why, frankly, what we are offering in VMware is a platform, an ability to create a platform that is exactly what public cloud provides on-prem at much more affordable cost and a single seamless platform. And of course, the federal agencies, the federal government, has the scale by a large measure. They can create their own private cloud based on the VMware platform, and that's what we've been encouraging them to do.
Okay, so sounds like you're saying the public cloud is not the silver bullet it was once believed to be a decade ago. How does private cloud address that, and what does that mean for existing investments in public sector cloud?
First, it's important to keep in mind that cloud, whether public or private, is an operating model, not a destination. Given that, it makes sense for government agencies to use the public clouds they have for elasticity and bursting workloads. But for reasons I just outlined, it also makes sense for federal agencies to better leverage and build on their on-premise investments. This results in a hybrid world where private cloud becomes the platform to drive efficiencies, cost savings, and innovations. Second, the other added challenge that we have long known is that government agencies are terribly siloed, as I indicated. They don't work well to deliver services to customers. Their constant efforts to patch, remediate, and manage each silo while maintaining the basic automation layers that are running make you less resilient. When something breaks, everybody points fingers. Managing silos while trying to adopt a public cloud increases cost and slows innovation. Private cloud, however, offers the solution that enables agencies to virtualize their entire data center and create a single, manageable platform. Federal agencies can achieve the benefits long talked about with IT modernization using a private cloud operating model consistently delivered across on-prem, public clouds, and edge locations. A true private cloud platform delivers the operating model typically associated with public clouds, but here's the difference: it is resilient, it is more secure, and it costs a lot less than public cloud.
Can you expand on that a bit and outline what you see as the core benefits to federal agencies with private cloud?
