As we talked about earlier, you're doing well in the cloud right now, but how concerned are you about things like the Facebook Open Project, with gear not made by companies like yours?
This is a market that's going to go through unbelievable speed. I used to say that this was kind of an exceptional time. This is the new norm. So in a single year you could talk about SDN, you could talk about new consumption models, you could talk about IT as a service, you could talk about new players, Google, or Facebook, or Amazon doing this differently than before, all in one year. I watch market transitions and I think about what are the transitions people are [really] after? Speed, OPEX and CAPEX advantages, flexibility, and agility.
This will be just one more series of good challenges. At Cisco we'll say: What's the business objective on it? Then transition is over. What we will not do is leave that concept alone like we did SDN, and allow other people to gain the high ground, and then we play defense. SDN is one of 15 equations that are an important part of the future. We're going to build everything SDN-compliant, we're going to lead in this area, but it's just one of 15 variables, that without intelligence in the network, without servers and storage and switching, software, the network coming together in the data center, and orchestrating this, you can't do it, including security. So those are just yet another set of challenges. This one you're going to see us out ahead of the game on. There are a lot of weaknesses to the areas you said, and we're going to go back and just solve what the customer's problems are.
What's the problem in the IT industry? If you're a stand-alone switch, stand-alone data player, stand-alone server capability, stand-alone storage in the data center, stand-alone anything, this is going to be a hard market to play in. It's going to be white-label-as-a-service or white-label options. So if you're competing against white-label where the decisions are primarily cost or OPEX, you're going to lose. It's where you have to go after solving their problems though. We think there's going to be a brutal consolidation first in the communications industry, which I would argue is on its way again for probably the third time you and I have seen it in our career, and then right behind it back in the IT industry.
So your VCE joint venture, does this have a limited life span?
No. Without VCE, we would not have the position we have in the data center. EMC is a very important strategic partner with us. VMware is a partner at times and a competitor at times. And that's more of the future. From a personal point of view, even though I wish VMware had not gone into networking, it actually is the best thing to happen to us. Because once they did, then we took a step back to what we do best - open architecture, support all four hypervisors, not tied to any vendor for a strategic long-term direction. VCE is going to have a good life cycle. Its run rate, I think we've already said, is a billion dollar plus. Huge. But let's also realize what we're doing with NetApp. It is huge as well. Great partnership. The CEO and I meet quarterly, a very profitable relationship for us both. So it really speaks to how the network is kind of at the center of all these changes and there's good news or bad news. The bad news is it means everybody's going to be shooting at us on one hand. The good news is everybody might want to partner with us if we do it right.
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