VMworld 2015 Impressions

35,000 feet over Utah, one glass of scotch down, ear buds in and my internal notes sent; it is time to write some VMworld 2015 impressions for the blog. In no particular order, here they are:

• VMworld has become a storage show. From the moment you walk onto the expo floor, there is a full on blast of storage vendors. I am by no means a storage expert, but the last large storage company to go public that is still the master of their own domain is a company called NetApp, which went public on November 21, 1995 at $13.50 (note VMEM is small publicly listed storage company).  The split-adjusted price is $0.84. There have been a series of other storage companies that went public, DDUP, 3PAR, ISIL to name three, but all were acquired by the larger storage companies post the credit crisis. Nimble is already a public company, Pure recently filed and I think there were 25 more storage companies with the goal of public listing at VMworld. It will be interesting to see if the big players consume the small players this time around or vice versa. I had one exec of a storage company tell me his CEO’s goal is to buy EMC. Lofty goals are good in life.

• What VMworld was not, is a networking show. As large a presence storage companies had at VMworld, the networking companies were noticeably toned down from last year. The Cisco and Arista booths were quite small and I do not even remember if Juniper had a booth. The smaller networking startups were relegated to small booths on the outer perimeter of the show floor. I did find the HP/Arista converged rack offering to be interesting. I was not sure what to make of this solution when they first announced it, but it appears this is a legitimate effort by HP/Arista to compete with Cisco/EMC offerings from VCE. I also think it might portend a tighter relationship once the HP split is complete.

• Hyperconverged Infrastructure (HCI) is all the rage. Nutanix and Simplivity had huge booths complete with super cars. Pretty much every other vendor had some sort of well conceived or not so well conceived HCI offering.

• I foresee falling prices in the land of cloud. I am not a cloud expert, but I have spoken to a lot of end-users who expressed dissatisfaction with the costs associated with public cloud. They had other concerns around content ownership, security, etc, but the main complaint was cost. I see this going only one way and that is that there will be a prolonged deflation trend in public cloud pricing. I think this deflationary trend will have a profound impact to many vendors across the IT spectrum as well as the cloud providers.

If you have been in the market the last few weeks, I bet that has been an exciting time for you. My thoughts here are a mix of (1) a retest of the 2009 uptend is probable, (2) credit indicators and spreads are not good for the equity markets, and (3) lower global growth will affect bond yields.  At some point good companies are buys, but it feels we are in a rebalance of global FX carry trades and we are dealing with slower growth, crude complex contraction and this is all whipsawing the equity markets.  It is hard to go all in and buy stocks when the market is up big one day, down big the next day and up big the day after.

/wrk