Good day, ladies and gentlemen. Welcome to the Intel Cloud for All Conference Call. At this time, I would like to turn it over to Mark Miller, who will be moderating today's call. Please go ahead, Mark.
Thank you very much. Good morning, good afternoon, everyone. I appreciate your time and joining us to have us share our news about our Intel Cloud For All initiatives as well as our collaboration with Rackspace. This afternoon, this morning, we have Diane Bryant and Jason Waxman with us to share some of that information. At the end, we will have brief time for Q and A.
So feel free to think of your questions, because at the end, you'll be instructed on How to go ahead and ask us our questions. So without further ado, we will hand this on over to Diane.
Hey, thanks Mark. And thanks to all of you for joining us. So we have a couple of announcements today that we want to share with you. First is the launch of an initiative To accelerate the move to cloud computing, so accelerating the deployment of new solutions in public clouds, private clouds and in the hybrid cloud model as well. And that's our Cloud For All initiative.
The second thing that we want to do this morning is share a joint announcement that we're making with Rackspace And this is the first announcement within the Cloud For All initiative. So we are investing to deploy both the critical developer expertise as well as the lab infrastructure that is needed in order to make our stated objective a reality. So the move if you think about the environment, the move to cloud computing is happening because there is A very clear and very compelling value proposition. There's value in the cloud to an application developer. There's Value to the folks that are responsible for building and operating the data centers and there's clearly value to the end user that's Consuming those services that are being deployed to a cloud environment.
The speed to new solutions deployments, The flexibility in addressing customer demand and that inherent CapEx and OpEx efficiency makes the use of cloud computing technology Very compelling. And that value proposition that we talk about, it holds equally, it holds across public cloud service providers For the communications, service providers and for businesses IT operations. So it's a pervasive value proposition. And it's why today about half of all applications are being delivered from a cloud and that's our estimate. So these are applications that are self-service, they're fully automated, they're living in a multi tenant and elastic cloud environment.
And we take that and we project out that that number is going to grow to up to 85%. So 85% of all applications We'll be deployed to a cloud environment by 2020. So as new applications are being developed by businesses, they're going to be developed native growth in the adoption of cloud by large businesses. And despite the fact that most people will say that it's intuitive that Cloud is growing like crazy and we conclude that this transition to cloud is actually not happening fast enough. And there are real impediments for that.
There are impediments for private, public and hybrid cloud deployments today. So I want to talk about them. The first is the fact that there is a rapid pace of innovation occurring today in the cloud software stack. And the result of that pace of innovation is that there are many options for each of the components that are in the stack. So from the hypervisors To orchestration components, to the developer environment, there are numerous choices and even numerous configuration options within each of those choices.
So that clearly then leads to complexity in integrating the various software components into a properly functioning, fully functional software cloud stack. So one a stack that is both reliable and is running at performance. That process takes a high degree of technical Keith today, there's a lot of trial and error that goes into it. A typical deployment takes weeks, at least weeks, if not months, and the Solutions are often what we call snowflakes. They're both unique and they're a bit fragile.
The last Obstacle is there are features that are fundamentally missing that an enterprise IT operations organization would simply be mandatory if they're going to go down the cloud path, Such as high availability, such as version control, management is a big deal. You need to have the management features in Cloud environments that are consistent with the management that exists within enterprise IT today for monitoring, ticketing, Authentication systems, all that standard operational infrastructure. So with that, our goal is To eliminate these impediments and enable the deployment of tens of thousands of new clouds, both private and public, Success as we've defined it is going from an implementation from start to full functional self-service Cloud portal in one day, and ultimately, we should be able to do that even within an hour. So to make that That happened to make that a reality, it's going to take addressing the full stack of the software defined infrastructure. And we've got a very simplified diagram here on the slide.
There are different layers in the software defined infrastructure stack. There is the system layer at the bottom, which is all about how you take various compute, network and storage systems and you create resource pools out of them. Then there's 3 boxes at the top that make up the cloud software stack itself. You have the virtualization layer is first and we use the Virtualization loosely, it could be virtual machines like running on ESX or KVM or it could be containers like Docker. Next on top of that is orchestration and this is a layer that takes the application and then schedules it onto the Correct virtualized resources and correct meaning that it's the resource that the application actually matches the demand, whether it's security or performance latency.
This layer is also responsible for efficiently managing those resources once deployed in the data center on a real time basis. So this is a highly complex layer in the stack. And then the top layer is for the application deployment, so to Allowed developers to easily, rapidly deploy their application out into a cloud environment. So given the current state And with the fact that the industry has been making significant investments in this area over the past 5 plus years, we believe that What is needed is a very structured approach if we're going to make a difference in the adoption curve of cloud. So what we are announcing then today is a new Intel initiative that's appropriately named Cloud For All.
The objective of the initiative is to accelerate the deployment of highly efficient clouds for broad enterprise market And for the cloud and communications service provider market, so a broad sweeping application. To achieve this objective, we're going to make A range of investments and those investments you will see can take the form in industry collaboration, financial investments, whether it's M and A or equity investments. You'll see investments in standards development, in market development funds, clearly product launches And significant contributions directly to that Cloud Vocra stack. So specifically, we will invest in the software defined infrastructure stack to make sure that it is fully functional and easy to deploy. 2nd, we will optimize that stack To ensure that the cloud solutions are not just functional, but actually deliver against this expected level of efficiency, the OpEx and CapEx savings that As promised, through the move to cloud.
And then 3rd, we'll work to align the broad community on standards for ensuring interoperability and portability across the stack. So to talk about then one of the very important Cloud for All Investments, the one that we're announcing today, I want to hand it over to Jason Waxman, who is the Vice President and General Manager of our Cloud Platform Group. So Jason, do you want to take it?
I will. Thank you very much, Diane. So we're excited to be here today to unveil the overall initiative. And as Zane pointed out, This is really about moving the industry. Most people look at cloud and they think that the market's on fire and we're in a position to kind of say, you know what, it's actually not moving fast enough.
And when we're looking at moving the market, incremental action isn't going to cut it. It's not going to go move the needle. We really need major action. Now one area in particular Now we've seen a high degree of industry interest is in OpenStack. We hear from a number of service providers and also from enterprises that they're interested in OpenStack.
They want to deploy OpenStack, but again the challenges that Diane outlined are preventing them from doing so. And in fact, Bloomberg as an example is running a ton of Services on OpenStack, but they're spending a lot of time adding to the actual source itself to make it enterprise ready. So when we look at that as a major industry need, we thought who should we partner with? And we decided that Rackspace, who 1st of all, the co creator of OpenStack, but they're also the company that has the greatest experience of OpenStack operation at scale. And we also recognize that between the 2 companies, between Rackspace and Intel, we held a very common view.
And that common view is that an open ecosystem We'll really enable diverse set of cloud deployments and support industry innovation. And so that's really the backdrop. And with that, We're here to announce today that together we are creating the OpenStack Innovation Center. Now the OpenStack Innovation Center is going to have 3 key components The first is that we want to make the open source or on OpenStack enterprise ready. And so together, we're working on a roadmap of features over the next 6 months to make sure that first we're bringing in things like a better scheduler to make sure that it's going to be More robust to improve some of the networking capability in OpenStack to add container services, Which has been something that the community has seen in high demand.
And then just general bug fixes, making sure that the code as a whole is more robust. Now the impact of this is that today at best, the most successful OpenStack clouds are seeing scale to maybe a few 100 nodes. And our goal is to be able to take that and enable enterprise class features at scale of 1,000 of nodes. And our focus is really on the community and the overall project. One of the things I want to clarify here is that this is not about yet another distribution.
We want to make sure that the overall project is healthy and that the people that want to pull from that project have the ability to get the work done that they want to get done. And so there are a lot of industry partners such as Red Hat, Mirantis, HP, Huawei and others that are going to benefit From the work that Rackspace and Intel are going to do through the OpenStack Innovation Center. Now to accomplish this, one of the things we need to do is build the industry's Largest OpenStack developer team. They're going to sit in San Antonio and part of the reason is that they're going to be right with all the People that are operating that OpenStack cloud at Rackspace at scale, they're going to benefit from that insight. And on top of that Rackspace Space is going to be upping some of the training programs, not just for the engineers that are in the innovation center, but really to help train the industry more broadly.
We're very excited to kind of tap into that And we're going to be adding as a result hundreds of engineers to accelerate the overall project. Another companion piece, which we also think is breakthrough, as we've The community doesn't have the resources to test at scale. And so we're prepared together with Rackspace to bring online the industry's largest developer cloud For OpenStack Development. And this means that anyone who wants to build a design, build or operate is going to have a resource that is unprecedented. There will be 21,000 node clusters that will be brought online within the next 6 months.
We'll actually start to bring some of that capability online even sooner. We'll continue to make sure we keep the community aware, but we really think that this is important to enable people not just to theoretically progress Towards their own OpenStack cloud, but to actually be able to validate, test and make sure that the code is robust. So again, we're very excited about this announcement. It's our 1st bold step forward And a major collaboration for us. And with that, Dan, I'd like to turn it back over to you.
Yes. Thanks, Jason. So it is a big announcement that we're very excited about. And the folks on the line may have seen other announcements that we've made or that we participated in over the prior 2 to 3 months. And all of those announcements have been Very well aligned with this overarching cloud for all initiative.
We've you've seen announcements that we've made with cloud software leaders like VMware, Microsoft, Red Hat, Standards bodies such as Kubernetes Foundation, the Open Container Project, OpenStack Foundation. For example, in early May, we announced at CoreOS Best, our collaboration with CoreOS on optimizations for greater efficiency in the tectonic stack, As well as we announced investments in solutions deployments through our partnership with Redapt. At DockerCon in late June, we announced a collaboration with Docker to improve container security using our Intel Cloud Integrity technology and we demonstrated the solution there. And we've taken a steering role in the new open container initiative, which was announced at DockerCon with the objective of driving consistency in container formats. And we joined Google and Docker and others just earlier this week in the announcement of the Cloud Native Computing Foundation.
So targeted in enabling that next generation of application development, developed natively for the cloud. So with our formalization now today of the Cloud for All initiative, you can all expect that there will be a continued stream of investments that we will be making and you should expect 15 to 20 major announcements over the coming year. So not surprisingly, we're not the only ones that see the opportunity for market acceleration when it comes to cloud computing. CoreOS, The developer of open source projects for Linux containers and Mirantis here, a leader in open source cloud deployments, they clearly see the value in The Cloud for All initiative as a unifying effort for us to drive the market. So between broad industry support, a Clear agreement on the problem statement and the opportunity that follows, we at Intel feel compelled that we need to take this action.
And we clearly see the business value in accelerating cloud adoption. As you can see here, this is from IDC and they Project that the spending on hardware infrastructure in support of cloud solutions will continue to grow at a 14% CAGR that's across Public and private out through the foreseeable future. And they state that based on the benefits, the fundamental value proposition of cloud based computing, The cloud IT infrastructure growth will continue to far outpace the growth of the overall IT infrastructure market well out into the foreseeable future. So we believe that we can change the curve through these very targeted investments, targeted clearly at those barriers that we see for adoption today. And at the root, cloud computing is another great example of Jevon's Paradox is tried and true.
If you make technology more efficient and easier to consume, the rate of adoption will accelerate. So I want to thank you all for your time. We certainly look forward to keeping you informed as we continue to invest to accelerate the move to cloud computing and you'll hear many more announcements in that vein in the future. So I'll turn it back over to you now Mark.
Great. Thank you very much. Thank you, Diane. Thank you, Jason. As we move into the Q and A portion, I just want to do a quick reminder that the press release And a replay of this will be in our newsroom.
So please feel free to go there for more information. We have links to blogs and Rackspace's news as well. So there's a lot more to be had here. So Christy, can you help us with the Q and A portion, please?
Yes, certainly. Thank you. So ladies and gentlemen, your question and answer session will now begin. All of the lines will remain on listen only. Thank you.
Thank you. While those questions are queuing up, Jason, Diane, one question that I think has been pretty common is you say tens of thousands of clouds. Can you tell us how you got to that number?
Yes, I'll take it. So it does perhaps seem like a large number, but it's actually Not large at all when you think about some simple data points. So today, we estimate that the number of enterprise IT that have actually deployed cloud solutions today is in the low teens, so about 12%, 13%. There's 45,000 publicly traded companies today. So that tells you there's tens of thousands right there.
You can add on to that 100,000 plus managed service providers. You have all the telco communication service providers. And even if you look at the number of VMware sites that they have 500,000 customers. So there's 500,000 Folks running data centers that have virtualized their servers, and we believe those people clearly see the value proposition of going from a virtualized environment to a cloud based environment. So you might say that tens of thousands are conservative.
We're bullish. Okay. All right. Are there any questions on the line?
There are, yes. The first question comes from the line of Timothy Kit Morgan, you're now live in the call. Please go ahead.
Hi, Diane. Hi, Jason. What's the scope of the investment for this? I mean, it could be very large. It could be modest.
It's hard to gauge. Intel has made pretty big investments. I'm thinking of like the investment in Cloudera was Quite large, because it's important. So what's the scale that of money that you're And other resources because it's not just money.
So as you know, we're a pretty big company and so big for us is big, right? And I will say that this that First of all, the collaboration with Rackspace, which is the first thing that we're announcing today, is a sizable collaboration. And then I can say what Diane just highlighted 15 to 20 sorts of deals, you're talking about, again, a major commitment in From Intel to go invest in accelerating this ecosystem. I'd love to be able to put a number on that for you precisely today, unfortunately. Me too.
I know, so sorry.
But it's bigger than a bright box. All right.
But again, Jason, you did explicitly say there'll be 100 Engineers between ourselves and Rackspace working on the development and you've got a couple of Yes.
Thousands of nodes. Thousands of nodes, It's hundreds of engineers training programs and what it's like and that's one exactly.
Got you. Thank you.
Thank you.
Thank you. Your next question comes from the line of Judith Hurwitz. You're now live in the call. Judith, please go ahead.
Thank you. Got a couple of questions.
First of all, the public cloud is that Based on Rackspace, are you going to offer any of your own cloud services? Are you charging for the use of the developer cloud? The other question I have is, What is the scope of the security services and data services within this?
Sure. So obviously, I had a number of questions. If We leave any of them out, please feel free to follow-up. I think your first question was just regarding when we talk about public cloud, We tend to mean the broad industry and the broad market. So obviously Rackspace does participate in that, but for the Amazon, Microsoft, Alibaba in China, a whole range of different companies, Salesforce, anyone who provides a service Over the Internet, we sort of view into that public cloud bucket.
With regard to the developer cloud, our intention is not to charge for the community. This is That the 2 companies are making to go create a community and then benefit from that growth in the community. So we have no intention to go do that.
And then security, I think was the other question.
Sorry. Data services or security services.
We at Intel are not planning to be a service provider in that. Again, we benefit as the overall industry grows. We definitely see a lot of Collaborators, we might make additional collaboration announcements with partners in those spaces, but we're not intending to be in them ourselves.
Thank you.
Thank you. Your next question comes from the line of Scott Fulton. You're now live in the call. Scott, please go ahead.
Yes. Thank you. Hello, Diane and hello, Jason and hello, Timothy out there. Two questions, if I may. First question having to do I don't have to Remind Intel about the different classes of processors it produces, the E3 class, Which addresses a lot of the needs of the open compute organization, the E5 workforce class or the E7 high performance class, All of which have been said to be innovators in cloud computing space.
And then there's the Xeon 5 Processors for the super high performance computing applications. Which of these or perhaps a mix of them will we see in the Rackspace Intel Community Data Center?
So first of all, I think the straight answer to your question is, they will be E5. The other thing which I do want to highlight is when you look across Public Cloud Services. And as you pointed out, we have a pretty good handle of where the processors go. Over 95% The compute and the CPUs that are deployed are the E5 class. Now one of the things we are seeing is that particularly for high performance Computing in the cloud, we're actually seeing some strong interest and some uptake on Xeon Phi, so expect to see that as being probably one of the fastest growth segments over the next couple of years.
But Still by far and away it's E5 is the class for cloud.
Very good. Thanks Jason. And the second question a little quick. You mentioned the need to bring better into OpenStack. Now OpenStack already has announced Magnum which is its multi tenant Cloud orchestration, which integrates with Kubernetes.
What type of better orchestration can there be for OpenStack Then Magnum and Kubernetes.
No, you're absolutely right. I mean, first of all, there are Kubernetes, but also ASOS and others, there are some more advanced schedulers that there's some very high interest in potentially integrating together. One of the things that I was really sort of getting on, particularly with this collaboration is improvements into Nova. And It still remains to be the most popular scheduler for OpenStack and we want to be able to make sure that it can do things like continue To maintain the uptime of services or do things like live migration, right? These are things that an enterprise is going to require and we need to enhance that level of schedule.
But You're also right on that we're looking at some of those other options in the community. And that also highlights by the way, the reason that this is so complex that Diane highlighted Whole fragmentation and integration of all these different parts together. So it's a great question.
Thanks, Jason.
Thank you.
Thank you. And you do have one more question. It comes from the line of Brandon Butler. You're now live in the call. Brandon, please go ahead.
Thank you. You may have
touched on this in the previous answer, but can you just talk about how Intel products are going to be integrated into the plans For this broad plan that you're outlining here?
Yes, absolutely, right. And obviously, there's a Strong motivation on our standpoint is that we want to go see more clouds deployed and we want to see them optimized and taking advantage of all the great features we're trying to expose in the platform. Now the obvious place is thinking about the CPU portfolio. I mean, I highlighted the fact that while E5 continues to be the mainstay of the cloud, We see the emergence of Xeon PHY and other parallel computing. And so we want to make sure that software defined infrastructure is intelligent enough Take advantage of those types of CPUs, but it really goes way beyond that for us.
I mean, if you look at some of the initiatives that we have around Fabric or some of the initiatives or next generation memory or solid state drives, Those are all things that a well optimized cloud can go take advantage of and we just need to make sure more people have access to that. And even things such as accelerators and an FPGA and intelligent cloud could really do a better job of taking advantage of that capability. But the cloud has got to be optimized and aware of it. Otherwise, those features fall silent.
Can I
ask one follow-up question?
Should we talk about your work that you're doing with major public cloud vendors and how the work that you have been doing with them will support Sort of this next stage of work that you're embarking on now?
Sure. So we have just Tremendous engagement and we go very, very deep with all of the large major cloud service providers. A lot of the focus has been around how do we work with them to go optimize infrastructure for their needs. And so we've literally created a team here at Intel that thinks about every level of what they're trying to do, whether that's the silicon optimization to system design or standards like open compute In the industry to rack design to even facilities design and then of course software optimization along the whole spectrum. So we brought all those capabilities of how to go optimize for the world's largest cloud service providers to the industry.
And now what we want to be able to continue to do is supporting them the same way that we have By optimizing the technology, but recognizing that there's a whole mass of the next 10,000 clouds that we want to be able to do Reasonable work to be able to deploy a cloud efficiently and scalably, and we can kind of bring that intelligence to the masses. Thank you.
Thank you. We do have another question from Judith Howitz. You're now live in the call again. Judith, please go ahead.
Yes. Thank you. You said you're working with all the major public cloud providers, but companies like Amazon Build their own hardware. So are you including Amazon as a partner in this? Or are they going in a different direction?
Amazon is a great partner. And again, our goal when we say for all, we really do mean for all. Now, it doesn't mean like any menu that everybody wants all the things that we have to offer But there absolutely is going to be something for everyone and Amazon is an incredible customer and partner of ours.
Thanks.
Thank you. We do have no further questions. I will just do one last reminder. Thank you.
Okay. Well, thank you all again for your time. Thank you, Jason. Thank you, Diane. And just Another reminder, there is a lot more information on our newsroom@intel.com.
So please feel free to go there or reach out to me, Mark Miller, for any additional questions. That should conclude our call today.
Thank you. Thank you.
Thank you. Ladies and gentlemen, that concludes your conference call for today. You may now disconnect. Thanks for joining and have a very good day.