RICK JACKSON: Hello, I'm Rick Jackson and I'm from VMware.

I'd like to talk to you today a little bit about how we at VMware are working with customers and the industry to help them achieve the full benefits of cloud computing. Cloud computing promises to significantly help us drive up agility within IT, at the same time lowering cost structures for delivering services. Now this is incredibly important for the business because we know that IT agility is what is going to drive business agility and business competitiveness. Likewise if we can reduce costs, then we can actually redeploy those funds into further business investments. Now that's the promise of cloud. But at the same time, customers are concerned about, well what happens to compliance and security, for example. So we know that our solution as we work with customers has to maintain a compliant environment that is also secure. We can't just hand over sensitive corporate assets to a third-party provider. And so what we're talking about is an approach that really continues to keep IT control. So for my conversation today I'm going to break this up into three layers that we see emerging in the end state of cloud computing. I'd like to start with talking about infrastructure and specifically existing infrastructure already in place in your business today. Then I want to talk a little bit about applications and some of the demands from the business on new applications for this new cloud era. And then finally I'd also like to talk about users and how users can get the most out of this new cloud era. So let's start with infrastructure. Every business has existing data centers and this is something that has to be contemplated because we can't just throw things out and start over. So one of our biggest challenges is how do we leverage existing investments, investments in hardware, software, data center facilities, skill sets, etc. So often when you talk about or you hear cloud computing in the industry, so much is emphasized on public cloud computing as though we're going to start over in the public cloud. But I do think it's an interesting starting point to say, well what is it about public cloud computing that is so compelling and interesting to everyone. So let's start by talking about what the four key characteristics of public cloud computing are. The first one is a concept called pooling. Pooling is simply breaking down the traditional vertical silos of hardware and infrastructure and creating pools of capacity of CPU, memory, storage or networking, so that we can take full advantage of all of that investment and leverage it to the fullest to get the most efficiency out of our resources. And we want to be able to dynamically allocate out of those pools of resources based on workload demand so that we can scale up for application workloads and scale down when we don't need them. This is a concept called elasticity, another key characteristic of cloud computing. Now in this dynamic, on-demand environment, the key to making this work is automation. Automation is what gives us the ability to do all of this in large scale and extremely cost-effectively. For example, you can imagine that companies like Google that have millions of users coming onboard to use their services are not going to have tens of thousands of admins running around doing manual tests. It has to be automated. So between pooling, elasticity and automation, these three characteristics really help us

drive the best efficiency out of the infrastructure. But just as important, they set us up for what I think is one of the most important characteristics of cloud computing. And that's agility, the ability to respond on demand, to deliver services on demand. The best example of that: self-service. Imagine in our own personal life that when we want an application, we just go to an app store, look for it, find it, download it and start using it. We don't have to wait for anyone or anything other than just how long does it take to download a few bits. This is a great example of self-service in our consumer world. An infrastructure can be set up for self-service as well. Self-service is a key benefit that the line of business loves. And, in fact, our belief is that one major reason why line of business is going to the public cloud directly is for that on-demand, self-service capability. Now these are definitely attractive characteristics but as we said, our challenge is we need to take advantage of our existing investments. So we need to take these characteristics and bring them into the data center and this is where VMware helps. We help our customers leverage virtualization, which you've probably already started that journey, to build out a private cloud so that we can pull those characteristics into our existing data center. After all, we've seen some surveys that have shown that by 2015 approximately 15% of the workloads running in a traditional enterprise data center will have moved to the public cloud. The implication, 85% are here. It would be foolish to ignore taking advantage of the existing data center and bringing cloud characteristics to our data center. Now customers that are on this path have already seen tremendous benefits. For example, we've seen customers reduce capital expenditures by as much as 50 to 60%. We've seen them reduce manual tasks through automation and start to address OpEx by almost a third. And, in fact, even the energy cost for the infrastructure environment in your data center has been reduced upwards of 80%, significant savings in the infrastructure environment. Now it would also be foolish for us to talk about private and public as two separate and distinct cloud environments. This is not how we see the world evolving. We believe that the correct model is going to be to extend private clouds with public cloud or off-premise resources, creating a hybrid cloud, if you will, that bridges these two environments together. So this is why VMware is working with public cloud service providers through our vCloud program to leverage the same technology that we work with enterprises in their environment so that we can create an optimized hybrid infrastructure environment for our customers based on their business needs, one that can guarantee portability of applications between cloud environments, both being able to move out to the public cloud as well as being able to bring them back if the need arises. And in this hybrid environment we have ultimate scalability. Because with the growing list of partners that are working with VMware on this compatible, secure and managed infrastructure, there's always choices for extending your data center environment. McKinsey actually did a study and looked at private clouds versus public clouds versus hybrid clouds and in that study showed that the most cost-effective approach to IT will indeed be that hybrid cloud

strategy. And through cloud characteristics of on demand, self-service, ultimate scalability, we can address agility as well. So that's our infrastructure level but infrastructure is there to support applications. And in our environment, we have existing applications, we have the demand for new applications based on business needs and an increasing amount of software as a service that is typically showing up in our environment. So what are some of the challenges when we look at applications? Well first off let's talk about existing apps. Oftentimes in our portfolio we have applications that are starting to cost more and more to continue to maintain. Many customers have come to us and talked to us about, hey, we see the cloud era as the right time to start to take some of our portfolio and bring it forward and modernize it. So that that way we can look at how do we decrease our ongoing maintenance costs while at the same time increase some of the capabilities of these older applications to support new business needs. So modernizing these existing applications has a certain set of requirements very similar to building new applications. First, how do we decrease the time-to-market? This is a highly competitive world. Businesses need to compete based on the agility in their IT organizations which means that the time to develop new applications has to continue to shorten. And these aren't just yesterday's old applications. They need to be modern applications. And what do I mean by modern? We're seeing an increasing convergence of what we see and experience in our consumer lives with enterprise requirements. So applications will start to have more of that consumer feel using Web 2.0 technologies, more social networking aspects and collaborations built in. And these applications need to be built and designed for this new world of hybrid cloud computing. The other thing is that there's an explosion of data that's happening in the enterprise. And especially as we think about these high-end, cloud-based applications, we have to think about data differently, how we manage that. It may be that the traditional relational database isn't the right metaphor for cloudscale data management. So how does VMware solve this? We've developed a cloud application platform. A cloud application platform is designed to address the needs of modernizing existing applications or building new applications, a focus on build using a set of modern frameworks and tools to accelerate the development of these cloud-ready applications so we can decrease the time-to-market. A set of platform services that are cloud-scalable, cloudready, that could be taken advantage of in these applications with built-in management and monitoring to reduce the cost and complexity of managing and running these applications. And then, of course, a critical aspect is that this application platform is designed for scale, cloud scale, because that's where these applications are going to ultimately end up. This is why you're starting to see that our Platform as a Service offering is being leveraged by the industry as the standard PaaS offering for things like Java and Ruby on Rails. So we've got partnerships with salesforce, we've got partnerships with Google and there are more and more cloud service providers that will be delivering VMware's PaaS offering to market to help address this application issue.

But one of the things that really differentiates VMware's PaaS offering is that you have the ability to develop these new, modern cloud applications, to deploy them via public cloud services and, therefore, use them in a Software as a Service model, or with no change, deploy those applications also in your private cloud environment. Your choice of what makes sense for your business, where you want to deploy those particular applications. Now a great example, proof point of this is we've been working with a large online travel company. And this is a company that was taking an existing application, wanted to modernize it for this cloud world, bringing it from . NET into our cloud application platform with the goal of increasing revenue. By making the site more usable and responsive, they estimate that they can improve their revenues by as much as $100 million per year, a significant ROI on a modernization project. Let's talk about users. When we typically think about end user computing, we think about desktops from the traditional world. In fact, even the category is often referred to as desktop computing. And on that desktop we have our operating system, our apps and data. And it's locked to the device but we all know that that's not a real representation of today's world. Today that desktop is being replaced by more and more choices in mobile devices, whether that happens to be a traditional laptop. More and more we're seeing people actually using their smart phones in order to access corporate data. One of my favorite form factors is the tablet in particular. Happen to be a huge iPad fan. What's tomorrow's form factor? Who knows? But what we're seeing is proliferation of devices. Now you can imagine that in the traditional desktop world it was costly and complex to refresh. What's it like now in a world that users have more than one device and in different types of devices? So not only is the proliferation an issue but the refresh cycles are extremely costly and complex. How do we address this? First we leverage the cloud. By putting in place the cloud infrastructure, by creating more applications available via the cloud, we can finally free up the information and the applications that are locked to this device, free that up so that now we've got our apps and our data in the cloud. We secure the cloud, we secure access to the cloud. But by freeing up the information, we can now dynamically deliver that back to any device that the end user chooses for their particular purpose. This is about changing the metaphor for managing devices in a device-centric strategy to a user-centric strategy. Now a great example of where we're doing this is in the healthcare market. In the healthcare market it's incredibly important that we enable physicians to spend more time on patient care and less on worrying about the technology. So we've got a solution that we've been working with major healthcare providers on called the Follow Me Desktop. And the idea here is that a physician can walk into any room in a facility and walk up to any device and instantly access their secure personal environment, regardless of the device that they're using because it's all backed up in the cloud, and then focus their time on the patient. And you could imagine in the healthcare industry which is so tightly regulated around privacy and security that this solution has to be compliant and secure, always under control, a great example of end user computing. Now those are the three distinct layers that we see in a cloud computing environment. But for this to all work and for us to ensure compliant, secure and control, it's got to be managed. We can't forget about

management. Well one of the advantages of cloud and our approach to cloud computing is that at each layer we're providing our customers with as much choice and freedom to innovate as possible. The fact that there's a loose coupling between these layers means that I do have the ability to choose where to deploy an application, for example, that I'm not dependent on the device that my users are using, that I do have the ability to expand my infrastructure. This being said, we have to rethink management. It can't be vertical, it has to be horizontal. So we build management into each layer. Management and security need to be contemplated, designed and built in to each layer. And that's what's going to give us a compliant and secure cloud environment. Take security, for example. Traditionally we always start by securing the physical perimeter. What's the physical perimeter in this new world? It's changing, it's dynamic. So one of the things that VMware has done is we have taken traditional security functions out of static physical devices, moved it into logical virtual appliances that can be dynamically moved and reconfigured as application workloads are being moved between clouds so that we can ensure a secure environment even in this dynamic, changing world. So that's our approach to management and security. Now I would be remiss if I didn't say that in this new world of on-demand, shared infrastructure, there's not going to be some need to change the way our processes and IT operations work. So that is going to be a challenge during this transition. This is where VMware's cloud practice has been working with large enterprises and with public cloud providers to build around IP and best practices to support the journey to cloud computing. And so working with VMware and, of course, with our partners, both system integrators and solution providers, while we're sharing IP and collaborating on best practices, we can help mitigate the risk of this important journey. Thinking ahead about these challenges could be the difference between a successful transition or a failed initiative. Now through this conversation the one thing that I'd like to point out, I have not been talking about VMware's cloud. I'm not talking about THE cloud. What I'm describing here is your cloud. Your cloud is the only cloud that matters because your cloud is going to leverage existing investments in your data center. It's going to help you with your application portfolio and respond quickly to the business with new applications. It's going to allow end user freedom of choice of devices while maintaining a secure and controlled environment. Ultimately it's going to give us the IT agility we need to support business agility while lowering costs but at the same time being compliant and secure and under control. Your cloud is all about accelerating IT, helping IT be more flexible, more responsive to the business and even anticipating business needs. Because by accelerating IT, we can accelerate your business. And at the end of the day isn't that what it's all about? So for next steps, let's talk about how we can get accelerating on this journey to your cloud, thank you.