On this episode of The Six Five – On The Road, hosts Daniel Newman and Patrick Moorhead welcome Mike McDonough, Executive Director and GM, Software and Solutions at Lenovo for a conversation on AI-ready solutions during VMWare Explore in Las Vegas.
Their discussion covers:
- How Lenovo considers the role of AI infrastructure and AI-ready solutions when improving business operations and driving innovation
- The evolution of Lenovo’s partnership with VMWare and how the new AI offerings will support the delivery of critical data to enterprises and inform decision-making
- Lenovo’s announcement of the new generative AI joint solution with VMware to deliver the most GPU-dense platform and how this new solution will enable next-generation AI workloads
- Lenovo’s announcement of the first solutions from the joint Edge and Cloud Innovation Labs with VMware and the role these and future solutions driven by the Innovation Labs will have in serving new and existing customers
Watch the video here:
Or Listen to the full audio here:
Disclaimer: The Six Five webcast is for information and entertainment purposes only. Over the course of this webcast, we may talk about companies that are publicly traded, and we may even reference that fact and their equity share price, but please do not take anything that we say as a recommendation about what you should do with your investment dollars. We are not investment advisors, and we ask that you do not treat us as such.
Patrick Moorhead: Hi, this is Pat Moorhead and we are live at VMware Explorer 2023 in Las Vegas on the show floor, but more importantly in the Lenovo booth on the Explorer show floor. Daniel Newman, how you doing?
Daniel Newman: Good to be back. Good to be here. It’s good to be in Las Vegas. It’s just good. All is good. And look at it. I’m speaking really loud right now because I have to, because this place is packed.
Patrick Moorhead: No, this place is packed. And literally five or six minutes ago, there were probably about 150 people watching one of the Lenovo storytelling sessions, educational sessions. They all left and we’re going to get into a quick video here. And you know what? My favorite topic, our favorite topics, over the last, I don’t know, couple years, what is it? AI and multi-cloud. But we are here to talk about AI, and we are here to talk about, with Lenovo, about what they’re doing with AI, what they’re doing with VMware. How are you doing?
Mike McDonough: I’m doing wonderful. I’ll tell you, exciting times here. Great to be back. Covid’s rare in a rearview mirror. This is awesome. Glad to be here. Thanks for the invite.
Patrick Moorhead: Thanks, Mike, for coming on. Appreciate that.
Daniel Newman: Yeah, you heard Pat say one of the things we’ve had a problem with, there just hasn’t been a lot of AI talk this year. So we were like, we need to go to an event and talk about AI because no one’s talking about it. But no, in all serious, Enterprise AI, massive. Lenovo’s been on the record talking about its billion dollar investments. We’ve heard from YY, talked to Kirk Skaugen. And had a bunch of your colleagues on this show. Now you’re with us.
Mike McDonough: Yeah, thanks.
Daniel Newman: Talk Enterprise AI. Let’s talk about the trend. Help me understand kind of the way Lenovo’s positioning Enterprise AI. How are you helping companies get ready and preparing to invest in this AI future?
Mike McDonough: Well, thanks for that question. I’ll say that when we look at Enterprise AI, we got to first make sure everybody has this on the same page. So the first thing we would do, is we spend time with our partners. We start there because very partner forward. And then we start educating the baseline of our customers. So we’re kind of unique, multinational, many different disciplines, big into laptops and the edge, so obviously that’s where it’s all being driven from. You got to have something to touch. And so we establish stats, and then we start going back. We’ve been working on this since about 2017, a ways. We announced, as you said, the 1.5 commitment this year. We’ve had multiple labs. We have actually three labs globally been running since 2018. Last year we announced the AI Innovators Program, which really brought the ISVs.
The end of the day, it’s great to do models, great to do degenerative stuff, but you got to have outcome based. And so on the outcome based side of things, we focused in on reaching out to top ISVs, working with them, putting them on our workbenches, really showing how AI and applications work well together, and then creating a value proposition to our customers. We actually have business development teams out there working with our customers, because it’s so new. It’s so new. Where to go, in the cloud, hybrid, on-prem, many discussions we had had.
Patrick Moorhead: Yeah, so Mike, as industry analysts, we watch what Lenovo does. We talked to enterprises, we look at what your competitors do, and in the green room conversation you and I were having, I commented about your strategy and software. It’s really clean, and also in partners and even the channel is very clean. And by the way, I’ll say that, versus your competition, and you don’t have a competitive stack. You’re adding value, but you’re not necessarily competing with your partners. I do think there’s value in that. Now, when it comes to AI, can you talk in a little bit more specifics about those relationships, how you’re fostering them, and maybe talk about how they’re different than that and if there’s any contrast between machine learning and deep learning AI, and generative AI. How it’s different maybe from analytics. That’d be great.
Mike McDonough: Oh, absolutely. There’s a lot to unwrap there. Awesome. So I am lucky enough to lead the product management, the product marketing management, and then some other parts of the business, particularly on software. And I’ll say that, to your original point, your initial point, we don’t have a lot of burrs. We don’t have a lot. It’s pretty clean cut the way we go to market. We know where we’re good at and where we want to partner at. So I’ll throw it into three buckets for us.
Bucket number one, hardware. So we know that there’s an evolution happening between the traditional hardware today. We started off with using traditional servers, but as AI becomes more prevalent, we need fit for purpose. A good thing for us, almost 50% of our revenue comes from the hyperscalers who are right there, the osmosis. What we get from those conversations allow us to build better products.
Patrick Moorhead: Well, and by the way, in the end, what starts in the hyperscale now will ultimately find its way on-prem. Not the edge, but in the enterprise data center. That makes sense. And a lot of people sometimes forget what a player you are in hyperscale. A lot of people have exited that business, but with your ODM plus model, you found a way to make money but also drive scale.
Mike McDonough: That is so true. When you think about the hyper scales, as you gentlemen know, they’re fractions of a penny. And they’re really frugal trying to figure out how to optimize everything they do. That comes downward in the development of the general product for the rest of the world. And so that’s awesome. So bigger boxes, smaller boxes, heights, CPUs at the right amount at the right place and right time, that all kind of ingests. And then our side of it, which is a software side of it, as you mentioned just a couple seconds ago, we know what we’re good at. And so we’re really focusing on two things: orchestration and automation. We’re glue. We’re really working with our partners, we’re working with our hardware, and we know where we’re going to participate in the AI stack, the evolving stack that’s coming out.
Patrick Moorhead: Yeah, you might know, you spent a few years at VMware.
Mike McDonough: Just a couple.
Patrick Moorhead: So you might know something about this.
Mike McDonough: I feel like I’m coming back to high school and a reunion every time I come back here.
Patrick Moorhead: And it’s great. I mean, bringing that value to Lenovo, a lot of things funny. Everybody likes to separate themselves. I was a hardware guy, I’m a software guy. But it’s like, it’s all kind of coming together where it’s really hard to be good at anything without being competent at both.
Mike McDonough: That is true. And I’m kind of blessed. My career started originally in hardware way back when in Nortel. That’s a footnote in history. And then I moved, I saw I had this passion for software. So I reported to this guy named Brian Connors, you probably recognize the name…
Patrick Moorhead: I may have seen him on the floor. I don’t know.
Mike McDonough: So when I came here, Brian said, “Mike, you got a blank sheet of paper. Let’s go make some magic.” And so he’s been an amazing supporter. Kirk, as you know, beyond amazing supporter. And all the way up the YY, they want to make this happen. They’re committed to it. That 1.5 billion is a resonating where that investment’s coming from.
Daniel Newman: So you talk about your history at VMware. Let’s take history and fast-forward to today. VMware, Lenovo, now it’s a partnership. This is complex stuff to deliver the future of generative AI. Talk a little bit about what was announced here, the role that Lenovo has to play, and the opportunity that you see that it creates by bringing together the power of Lenovo and the power of VMware.
Mike McDonough: That’s a great question. So I was real excited to be part, us as an organization, to be part of this. It’s not an I, it’s really a we. When Nvidia, because we had a long-lasting relationship with them, and VMware came to us and talked to us about this, and this was months ago, and told us what they were doing, we were all in. So we pivoted our architects, we got our engineers, we got our early developers, we got some alphas and betas, some what ifs situations on the table. We started working. Similar to cobblers on a bench, just making it all happen. So I’ll say to you right now that it was probably about six months of intense work going on, and tight collaboration between these three companies. As a result of it, we will, in one month, have the first iteration. And you can get glimpse of if you talk to your salespeople. All the prep stuff is done.
We’re talking to our field. The field’s enabled already to be with this timing. We’re already working on software. Yesterday I had two or three meetings where I couldn’t share this with just partners who are going to be the stack above this. I think this is super excited. I think the generative AI piece is really the cornerstone we’re going to start with, but that’s not where we’re going to end with.
Patrick Moorhead: Are there any specific, I like to call them areas of heat, workloads, or use cases that customers or partners or partners customers are gravitating toward right now?
Mike McDonough: Well, I think that answer comes back in twofold. One, where are you good at? Right? See the Lenova, large multinational global company. So we find ourselves gravitate a lot of manufacturing. See a lot of manufacturing out there because we have Chinese heritage, so they have manufacturing over there, or they have partners that they could communicate with. We’re able to cover that gap and do that. So manufacturing definitely.
Other side is retail. Retail’s not global so much unless you’re doing the big, big boys. And luckily enough, we do have quite a big, big boys out there. And so that’s quite exciting as well. So I’ll say retail, we’ll say manufacturing, and then it starts to get into other areas of it. We see, of course, education. We see higher ed. That’s kind of neat, but that’s not the strong suit of it. Finance and banking, very fit for purpose, very vertical. But the manufacturing and retail is the broad side of it.
Patrick Moorhead: Yeah, I appreciate that. So we’ve talked a little bit about AI, essentially the way you approach software with partners and inside of Lenovo, but the edge is a huge part of what your division and Lenovo provides. In fact, both Dan and I did research notes on your latest edge announcements and they had made a claim that said, “We have the broadest edge.”
And I’m like, okay, I’m an analyst. I’m going to do a fact check here. Show me the data. And again, this is not opinion, this is fact. Lenovo does in fact, right now, have the broadest edge portfolio out there. You want big edge, you want small edge, you want air cold edge, you want liquid cooled, you want GPUs, you want CPUs, you want arm, you want… Anyways, you get the point. Can you talk a little bit about some of the announcements that VMware made here on the edge and how that is going to impact, or what does that mean for Lenovo?
Mike McDonough: Well, we’ll say, let’s start with that VMware question. First of all, the world changed when Charles Ferland, and I know who you know, he runs our edge business.
Patrick Moorhead: He’s been on The Six Five three times…
Daniel Newman: At least.
Patrick Moorhead: Veteran.
Mike McDonough: Doesn’t surprise me.
Patrick Moorhead: Yes.
Mike McDonough: Doesn’t surprise me. His pivot into the business really brought a lot of fresh air and a lot of direction. So I would say by 2018, the cast was die, we’re going to go into edge. Number two was, we wanted to go big with VMware. We knew they wanted to push on the edge, so we signed an agreement with them. And so there’s two parts of the business. We’re doing this generative AI direction with VMware. We have a whole new organization that has been jointly invested with two of them that are at the tip of the spear out in the field. I have a lab that we co-invested with, brand new, it’s got to be state-of-the-art, out of Austin, Texas, from your backyard, right there, right?
Patrick Moorhead: Oh, here we go.
Mike McDonough: Reach out to Austin. So they have connections to all the multi clouds. We brought in our experts. We’ve been working already, as a result of this announcement today. We have our organic software kind of playing learning. So we’re eating our own dog food and using that stuff. So those are the type of things. And then we invested just as much as we did in the data center and the multi-cloud directions you heard, as we did in the edge. Hardware’s the core, and we’re doing a lot of information on data sets and storage. So most of the data we’re seeing is collected at the edge. We see a lot of stuff going back to the core or to the cloud, but we know it’s not that long, which you’ll start seeing some sort of edge cloud or some form of modeling being created at the edge, and that’s the next big window that we’re jumping into.
Patrick Moorhead: Yeah, it was really important for VMware to really lean into a smaller package for the edge, because quite frankly, a lot of folks moved in and the footprint. But seeing VSAN for smaller edges… A drive-through doesn’t need the full power of VMware and Lenovo, quite frankly, than in what I call the edge that has aluminum flooring. There’s a big difference between those environments.
Mike McDonough: I totally see that. We are lucky enough to be participating in some very large global retail chains. And at first you might look at that and say, “Wow, that’s kind of scary. They’re understanding and they’re studying all about their customer.” But if you can look at the other side of that coin, they’re trying to cater to that customer. And so everything from sensors as you approach or as you order, it is a just in time market, it is something that our customers are striving for to reach and understand and drive more of that. So generative AI, AI models, at the edge, making decisions, ingesting them in. It’s exciting times, I’ll tell you. It is just amazing.
Daniel Newman: Yeah, the retail space is very interesting. I actually spent some time with the Lenovo team at NRF. I don’t make it every year, but we did some really big research that ended up being part of the main keynote last year on resiliency in retail. And so it was a very interesting coming out of the pandemic, what’s going on. But the generative applications, Mike, very, very exciting stuff. I think we could probably keep this conversation going, but we’re going to do you a favor and give you back a little time. We know this booth is crowded with customers. I’m sure a lot of people here that you need to talk to. But in all serious, it’s been a lot of fun having you with us.
Mike McDonough: It went so fast. I’ll tell you, gentlemen. Thank you very much. Really appreciate that.
Patrick Moorhead: It’s fun.
Daniel Newman: Thanks so much for joining us.
Mike McDonough: Thank you. Thank you.
Daniel Newman: We’ll have to have you again soon.
Mike McDonough: Looking forward to it.
Daniel Newman: All right, everyone. We’re here at VMware Explorer 2023 in Las Vegas. You heard it here. We talked gen AI, we talked multi-cloud, we talked about a lot. But if you want to hear more from us, you need to hit that subscribe button. Join us for all the episodes here at VMware Explorer, but also just for all The Six Five shows because, well, they’re awesome. And so, for this one, time to say goodbye. We’ll see you all later.