Gelsinger: US policies influence tech firms standing in Asia

Actions of U.S. government impact the way Asian countries look at U.S. technology companies like VMware, making it tough for them to do business in these fast-growing markets, says CEO Pat Gelsinger.
Written by Eileen Yu, Senior Contributing Editor

SAN FRANCISCO--Actions and policies undertaken by the U.S. government influence how Asian countries view U.S. technology companies, making it tougher for the vendors to do business in these fast-growing markets.

Customers will wonder if U.S. tech companies are operating in the interest of their shareholders, or as a proxy of their government, says VMware CEO Pat Gelsinger.

In an interview with ZDNet Asia at the vendor's annual VMworld conference this week, VMware CEO Pat Gelsinger said it was important for technology companies such as the virtualizaton vendor to be respectful of the countries in which they operate. 

He said social-political tensions between countries were complex issues and he was not an expert in politics--"my name is Gelsinger, not Kissinger", he quipped. However, he noted that policies made by the U.S. government will impact the reputation of U.S. technology companies in foreign markets such as those in Asia. 

"[China and other markets in the region] will look at the actions of the U.S. government as well as U.S. technology companies, and ask, 'Are you truly operating in the interest of your shareholders, or as a proxy of the U.S. government'," he said. "So our actions need to  be very considerate in that respect... Obviously as a U.S. company, I worry about these things."

And while the U.S. government needs to make policies in education, technology, and so on, Gelsinger said he also needs to be able to operate for VMware shareholders and be respectful of the company's fastest-growing markets in Asia, including China. 

The Asia-Pacific region contributes about 20 percent of VMware's total revenue and is the company's fastest-growing, clocking a 40 percent year-on-year growth in its second-quarter revenue, which hit US$1.24 billion

"It's extremely important for us to realize what...our actions and business behavior and policy decisions look like, from the lenses of the companies and governments of those countries in which we're trying to participate," Gelsinger said.

Asked then if this meant he did not approve of the U.S. government's actions involving Chinese IT companies Huawei and ZTE, he said he did not have all the information to make a proper assessment, but noted: "All I know is, boy, it just makes us doing business harder."

In a separate interview with ZDNet, Andrew M. Dutton, VMware's senior vice president and general manager of Asia-Pacific and Japan, also urged the need to debate and address issues such as Edward Snowden's revelation the U.S. National Security Agency (NSA) had been spying on foreign countries and agencies.

These incidents could shake an organization's confidence in emerging technology such as public cloud services, and should be debated early so the necessary laws can catch up with new technology, Dutton said. 

Public cloud not for most enterprises

During the interview, Gelsinger also elaborated on his belief that the public cloud model would not catch on among most enterprises. In a panel discussion at the conference earlier this week, he had dismissed suggestions businesses should go 100 percent on the cloud from the get-go.

He explained that this model simply could not meet the needs of organizations in highly regulated businesses that have "real SLAs (service level agreements), real premise requirements, real governance requirements".

He said customers were bringing data back in-house after unsatisfactory experience with their initial public cloud purchases, adding that this pointed to the hybrid cloud as the better business model and the reason why VMware was betting on its new vCloud Hybrid Cloud Service.

Asked if this meant startups and smaller enterprises would never be VMware's cloud customers, Gelsinger told ZDNet companies that needed to scale would eventually migrate from public to hybrid cloud. 

He pointed to Zynga as a an example of a startup which ran everything on Amazon Web Services, but eventually brought everything back its own on-premise architecture. "It wasn't because they wanted to run data centers. They brought it back because the economics and scale and SLAs didn't work out," he noted.

He added that VMware, over time, will look to expand its cloud offerings to include the developer line of business but, for now, it is focused on enterprise commercial customers. 

Eileen Yu of ZDNet Asia reported from VMworld in San Francisco on the invitation of VMware.

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