Thursday, August 18th, 2016

Time	Event
1:00p	Spirit of Competition: Nutanix Certifies Cisco USC Hardware Ahead of an ever-more-likely initial public stock offering, hyperconverged infrastructure startup Nutanix this morning announced it is adding Cisco Unified Computing System hardware for use with its Enterprise Cloud platform. It’s the kind of arm’s-length handshaking announcement that would merit a relatively small point size for its headline, were it not for the fact that Cisco and Nutanix are clear competitors in the emerging hyperconvergence space. “Hyperconvergence, as the fastest growing segment of the data center, provides a different course for those building and architecting data centers,” said Greg Smith, Nutanix’ senior director for product and technical marketing, in an interview with Data Center Knowledge.  “I think the benefit here is, if I’m a data center manager, and I’ve made or planning to make significant investments in [Cisco] UCS, but I still want the benefits that hyperconvergence brings, now I can get that.” Thursday’s announcement does not constitute any kind of deal between Cisco and Nutanix.  Rather, it represents an acknowledgment that Nutanix tested its Enterprise Cloud suite (specifically, its commercial platform, as opposed to its open source Community Edition) on enough hardware carrying the Cisco UCS brand, that it can adequately support Nutanix installations on that hardware. Nutanix also makes clear that Cisco customers utilizing that company’s Application Centric Infrastructure (ACI) — which opens up Cisco’s SDN technology for access through APIs — will be able to continue doing so in a certifiable way by both Cisco and Nutanix as those customers implement the Nutanix platform. Meet-in-the-Channel It’s a pawn move, but the kind that opens up the board for an attack by a knight or bishop later. Less metaphorically speaking:  Last March, Cisco made a number of announcements with respect to its move into the hyperconverged infrastructure field.  Those announcements involved the integration of software-defined storage platform HyperFlex, as part of Cisco’s business agreement with startup producer Springpath; plus its Tetration network analytics service, acquired as part of its deal with CliQr. It’s a familiar, all-in-one vendor play, designed to bring existing Cisco server customers into the hyperconvergence market, and expand it from there.  Nutanix’ move — which it describes as more of a “meet-in-the-channel play” — could intercept existing Cisco customers before they become locked into that brand. “These are customers who have made investments in Cisco UCS as their standardized server platform,” explained Smith.  “They made that decision, and they want to leverage that investment.  But at the same time, they want Nutanix, and they want the experience that we provide.  So they’re asking for the two companies to provide support and a joint solution.” That said, this certification move does not actually represent a joint solution — not yet, at least.  But if channel sales partners offer Nutanix as an option along with UCS, it might not matter much. See also: What Cisco’s New Hyperconverged Infrastructure Is and Isn’t Good At Nutanix walks much of the same tightrope as any other software manufacturer whose service agreements depend on certifying hardware.  It wants to portray its software as adaptable to any environment; indeed, Smith made clear to us that one of the key goals of the Community Edition project has been to spread out Nutanix’ reach to as much of the x86 landscape as possible. At the same time, it can’t afford to portray its certification of Cisco UCS as an affirmation of the self-evident, or like a well-advertised coronation.  So Smith characterized the certification process as requiring the cooperation of channel partners.  “We ran real workloads, not synthetic, not just micro-benchmarking tools,” Smith explained. Technical Advantages? Moreover, the certification does put Nutanix in the hunt for a larger footprint in cloud data centers where Cisco servers have already been deployed.  As our Bill Kleyman wrote last April, Nutanix’ SDS may have an advantage with respect to storage.  Because of Cisco’s choice of storage architecture, he pointed out, solid-state storage capacity for a system may be limited to the maximum amount available in its cache.  Nutanix avoids that potential roadblock. And as Nutanix’ Smith pointed out, his company’s Enterprise Cloud Platform is not rooted to any one vendor’s particular hypervisor for virtualization.  Nutanix offers its own native Acropolis hypervisor (AHV) as an alternate choice, alongside support for VMware vSphere and Microsoft Hyper-V. “Without touching my Cisco UCS footprint,” Smith said, continuing his role-play as a data center manager, “I can transform my data center to have my workloads and applications driven by a hyperconverged infrastructure.  By doing that, I leverage Cisco UCS, I remove the complexity and cost of my SAN, and I get greater choice on my virtualization technology.  Maybe I don’t have to have VMware licensing on each and every one of my servers.” (Comment on this)
4:34p	Cisco Cuts Workforce by 7% to Speed Transition to Software (Bloomberg) — Cisco Systems, the biggest maker of equipment that runs the internet, plans to cut about 7 percent of its workforce, trying to recast itself as a provider of software-based systems and services. The company will eliminate 5,500 positions from its workforce of more than 73,700, Cisco said Wednesday in a statement. Savings from the job reductions will be invested in newer businesses that Cisco expects to fuel sales growth, such as cloud computing and connected devices. The company said it will take charges totaling about $700 million associated with the restructuring. “We need to make some pretty immediate shifts in our portfolio,” Cisco CEO Chuck Robbins said in an interview. “We have rapidly shifting customer expectations. The winners in the future will be the ones that understand those dynamics.” Robbins, who took over in July 2015, has been working to rekindle growth by shifting Cisco toward software-based networking, security and management products, which customers increasingly prefer because they’re less expensive and more versatile. Cutting Cisco’s workforce may give Robbins the resources to speed the company’s transition, potentially helping it take advantage of stronger demand in markets such as security, which grew 16 percent in the fourth quarter, and collaboration, where sales rose 6 percent. See also: Spirit of Competition: Nutanix Certifies Cisco USC Hardware Growth Potential “We are looking at the areas where we believe growth will come faster,” Robbins said on a conference call. “It’s not that we’re ignoring one in favor of another, we just want to make sure our investments are commensurate with the growth opportunity.” Shares of the company declined about 1 percent in extended trading following the announcement. Earlier they had fallen 1.3 percent to $30.72, leaving them up 13 percent this year. “Cisco is plodding along,” said David Heger, an analyst at Edward Jones & Co. “They’re not overall declining. That’s a signal that they’re managing the transition fairly well.” Underlining Cisco’s struggles to revitalize growth, the company Wednesday reported fourth-quarter sales that declined 2 percent from a year earlier in a “challenging macro environment.” Struggling Markets Orders in emerging markets and to service providers slowed, hurting router revenue, Robbins said on the call. In times of economic uncertainty, companies try to extend the life of existing equipment, he said. While there was “pause” in ordering in the U.K. as companies tried to calculate the impact on their business of the country’s decision to leave the European Union, that hasn’t translated into a broader weakening of demand in Europe, Robbins said. Sales in Cisco’s biggest business unit, switching, increased 2 percent to $3.8 billion while routing, the second-largest revenue source, fell 6 percent to $1.9 billion. The company’s Europe, Middle East and Africa sales region suffered a 3 percent decline in product orders in the fourth quarter. The headcount reduction was much less than some analysts had speculated and in line with a more typical annual cut of 5 percent, Simon Leopold, an analyst at Raymond James, said in a note. Any more and investors would have been concerned that Cisco was signaling “a more challenging sales environment than we had expected.” The company last announced a large round of firings in August 2014, when it eliminated 6,000 positions. Cisco’s workforce is down from the 75,000 it employed in 2013. (Comment on this)
8:08p	Why Nvidia Gifted Elon Musk’s AI Non-Profit Its Latest Supercomputer There are few better ways to make the statement Nvidia wanted to make when the chipmaker’s CEO, Jen-Hsun Huang, showed up last week at one non-profit’s San Francisco office bearing Nvidia’s latest and greatest supercomputer as a gift. Nvidia wants the world to see it as the leading processor maker for artificial intelligence, and what better way to position itself that way than to have its hardware in the hands of an AI research team that’s at the top of its field? The non-profit is called OpenAI. Founded by Elon Musk, it is the Tesla and SpaceX founder’s attempt to ensure an AI future that’s good for humanity is more likely than an AI future that’s really, really bad for us. Nvidia has gifted OpenAI its new supercomputer, called DGX-1, because it is positioning the system as “the world’s first supercomputer dedicated to artificial intelligence.” The timing of the announcement is notable. Huang delivered the system to OpenAI’s offices a week before Intel, Nvidia’s biggest competitor, whose processors power most of the world’s servers, kicked off its big annual conference in San Francisco called Intel Developer Forum. At the conference, Intel would unveil plans to make the next-gen product in its Xeon Phi family the company’s first processor designed specifically for AI workloads. Xeon Phi is already the chief competitor to Nvidia’s GPUs in many of the world’s fastest supercomputers, and the battle for share of what promises to become a fast-growing market for AI hardware is on. To draw a contrast between itself and Nvidia, Intel is positioning Knights Mill (code name for the next-gen Xeon Phi part) as a general-purpose processor companies can use to run machine learning workloads as well as other types of analytics applications. Machine learning is a field in artificial intelligence where the biggest players are spending a lot of R&D money. Intel also claims that Xeon Phi enable AI systems that train faster and scale better than systems powered by GPUs. Ian Buck, VP of Nvidia’s Accelerated Computing unit, took issue with those claims, ripping into the benchmarks Intel used to make its case in a blog post. Read more: Intel Wants to Make Machine Learning Scalable Intel used an outdated deep learning model in its benchmarking and unfairly compared its current-generation Xeon Phi processors with older-gen Nvidia GPUs, Buck wrote (more details here). A single DGX-1, the system Huang gifted to OpenAI, is more than five times faster than four Xeon Phi servers, according to Buck. Both Intel and Nvidia don’t just have each other to worry about in the AI hardware market. The biggest and most active companies in the field, Google and Facebook, haven’t been reluctant to get their hands dirty and design their own custom hardware when the market cannot address their needs. Google has designed its own processor for machine learning, called Tensor Processing Unit, and Facebook is planning to open source the design for Big Sur, its custom AI server. Big Sur, by the way, is powered by Nvidia GPUs. It is the amount of money profit-driven corporations are investing in AI research that worries Musk, and it is why he started OpenAI. As he explained in a recent interview with Recode, a future where the most powerful AI is controlled by a few people can lead to nothing less than dictatorships replacing democracies. Google’s AI ambitions appear to be particularly worrisome to Musk, even though he avoided uttering the G-word in the interview. A non-profit that does AI research aggressively and open sources the results is one way to ensure no one small group of people gets control of the most powerful AI and exploits it for its own selfish ends. Here it is, in Musk’s own words: (Comment on this)

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