Intel Corporation (INTC) Earnings Call Transcript & Summary

Good morning, folks. Welcome to our session here today. I'm Ian Hood, the Chief Technologist with Red Hat. And I'm joined here with Rajesh Gadiyar. He's the Vice President for Data Platforms as well as the CTO for the Network Platforms at Intel. So welcome, Rajesh, to our session today.

Thank you, Ian. It's a real pleasure being here with you on this panel. As you know, Red Hat and Intel have had a very strong collaboration through our journey together on network transformation, and it's great to be talking to you this morning.

Great. So Rajesh, kind of the topic a lot of our folks want to hear about is what's going on in the industry, especially for telcos, and how do they get to cloud native? What does that mean? There's lots of technologies and lots of activity, and the industry is moving really, really fast. But the key thing is about being able to build new experiences, new services for us and even for the Internet of Things or objects, wherever they might be. And what's been going on in the industry, quite frankly, though, is that we've been on this journey for quite some time with SDN and NFV almost 10 years now, and it's really kind of matured, and many operators have invested in it. But the key things that are important now is, how does the automation come into play, and what the operators have found is that by investing, their networks are much more valuable to them and take these challenges and changes very quickly. But these changes allow them to actually extend the innovations in silicon which is where we work together with you and all the way up to the application layer. So really what I'm interested in, Rajesh, is kind of Intel's view on kind of this industry and kind of what you're doing and your focus in this journey.

Yes. Thank you, Ian. And like you correctly noted, we have actually come a long way in our network transformation journey and have made really good progress with NFV. And if you think about it, the biggest accomplishment that we have achieved so far is really the disaggregation of hardware and software. And what that has allowed us to do is really innovate much faster and transform the network infrastructure. It has also actually allowed us to really drive a larger ecosystem. So as you'll recall, actually, when we started the NFV journey 7 or 8 years ago, we were largely -- it used to look like closed-box solutions in the network infrastructure. And what we've been able to accomplish as a result of this disaggregation I talked about is now new players have come in, and we are driving a faster innovation cycle. Now along with that disaggregation, of course, one benefit has been a ton of flexibility because now you can actually bring in new applications. If you wanted a network address translation software application, you can bring that in from a different vendor, do mix and match, really get nice ability to monitor, optimize and modify applications. And then of course, like, the biggest thing is the performance scalability. So now that you have virtualized the network applications, you can easily scale the performance by adding additional instances on a standard server-like infrastructure, which actually works great from a performance scalability standpoint. And then all this sort of like comes together because what it allows us to do is to enable new services. And as we look at 5G ramp, I think the foundation that we have set with NFV is going to really help us drive new services with velocity. So I think we're poised really well. And as we look at the cloud-native transition that's coming up, there are a couple of things that are very important: automation, like you mentioned, and also how do we actually really make it -- provide that easy button for the developer ecosystem. So...

Great points there, Rajesh. Before I kind of move on to this piece, is that piece about the acceleration, and what we've found is that our customers have actually been able to deliver services that used to take 6 months. Now it's down to a couple of weeks and even down into days, if not hours. So this has really been some great progress, but there's other things that we're working on that you can chat with here as to what your focus is to kind of drive this forward.

Yes. From an Intel perspective, really, the vision that we are trying to drive towards is a programmable, scalable and intelligent network infrastructure. And we have a 3-pronged strategy. First, we're trying to actually make the underlying platforms and architecture better for network applications, so really an architecture that is best-in-class for converging application, control plane or signaling protocols, packet processing and signal processing, all running on a single architecture on a standard server. That's the first part of a strategy. Second, it's actually really going to be our cloudification of the network. So we have made great progress with NFV like we just talked about. But going forward, I think there is an opportunity to really drive that disaggregation to the new level, bring in more automation and bring in a lot of like cloud tools and methodologies to the network infrastructure. And then the last, but a very important piece, is our industry collaboration, both with open source communities and standards communities, but we also put a lot of emphasis on a commercial ecosystem, which we have always believed is very important. If you look at like telcos around the globe, many of them don't have the ability to -- they don't have large software teams, and they really depend on a commercial software ecosystem to help them deploy the solutions. And so this is basically our 3-pronged strategy as we drive this vision of a programmable, scalable and intelligent network infrastructure.

Excellent. And really one of the key things that I see from the industry is that these communities come together, we've got to actually accelerate this. And one of the key important pieces is that the operators and the vendors need to work together, and this is what we're doing to drive things forward. So what is it that the end customer and the operator is going to get out of actually going cloud native?

Yes. I think the promise of cloud native really is, first, actually, how do we create, deploy new services with agility. It's really about how do we actually monetize 5G? And I think we've probably heard a lot about edge services. Just really, how do we actually deliver these new services with velocity? Second is the operational agility. I think, increasingly, our conversations are how do we actually adopt the cloud development paradigm with continuous integration, continuous development and really bring agility into how we develop and deploy applications. And then of course, resource efficiency. I think disaggregation basically allows us to run an application anywhere. And then all these are in the vein of actually how do we provide an improved end-to-end user experience? And so when I actually think about these business imperatives, there are actually 3 areas that I'm focused on I would like actually to rally the community around. First is actually infrastructure and how do we actually continue to drive best-in-class network capabilities on a standard server infrastructure. This is where we are actually putting in a ton of effort, driving new instructions, better micro architecture, new kinds of accelerators for virtualizing radio access network, wireless core and better data plane infrastructure. Second is the area of automation and life cycle management that is entrenched in a CI/CD paradigm. And third, which is, in my mind, the most important, what you see here as #1, is really how do we actually make it easy for creation of the next generation of applications and services and how do we provide that easy button. So the cloud developers who are used to actually programming with a level of abstraction have the right infrastructure and the platform software on which they can actually innovate in a rapid fashion and bring new services to the market. So these are sort of like the 3 areas. And I know, actually, together, we've been doing a lot of work between Intel and Red Hat, and I expect to sort of, like, do -- have more collaboration with the extended community as well.

Excellent. And so you brought up some really good points about now the easy button and what cloud native can do. And the reality is that the complexity is actually increasing across this architecture, and we have to take advantage of cloud native across the development and the delivery of these services out to the edge and drive it from not just the micro-service architecture and the cloud native ones, but the existing virtual, existing physical and make this really almost autonomous across this entire picture. So really, we're working together to kind of drive this simpler picture and from that be able to deliver these services much faster, which is really what is the benefit to both the operator and to the end customers. And so to kind of wrap this up, kind of why don't we get your thoughts on -- we've done some great work, what's kind of the future things that we're working on together in the industry, both Red Hat and Intel? And what's the endgame for what we're seeing in the next few years?

Yes. It's a really good question, Ian. Now as you know, actually, over the last 7 or 8 years, through the network function virtualization phase of our journey, we've been actually collaborating, working very closely together. And together, I think we have sort of like driven this industry transformation. Now as I look forward to cloud native, there are a few areas that Intel and Red Hat are partnering. I think, first and foremost, of course, the cloud native paradigm means that we are actually going down increasingly micro services and container as a deployment model. And so we are actually looking to improve the container technologies. I think you will recall that we've actually worked together on Multus, a CNI plugin that really allows us to attach container ports to multiple networks. We have also been collaborating in open source communities, particularly -- I think there's a lot of work that we have done in Kubernetes to improve the exposure of the platform capabilities, which is really important. And there's actually a few placement controllers that Intel has worked on that we plan to actually work with Red Hat and provide them as Kubernetes operators and certify them as Kubernetes operators. And then together, we also have a joint lab. So we've been actually collaborating in Linux Foundation Networking on the CNTT project to standardize the NFV infrastructure and drive sort of like a joint certification program. And the joint lab that we have created actually has seen some great success as well. And we've been actually working with a larger community to help them and to certify some of the applications. So really great work together. And there is much more to be done, in particular, in the areas such as automation. So I'm looking forward to continuing our collaboration and addressing the next set of challenges as we ramp 5G and the virtualization of radio access network and edge services with a cloud native transformation.

Excellent. So one of the things that we're really happy that Intel is working with us, especially the work with CNTT that you mentioned and this ability to have kind of a common way to onboard things into this architecture, that's really important to make that happen across all these different pieces. And one of the things that I really like to see -- we're starting to see now is opening up the APIs down to the device drivers, which you're working on and working with us and bring that all the way up to the applications so that we can actually build this CI/CD approach for the infrastructure, the applications, the data platform across this end-to-end architecture. Because that's really the thing that's holding our operators up right now is that they've got a lot of things that they have in their environment that they need to actually continue to maintain while they add on new services. But this work that we're doing together has let some of our customers really kind of speed up the way that they do things and that they can now look to deliver those services closer to the customer, put them anywhere they like. And we can now really, as we've already seen, accelerate deployments because we all want this stuff to be on all the time in this new virtual world. And the things that don't go away, of course, is that we want to be able to control and secure this. So really, together, us as an industry, Red Hat, Intel, our thoughts are that we need to kind of help them reduce their risk and scale that revenue faster and deliver those great new services to the world. And so what are your final thoughts before we take some questions, Rajesh?

Yes. Ian, well said. Actually, completely agree with everything that you noted. And I'm actually a dreamer. And as I look to the 5G ramp over the next year or so here, I'm really excited, both in terms of what 5G brings to the table, but also actually what it enables, the latency, the end-to-end quality of service with network slicing. It just enables a ton of possibilities at the edge, whether it's enterprise edge or a far edge with virtual RAN or at the central office edge and regional clouds. I think the possibility to innovate and take a more cloud native approach to place workloads as -- bring compute to where the application and services are, I'm just super excited as to what we can do together as a community. And really, I again come back to the vision that I articulated, which is how do we actually make the network a programmable, scalable and intelligent entity. And so I'm super excited at the possibilities and look forward to working with you and also rest of the community to make that a reality.

Well, thanks so much, Rajesh. And I think what we'll do is we'll end here and thank our audience for listening. And hopefully, we've got some good questions as well to take. So thanks, everyone.

Thank you.